FDI rockets to 8-month high amid inflation

by Na Khue

Despite soaring inflation and low economic growth, foreign investors poured a record US$47 billion into the Vietnamese economy in the first eight months of 2008 – a four-fold increase on the same period last year, according to the Ministry of Planning and Investment (MPI).

Taiwan topped the table of 38 nations and territories investing in Viet Nam, shelling out $8.6 billion in 112 projects – 18.6 per cent of the total foreign direct investment (FDI). Japan came next with $7.2 billion in 78 projects, followed by Malaysia, Brunei, Canada, Singapore, Thailand, the British Virgin Islands and the US.

Of the 43 cities and provinces attracting FDI this year, Ba Ria-Vung Tau Province was the biggest gainer, followed by HCM City and Ha Tinh, Thanh Hoa, Phu Yen, Kien Giang and Dong Nai provinces.

The real estate sector accounted for some 40 per cent of the total registered capital. Significant projects included the $3.4-billion Viet Nam International University Township in HCM City (headed by Malaysia’s Berjaya Group); the $4.2-billion Ho Tram Strip in Ba Ria-Vung Tau (headed by Canada’s Asian Coast Development) and a $4.35-billion tourist project in Phu Yen (headed by Brunei’s New City Properties Development Company).

However, the booming real estate sector is raising concerns among economists who fear that capital invested in these projects is bypassing local workers.

They also point to the fact that developers are consuming vast swathes of farmland that could lead to food shortages and unemployment.

Furthermore, many of the planned real estate projects – which include luxury resorts, villas and apartments – will be out of the reach of average income earners.

However, an official from the MPI played down concerns that the real estate market was overheating. He said there was a dearth of desperately needed five-star hotels and high-end office space in the country. He also said that investment in the sector was giving the struggling local real estate market a welcome injection of capital.

Revenue from operational foreign invested firms this year was $30.4 billion, of which $1.4 billion went into State coffers – 33 per cent more than last year.

In the first eight months of the year, foreign firms created 18,000 jobs, bringing the total number of Vietnamese working for international companies to 1.4 million.

Milking it for all it’s worth

Cash-strapped Vietnamese families are having to fork out some of the highest prices in the world for milk.

According to a report released last week by HCM City-based market research firm FTA, milk in Viet Nam costs US$0.82 per kilo – compared to around $0.80 in the US and Canada, Australia, New Zealand, the EU, Israel and China. In Eastern Europe and South America a kilo of milk cost just US$0.40.

Meanwhile, GDP per capita last year was US$835 in Viet Nam, $5,600 in Eastern Europe, $10,000 in North America and $23,000 in the EU.

In 2007-2008, the price of condensed milk went up 5 to 6 per cent, while the price of powdered milk soared by 23 to 26 per cent. Milk turnover in the local market grew by 20 per cent, while the volume sold increased 6 per cent. Meanwhile, the price of powdered milk went up by 18 to 30 per cent.

A recent poll showed that young mums with toddlers aged two to four were prepared to give half their income to buy the "best milk products" for their young charges. A 400g can of locally made powdered milk now costs VND55,000, while imported powdered milk can cost as much as VND130,000.

The biggest milk producers are Australia and New Zealand.

Nutritionist Dr Dao Thi Yen Thuy said that there was little difference between locally produced and imported milk products, aside from a few much-hyped additives such as taurine and choline, which have little real health benefits.

Ads press on

Market research and advertising firms predict that firms will continue to spend lavishly on promoting their products, despite concerns over falling sales and smaller budgets due to the economic downturn.

Advertising revenue on 29 television channels, one radio station and 64 print publications monitored by TNS MediaVietnam in the first half of this year reached over $230 million, up 16.2 per cent on the $201 million spent in the same period last year.

Almost $171 million was spent on TV ads alone, while $42 million was spent on newspaper ads and $20 million on magazine ads. Radio adverts brought in just $828,000.

However, spending on radio ads saw the biggest increase – 52.5 per cent compared with the first half of last year. Spending on TV advertising grew the least – 14.3 per cent.

The top ten advertisers were Unilever Viet Nam, P&G Viet Nam, Vinamilk, VMS-MobiFone, Dutch Lady Viet Nam, Tan Hiep Phat Brewery, Nestle Viet Nam, Vinaphone, Viet Nam Brewery and Abbott Laboratories Inc. Together they spent almost US$60 million, down 2.1 per cent on the same period last year.

TNS Media Viet Nam managing director Tran Thi Thanh Mai told a local newspaper that some companies were spending less on advertising while the majority were spending more, with the net result that advertising expenditure was increasing. — VNS

Source: Viet Nam News