Mumbai: Vietnam expects to attract inflows of $150 billion (Rs6 trillion) from overseas in the next five years, as an accelerating economic growth and the nation’s accession to the World Trade Organization (WTO) attract investors.
Foreign investment will rise to $14 billion this year from $10.2 billion in 2006, deputy planning and investment minister Nguyen Bich Dat told reporters in Mumbai. The minister spoke after a meeting with Indian businessmen attended by Vietnamese Prime Minister Nguyen Tan Dung.
Vietnam’s government expects economic growth to exceed 8% this year, driven by the Southeast Asian nation’s accession to the WTO in January. The Ho Chi Minh City Stock Exchange’s VN Index has gained 35% this year, while the value of government-approved foreign-invested projects surged 64% through May, according to Dragon Capital, a Ho Chi Minh City-based fund management firm.
The Mumbai-based Essar Group said on Thursday that it’s considering expanding investments in shipping, telecommunications and oil and gas projects in Vietnam.
Indian companies committed to spending $133 million in Vietnam from 1988 to 2006, according to figures from Vietnam’s ministry of planning and investment.
Investment pledges by Indian companies were $158 billion in the first five months of the year, the ministry said. The Vietnamese premier is heading to the national capital where he will meet with his Indian counterpart, Manmohan Singh, on Friday.
“We are here to promote co-operation between the two countries and attract investments,” Prime Minister Dung told reporters after the meetings in Mumbai. Current trade and investment is “not commensurate with the potential of the two economies.”
India is set to become one of the top 10 countries investing in Vietnam, said Dung. Vietnam’s largest foreign direct investment pledges from 1998 to 2006 came from Taiwan, Singapore and South Korea, who together said they would spend $24 billion of the total $60 billion in the Southeast Asian country.
Trade between India and Vietnam has risen 30% annually since 2001, Dung added.
Exports to Vietnam from India were $880.3 million in 2006 and $353.9 million in the first three months of this year, according to statistics from the general department of customs in Hanoi. India imported $137.8 million worth of goods and services in 2006 from Vietnam and $34.1 million in the first three months, the customs department said.
Tata Steel Ltd, the world’s sixth largest steel maker, and Vietnam Steel Corp. plan to spend $3.5 billion on a steel and iron ore venture in Vietnam to supply construction and shipping companies.
Essar Steel Ltd had said in February that it will link up with two state-owned Vietnamese companies for a $527 million plant.
Vietnamese annual economic growth since 2000 has averaged 7.6%. The economy expanded 7.9% in the first half of the year, suggesting Vietnam may attain its full-year economic growth target of 8.5%.
Minh Bui in Tokyo contributed to this story.