Just less than a decade ago, local people of Quang Ngai Province had high hopes when hearing the news that a Taiwanese firm would build a large steel plant there and create many jobs.
The Tycoons Worldwide Group was licensed to build the factory in 2006. The US$1.04 billion project originally aimed to churn out 5 million tons of steel per year.
In 2012, the investor decided to cooperate with Japan's second-biggest steelmaker JFE to develop the plant. This time the ambition was to expand the megaproject, increasing its annual capacity to 7 million tons and the total investment to $4.1 billion.
However, JFE has recently decided to pull out of the project due to a prolonged oversupply situation of the alloy in Asia.
Without the Japanese partner, the investor said they would have to scale down the project to $2 billion.
But despite many changes on paper and announcements, nothing has been done.
Local authorities of Quang Ngai have said they will revoke the project’s license if the investor fails to prove that they have enough capital to actually build the plant by June.
Another project in the Mekong Delta city of Can Tho has not made any progress since it received an investment license in 2008.
The cost estimate for the Can Tho Oil Refinery Project has been cut from $500 million to $350 million, but its investor is still struggling to find enough money for it.
Last month, the Department of the Planning and Investment of Can Tho said it plans to revoke the project, after the investors missed a deadline to disburse a portion of their pledged investment for the refinery.
These are only two out of the many foreign-invested megaprojects that stumble on its way from paper to reality.
With huge capital pledges, their investors set unrealistically high expectations, but then very few manage to deliver on their promises.
Vietnam has so far licensed more than 30 foreign invested projects with an investment of billions of US dollars each, but only a few of them have come into operation, according to local newspaper Dau Tu (Investment), a publication of the Ministry of Investment and Planning.
Many others have been delayed for a long time, and the government have decided to pull the plug on some of them.
The Vietnamese government has revoked the investment license of a US$9.8 billion joint venture between state-owned shipbuilder Vinashin and Malaysia's Lion Group to build a steel plant in the central province of Ninh Thuan.
Many years after investors ceremonially broke ground on the project in late 2008, no construction has been carried out, apart from site clearance.
A US$4.15 billion resort project in Quang Nam Province has also been canceled by the government as the investor failed to complete the required investment formalities.
Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, said the situation is caused by careless assessment of investment proposals.
“The country has seen hundreds of projects delayed due to failure to carefully assessing them before licensing,” he said. “Local authorities should be very careful in licensing foreign-invested projects. We should not covet projects with big capital so much that we cut corners while assessing their feasibility.”
Some foreign investors have registered their projects, but do not really want to implement them, Mai said.
They were land speculators, who would sell their projects to other investors to earn profits later, he added, noting that this could be observed from the real estate sector, especially during a market boom a few years ago.
Echoing Mai, economist Pham Chi Lan said the government needs to make sure foreign-invested projects are feasible to avoid licensing those that only look good on paper.
Local authorities also need to review their roles in site clearance to avoid delays in multi-billion dollar projects, Lan said.
Vung Ro Oil Refinery is an example. The US$3.2 billion petrochemical project broke ground in the central province of Phu Yen last September, but its construction has not been started due to obstacles in site clearance.
Earlier, Indian conglomerate Tata Steel Ltd announced to scrap its plan to build in a $5 billion steel project in Ha Tinh due to land-related issues.
Many hectares of land set aside for such projects have been left fallow for many years, causing a loss of natural resources, Mai said.
He urged the government to revoke licenses of projects which have been suspended for too long, in order to create new opportunities for other investors.
Foreign investors disbursed some $4.2 billion in the first four months of this year, up 5 percent from the same period in 2014, according to the Ministry of Planning and Investment.
However, new investment pledges in the first four months fell 17.1 percent from a year ago to $2.68 billion, with most of the funds promised to processing industries and property projects.
Foreign investment inflows are an important source of foreign exchange for Vietnam to offset its trade deficit. The country also said last year it was still short of funds needed for infrastructure projects.