Processing and manufacturing industry attracts foreign investors

	Việt Nam to improve institutions to attract foreign investment
	Many foreign investors expand electronic industry projects in Vietnam
	Foreign investors maintain optimistic outlook for Vietnam’s growth

Manufacturing activities at Samsung Vietnam. Photo: Tran Ngoc

Positive growth

According to the Ministry of Planning and Investment, as of May 20, the total new investment from FDI investors reached over US$11.71 billion, equal to an increase of 83.7% year-on-year. Of which, newly registered capital decreased by 53.4%, but adjusted capital and capital contribution to buy shares rose sharply by 45.4 % and 51.6% respectively.

Foreign investors have invested in 18 industries out of a total of 21 national economic industries. Of which, the processing and manufacturing industry leads the way with a total investment of over US$6.8 billion, accounting for 58.2% of the total registered investment capital. At the same time, the manufacturing and processing industry is also one of the industries attracting the most new projects in the first five months of 2022, accounting for 25.6% of the total number of projects.

The processing and manufacturing industry in the first five months of 2022 recorded US$131.39 billion in export, up 16% year-on-year and accounting for 85.9% of the total export turnover. Many manufacturing projects of electronic and high-tech products have expanded their capital such as; Samsung Electro-mechanics Vietnam (Thai Nguyen) project rose by US$920 million; a project of Fujifilm Business Innovation Vietnam Co., Ltd. (HCMC) rose US$494.2 million; projects of manufacturing of electronics, network equipment and multimedia audio products in Bac Ninh rose by nearly US$306 million, in Nghe An US$260 million and in Hai Phong US$127 million; and Electronic component factory project (Phu Tho) rose by US$163 million.

Mr. Kim Byunggi, General Director of Hansol Electronics Vietnam Hochiminhcity Co., Ltd. Said that after several years of successful investment in Amata Industrial Park in Bien Hoa city, the company has increased by US$100 million to implement a new project in Ho Nai Industrial Park phase 2. The new factory will manufacture, process and assemble liquid crystal display modules and electronic circuit boards with a scale of about 10.8 million products per year. The company's products are mainly supplied to Samsung Group and exported.

Many other branches of the manufacturing industry have also expanded their production and exports. Despite the Covid-19 pandemic, export turnover still maintained a high growth rate, helping the industry develop stably. At the same time, the export market is being expanded to many other countries and territories to reduce risks for businesses when depending too much on a few markets.

It is necessary to provide more support

FDI enterprises want to find domestic sources of raw materials and auxiliary materials to meet the requirements of the localization rate when investing in Vietnam, to enjoy tariff preferences upon exports. In addition, raw materials in the country will help businesses proactively produce, reduce costs and risks of transportation time. The above factors open up more opportunities to promote the development of domestic enterprises in the manufacturing industry.

Speaking to a reporter from Customs News, Mr. Phan Huu Thang, former director of the Foreign Investment Department (Ministry of Planning and Investment), said the report on foreign investment in Vietnam on May 12, 2022 states that many Japanese and Korean businesses want to cooperate with suppliers of spare parts, components and semi-finished products in Vietnam. Because Vietnam's supporting industry is still weak, it is difficult to find domestic suppliers and large-scale foreign investors are forced to entice supporting enterprises and partners from their countries to Vietnam.

Việt Nam need to have mechanisms and policies in place to raise the level of Vietnam's small and medium enterprises in terms of technology level and management skills to meet requirements of FDI enterprises, creating opportunities for domestic enterprises to participate in the global supply chain. Accordingly, the State must play the role of a "midwife" for domestic enterprises by formulating strategies for the development of a number of priority areas of the supporting industry to focus investment, avoid spreading and ineffective investment; building a digital portal, building an online database connecting domestic enterprises with global end product manufacturers; organizing international industry exhibitions in Vietnam to connect suppliers with demanders; issuing specific mechanisms, policies and programs to encourage FDI enterprises to voluntarily transfer technology and management skills and support Vietnamese enterprises to join their supply chains.

At the same time, domestic enterprises must actively approach new technologies and search and select products suitable to their capabilities, improve their management skills to meet the requirements on cooperation with FDI enterprises.