Vietnam remains a strong investment destination for FDI inflows amid challenging times

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Manufacturing electronic components at EVA Company in Vsip industrial park (Hai Phong). Photo: VNA

Vietnam is still an attractive destination for investment capital in the context of many fluctuations due to the Covid-19 pandemic.

Strategic destination

In March 2021, despite the COVID-19 pandemic, Long An made a mark with the Long An I and II LNG Power Plant project (Singapore) with a total registered capital of over $3.1 billion, for the purpose of transmission and distribution of electricity.

Many other localities across the country have also continuously recorded many "giant" FDI projects such as LG Display Hai Phong (Korea) project with investment capital is adjusted to increase by US$2.15 billion; O Mon II Thermal Power Plant Project (Japan) with a total registered capital of over US$1.31 billion. Most recently, LEGO Group signed a Memorandum of Understanding with Vietnam-Singapore Industrial Parks Joint Venture Company Limited (VSIP) to build its 6th factory in Binh Duong province with a total investment of more than US$1 billion.

By November 20, 2021, as recorded by the Foreign Investment Department (Ministry of Planning and Investment), the total newly registered capital, adjusted and contributed capital to buy shares, buy capital contribution of the foreign investment investors reached US$26.46 billion.

Although it only increased slightly by 0.1% over the same period in 2020, this result is recognized as an outstanding achievement of Vietnam in the context of the pandemic. Not only that, newly registered and additional capital continued to mark an impressive increase over the same period. According to the Foreign Investment Agency, this is a positive increase in the context that global investment flows are declining and there are many adjustments due to the impact of the Covid-19 pandemic.

In the past 11 months, 1,577 new projects have been granted investment registration certificates, with a total registered capital of nearly US$14.1 billion, up 3.76% over the same period in 2020. Meanwhile, there are 877 turns of projects registering to adjust investment capital, with the total additional registered capital reaching over US$8 billion, up 26.7% over the same period last year. Foreign investors have invested in 18 industries out of a total of 21 national economic sectors. In which, the processing and manufacturing industry ranks top with a total investment of over US$14 billion, accounting for 53% of the total registered investment capital.

Despite ranking second in terms of investment capital, Korea is the leading partner in terms of the number of new investment projects, the number of projects that adjust capital as well as the number of capital contributions to buy shares. Thus, given the number of projects, Korea is the partner with the most investors interested and making new investment decisions as well as expanding investment projects in this 11-month period. According to the Foreign Investment Agency, this is a positive increase in the context that global investment flows are declining and there are many adjustments due to the negative impact of the Covid-19 pandemic.

FDI continues to increase

Many experts and foreign organizations share the same opinion that the 4th wave of Covid-19 leaves an "afterglow" in the short term, but Vietnam is still considered an attractive destination thanks to its solid macro foundation.

The investment trend in Vietnam will continue to increase as Vietnam gradually returns to the "new normal", cooperation agreements on trade and investment between localities and Vietnamese enterprises with foreign partners is being strengthened.

Accordingly, 44 cooperation documents between Vietnam and Japan agencies, localities and businesses were signed during Prime Minister Pham Minh Chinh's official visit to Japan (from November 22 to 25) which are economic cooperation agreements with a total value of many billion USD, such as: investment cooperation agreement in Lang Son power plant with total value of US$1.75 billion; the project of raising, processing and distributing beef cattle in Vinh Phuc of US$500 million; cooperation agreement to develop Dinh Vu economic zone (Hai Phong) of US$250 million.

Within the framework of the official visit to Korea and India by National Assembly Chairman Vuong Dinh Hue and a high-ranking delegation of the National Assembly of Vietnam from December 15 to 19, 2021, a series of leading corporations and enterprises Korea and India have also committed to continue long-term investment in Vietnam and look forward to working closely with Vietnam in fields such as energy, semiconductor high tech industry, green industry, clean energy.

During his visit to the 76th United Nations General Assembly High-Level Debate in New York (USA), in addition to bilateral meetings with heads of state, President Nguyen Xuan Phuc also had a meeting with representatives of many leading economic groups in the US and witnessed the signing ceremony of contracts worth billions of USD of these corporations with Vietnamese enterprises such as: the signing ceremony of a memorandum of understanding between T&T Group and UPC Renewables Group (USA) with a total investment of about US$2.5 billion; Memorandum of Understanding with GE worth $2.4 billion to cooperate and develop Chan May LNG project as well as using GE turbines and generators.

Assessing the prospect of attracting FDI in Vietnam, Mr. Harry Loh, General Director of UOB Bank in Vietnam, said that FDI inflows will remain resilient thanks to three main reasons. Firstly, despite obstacles from Covid-19-related travel restrictions, FDI is still flowing strongly into Vietnam. Second, exports to the US and Europe are still growing strongly, albeit at a slower pace. Third, vaccination rates across the country have improved significantly.

"With the shift in response to the pandemic, Vietnam's economy will recover strongly and FDI inflows into Vietnam will still increase," said General Director of UOB Bank in Vietnam.

To continue to take the lead in the race for FDI, Dr. Nguyen Bich Lam, former Director of the General Statistics Office, said that the Government, relevant ministries, branches and localities need to implement a number of solutions to "retain" and promote foreign investment attraction.

Accordingly, it is necessary to build a competitive advantage in attracting FDI by facilitating investment conditions, creating a transparent and predictable legal system on the basis of developing a globally connected market economy by legal rules. At the same time, we must also focus on developing regulations and standards as a new filter to select environmentally friendly foreign investors with advanced technology and the ability to withstand pressure from outside to maintain and ensure the national security of the country.