Vietnam is witnessing a relatively strong inflow of foreign direct investment (FDI) in the third quarter of 2015. Pouring billions of US dollars into their projects, investors from South Korea, Japan, the UK and other nations are marking their return to Vietnam and heating up FDI flows which have been relatively meagre from early 2015.
South Korea invested over US$39.1 billion in 4,459 projects in Vietnam as of the third quarter of 2015, becoming the biggest foreign investor in the Southeast Asian nation. Recently, South Korea’s Samsung Display registered to invest additional US$3 billion into its display project in Bac Ninh province.
This project has significantly lifted the FDI value this year to a positive growth. This has also proved that Vietnam is still an attractive destination for foreign investors and major corporations.
Reportedly, another South Korean company recently completed investment procedures to build a food and beverage plant in Yen Phong Industrial Park, Bac Ninh province. The project is expected to be completed and put into operation in the third quarter of 2016.
According to data released by Korea International Trade Association (KITA) and the Korea Trade-Investment Promotion Agency (KOTRA) on August 30, Vietnam overtook Japan to become the fourth largest export market of South Korea. The country’s exports to Vietnam reached US$16.35 billion from January to July 2015, propelled by Samsung-invested electronic production projects in Vietnam which entailed more and more supporting projects from South Korea as well.
Japanese investors are also very keen on Vietnam. According to a survey into Japanese companies attending a recent Vietnam - Japan investment promotion conference, up to 60 percent of respondents said they are planning to shift their investment flows from other Asian countries to Vietnam in 2015 and beyond. They are interested most in processing - manufacturing, garment - textile, transport - logistics, construction - environment - real estate, finance - banking - human resources - insurance, smart agriculture, and trade - retail.
These results have demonstrated the Government of Vietnam’s effective efforts to reform and improve the investment environment. According to the Foreign Investment Agency under the Ministry of Planning and Investment, Vietnam attracted 1,219 new projects with a combined registered capital of US$7.87 billion as of August 20, 2015, up 8.7 percent from the same period in 2014.
Besides, investors registered to add a total of US$5.46 billion to 389 existing projects, up 82.8 percent year on year. Thus, in the first eight months of 2015, FDI value in Vietnam unexpectedly jumped 30.4 percent from a year-ago period.
In addition to regular investors from South Korea, Japan, Taiwan and the UK, Vietnam also saw investors from Turkey and Hong Kong, which were forecast to bring much investment capital into the country in the coming time. These are the bright spots in the FDI picture in 2015.
According to economic experts, alongside efforts to improve the investment and business environment and sustain macroeconomic stability, Vietnam’s impending signing of economic agreements with regional and international economic institutions is the basis for attracting foreign investors
However, Vietnam is still facing stiff competition in FDI attraction from countries in the region such as China, Thailand, Indonesia and Singapore, which also have policies to attract foreign investors. As reported by the Vietnam Chamber of Commerce and Industry (VCCI), up to 69 percent of foreign investors have considered other comparative destinations before they decide to invest in Vietnam.
What concerns a majority of foreign investors is still cumbersome administrative procedures, informal costs and especially tax policy - a strong decisive factor in their investment location decisions.
Dinh Thanh
Vietnamese
