Good Signal Prompts Booming Year of FDI Attraction

9:11:54 AM | 2/18/2022

Foreign direct investment (FDI) flows increased sharply right in the first month of 2022. This showed strong investor confidence in Vietnam's economic recovery prospects and expectations for another prosperous year, driven by this important capital inflow.

Many gigantic investment projects

According to the Foreign Investment Agency under the Ministry of Planning and Investment, foreign investors registered to invest US$2.1 billion as of January 20, 2022, up 4.2% year on year. They spent over US$1.61 billion in the period, up 6.8%.

Specifically, foreign investors registered to invest nearly US$388 million in 103 new projects and added US$1.21 billion to 71 existing projects, up 2.69 fold in value and 54.3% in projects.

Investors from 33 countries and territories invested in 15 out of a total of 21 industries in Vietnam in January 2022. Singapore led foreign investors with nearly US$666 million, accounting for 31.7% of the total. South Korea was the second-largest investor with over US$481 million, accounting for 22.9%; followed by China, Japan, Hong Kong (China) and Taiwan (China).

In January, foreign investors invested a lot in Nghe An, Bac Ninh and Phu Tho provinces. In Nghe An, Goertek Group of Hong Kong (China) increased its investment value from US$100 million to US$500 million for its electronic, network equipment and multimedia audio product manufacturing project in WHA Industrial Park, becoming one of the largest investment projects in the province to date.

In Phu Tho, JNTC Group of South Korea added US$163 million to its electronic components manufacturing project. In Bac Ninh, GE Vietnam of South Korea raised its investment capital value by US$216.9 million.

In addition to these "groundbreaking" projects, some other localities witnessed positive FDI inflows in the early days of 2022, including Dong Nai and Bac Giang.

Promising a prosperous year

In fact, right from late 2021, FDI inflows were expected to jump high in early 2022. The successful adoption of the dual goal of disease prevention and economic development and the enforcement of new-generation FTAs ​​helped boost economic growth and FDI inflows.

Remarking on FDI inflows in the first month of 2022, the Foreign Investment Agency said that, boosted by recovery momentum in late 2021 in the wake of the COVID-19 pandemic, many FDI firms stabilized and expanded business operations. Their disbursed capital rose 6.8% year on year in January 2022.

Besides, foreign investors spent more on expanding their existing projects and purchasing equity assets from the same period of 2020. Although the fund for fresh projects shrank from a year earlier because of a few large-scale projects, the number of new projects surged (nearly 2.2 times more), showing the rising confidence of foreign investors in the business environment in Vietnam.

Vietnam had 34,642 valid FDI projects with over US$415.6 billion as of January 20, 2022. The disbursed FDI value was over US$253.2 billion, equal to nearly 61% of the registered value. The processing and manufacturing industry accounted for the highest share with nearly US$246 billion, or 59.2% of the total, followed by real estate and electricity.

Although there will be many opportunities for stronger FDI inflows in 2022, competition for FDI funds will also become fiercer, especially among countries with similar conditions to Vietnam, like India and Indonesia, said Minister of Planning and Investment Nguyen Chi Dung. Vietnam needs to prepare necessary conditions for more FDI funds by reviewing and supplementing the available land fund; reviewing electricity planning; training high-quality human resources; supplementing policies on the development of supporting industries; working out regulations and standards as a new filter to select FDI investors. Besides, it is also necessary to have plans to actively seek, approach, exchange and invite investors.

Proposing the point of view on a special policy for research and development (R&D) centers, Mr. Nguyen Van Toan, Vice Chairman of the Vietnam Association of Foreign-invested Enterprises, said that there is a need for criteria for investment project assessment. Priority projects are high-tech projects that use source technology. Especially, Vietnam needs to develop research and development centers to enhance FDI quality.

By Thu Ha, Vietnam Business Forum