VIETNAM FDI ATTRACTION REACHES RECORD HIGH

According to the General Statistics Office of Vietnam, the foreign direct investment (FDI) from the beginning of the year to June 20, 2019 reached a record high of 1,723 newly approved projects with a registered capital of over US$7.4 billion.

Major projects

According to the General Statistics Office’s data, FDI disbursement in the first six months was estimated at US$9.1 billion, up 8.1% over the same period in 2018. In the six months, there were 4,020 turns of capital contribution and share purchase of foreign investors with a total capital contribution of US$8.12 billion, up 98.1% over the same period in 2018, of which 625 turns of capital contribution and share purchase increased the charter capital of the enterprise with a capital contribution of US$5.48 billion and 3,395 turns where foreign investors bought domestic shares without increasing the charter capital with a value of US$2.64 billion.

Regarding the investment sector, foreign investors invested in 19 industries and sectors, most of which focused on processing and manufacturing industries with a total capital of US$13.15 billion, accounting for 71.2% of total registered investment capital. Real estate business came second with the total investment of US$1.32 billion, accounting for 7.2% of the total registered investment capital. The third was the wholesale and retail sector with the total registered investment capital of US$1.05 billion, accounting for 5.7% of the total registered investment capital.

Hong Kong was the leader among countries and territories investing in Vietnam with a total investment of US$5.3 billion, accounting for 28.7% of total investment capital. South Korea ranked second with a total investment of US$2.73 billion, accounting for 14.8% of the total investment capital in Vietnam. China rose to the third place with total registered investment capital of US$2.29 billion, accounting for 12.4% of total investment capital.

Major FDI projects included capital contribution and share purchase of US$3.85 billion from Beerco Limited (Hong Kong) to Vietnam Beverage Co., Ltd. for a beer project in Hanoi; the US$260-million electronic manufacturing plant by Goertek (Hong Kong) located in Bac Ninh province; a tire manufacturing plant worth US$280 million from a Chinese investor in Tay Ninh province and a similar project worth US$214.4 million financed by Guizhou Advance Type Investment (China) in Tien Giang.

Hanoi takes lead in FDI attraction

Of the US$9.1 billion in FDI attraction in the first six months, Hanoi accounted for US$5.3 billion, emerging as the leading locality in terms of volume, increasing the total cumulative investment to US$41.2 billion.

Regarding capital structure, the investment mainly focused on industry with construction accounting for 37.2%; real estate 31.2%; trade - service 31.2%; agriculture, forestry and fisheries 0.2%. Japan has currently been the leading country in terms of investment capital with about US$10.2 billion; followed by Singapore with US$6.6 billion, South Korea US$5.5 billion.

In addition, Hanoi has facilitated FDI attraction with non-budget spending of VND12.6 trillion investing in 17 domestic investment projects; adjusting investment capital for 34 projects (of which 25 projects increased capital by VND7.1 trillion); and approving 13,690 newly established enterprises with registered capital of VND143.7 trillion, an increase of 10% in number of enterprises and an increase of 1% of registered capital over the same period last year.

Vibrant FDI into industrial parks and economic zones

A positive signal is that in the first six months, FDI inflows into economic zones and industrial parks increased sharply. Accordingly, the industrial parks and economic zones in the whole country attracted about 340 foreign investment projects with the newly registered capital of about US$8.7 billion, bringing the total number of foreign investment projects to about 8,900 projects with the total registered capital of about US$186 billion. Particularly for domestic investment projects, industrial parks and economic zones in the whole country attracted about 334 projects with the total registered capital of about VND82.9 trillion, bringing the total number of foreign investment projects to more than 9,086 with the total registered capital of VND2,060.5 trillion.

According to Mr. Johan Alvin, Head of Trade and Economic Promotion Department, the Embassy of Sweden in Vietnam, in order to continue maintaining the current high FDI attraction momentum, Vietnam needs to further enhance transparency, particularly in Vietnam's tax and customs system.

Meanwhile, Mr. Nguyen Chi Hieu emphasized the possibility that Vietnam's economy would benefit from the ongoing U.S.-China trade war. Accordingly, the trend of shifting production from China to other countries, in which Vietnam is a new destination, the world's factory is absolutely highly feasible. This trend also in turn attracts the capital flows and major brands in the world to the Vietnam’s economy. In particular, in the context of the two new historic agreements EVFTA and EVIFA signed between Vietnam and EU, it will create a stepping stone and greater attractiveness for Vietnam's economy in the coming time.

Source: VCCI