Sep 27, 2021 / 17:32

FDI commitments to Vietnam rise nearly 5% in 9-month period

Vietnam continues to remain an attractive investment destination in the long term.

Foreign Direct Investment (FDI) commitments during the first nine months of 2021 rose by 4.4% year-on-year to US$22.15 billion, a report of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has shown.

 Production at YPE VINA in Binh Xuyen 2 Industrial Park, Vinh Phuc Province. Photo: Hoang Hung

Meanwhile, the serious Covid-19 situation in southern provinces/cities has led to temporary disruption of production and a reduction of 3.5% year-on-year in FDI disbursement to around $13.28. billion.

Principal Country Economist of the ADB in Vietnam Nguyen Minh Cuong said the pandemic and subsequent restriction measures are wreaking havoc on businesses as a whole, including foreign companies.

Cuong, however, noted for foreign businesses, any investment decision into a country would take into account long-term considerations, and they are rarely fazed by short-term issues.

According to Cuong, firms may shift part of their contract orders to other countries to cope with the current situation, but a complete shift of operation is another story. 

“In fact, many have welcomed the Vietnamese Government’s efforts in improving the business environment, and sees Vietnam as an attractive investment option for the future,” Cuong said. 

While calling the pandemic a global issue, ADB Country Director for Vietnam Andrew Jeffries echoes Cuong’s view by saying he is adamant that Vietnam remains an attractive investment in Southeast Asia.

“Foreign investors come to Vietnam as they look at the fast-economic expansion rate and growing middle class,” he told The Hanoi Times.

The view from ADB experts is shared by the World Bank (WB) as its latest report suggested higher FDI commitments to Vietnam were driven by newly registered capital flowing into manufacturing.

“This increase indicates foreign investors’ continued confidence in the Vietnamese economy in the longer run,” it added.

WB Senior Economist Dorsati Madani noted the Vietnamese Government is working hard to contain the pandemic while ensuring no major disruption to economic activities, including a shift into the strategy of safe adaption to Covid-19.

Madani advised the local government to continue supporting enterprises coping with the new situation by applying new digital technologies and working procedures.

Singapore remains top investor to Vietnam

Year to September 20, over a thousand or exactly 1,212 new projects have been approved with total registered capital of $12.5 billion, down 37.8% in the number of projects but up 20.6% in capital year-on-year, while 678 existing projects have been injected an additional $6.4 billion, falling 15% in number but rising by 25.6% in the capital. 

During this period, 2,830 projects had nearly $3.2 billion in capital contributed by foreign investors, which were down 45.3% in a number of projects and 43.8% in value year-on-year.

Investors have poured money into 18 fields and sectors, in which manufacturing and processing led the pack with investment capital of nearly $11.8 billion, accounting for 53.4% of total registered capital. Electricity production and distribution came second with $5.5 billion, or 25%, followed by real estate with $1.78 billion.

The report added that out of 94 countries and territories having projects in Vietnam in the January-September, Singapore took the lead with $6.3 billion, or 28.4% of the total newly registered     FDI projects, followed by South Korea with $3.9 billion, or 17.7%, and Japan with US$3.3 billion, or 14.7%.

Among 58 cities and provinces having received FDI in the period, the southern province Long An has attracted the largest portion of capital commitments with $3.6 billion, or 16.4% of the total. The northern port city of Haiphong came second with nearly $2.7 billion (12.2%), followed by Ho Chi Minh City (HCMC) with $2.4 million (10.6%).

The majority of FDI projects are concentrated in major cities with adequate infrastructure systems, including HCMC, Hanoi, and Bac Ninh, with the capital city currently standing second nationwide in terms of new projects, or 21.1% of the total, only behind  HCMC with 33.3%.