Hanoi remains favorite destination for FDI amid Covid-19

Hanoi targets to attract US$30-40 billion in FDI in the 2021-25 period, in which the city is expected to disburse US$20-30 billion, according to the Hanoi Promotion Agency (HPI).

Secretary of the Hanoi Party Committee Vuong Dinh Hue at the "Hanoi 2020 - Investment & Development Cooperation". Photo: Pham Hung.

The city expects the rate of enterprises using modern technologies and corporate governance model to increase by 50% against  2018, along with an increase of localization rate to over 30% by 2025.

While setting a goal of attracting high amount of FDI capital, HPA Director Nguyen Gia Phuong said the city would stay selective in attracting the foreign investment capital.

“Hanoi aims to attract high quality FDI from South Korea, Singapore, Taiwan, the US, Europe, Australia and New Zealand in the coming time,” he noted.

In the meantime, the city is stepping up its efforts in preparing for the incoming wave of investment capital, including a plan to develop supporting industries by 2025 and building new industrial parks.

The city targets to accelerate the establishment of an e-government model to create more convenience for the business community in realizing administrative procedures.

Impressive results

According to the HPI, while the Covid-19 pandemic has led to a sharp decline in the amount of investment capital globally, Hanoi remained a favorite investment destination in 2020,

“Hanoi’s authorities have been actively organizing trade and investment promotion conferences, as well as taking drastic measures in improving the city’s business environment,” stated the agency.

In the 2016-20 period, Hanoi was the host of four investment attraction and development cooperation conferences that resulted in 264 investment projects with a combined registered capital of VND854 trillion (US$36.58 billion).

At the most recent conference in June 2020, foreign and domestic investors committed a total of VND405.57 trillion (US$17.6 billion) in investment capital in 229 projects, an increase of VND270.45 trillion (US$11.58 billion) against last year’s event.

A report from the municipal Department of Planning and Investment revealed during the 2016-19 period, foreign-invested companies paid US$3.41 billion in taxes and created jobs for 310,370 locals, or 11% of the total workforce.

Hanoi was the top destination in Vietnam for FDI firms in two consecutive years of 2018-19, in which the FDI commitments reached US$8.7 billion in 2019.

During this period, 99,503 new enterprises were established with with registered capital of VND1,225 trillion (US$52.48 billion), up 24% in quantity and 118% in value against the last five-year period.

In the first 11 months of 2020, Hanoi was home to 24,600 new enterprises with registered capital of VND303.3 trillion (US$13 billion).

“Hanoi already possesses many key factors that are attractive to higher quality FDI. The current environment of global supply chain changes  as a result of the Covid-19 pandemic  providing a good opportunity for the city to further prioritize FDI inflows in line with its development strategy,” said Kyle Kelhofer, IFC Regional Manager for Vietnam, Cambodia, and Lao.

Takeo Nakajima, chief representative of the Japan External Trade Organization (JETRO) in Hanoi cited a survey of the agency that showed 41% of Japanese firms are planning to expand the operation in Vietnam in the next three years.

Hanoi attracted nearly US$2 billion in FDI in 2020, including US$662 million from 464 new projects and US$1.24 billion pumped into 132 existing projects.