Investor confidence drives FDI disbursement in Vietnam to record high

The rising confidence of foreign investors in the Vietnamese business environment has driven foreign direct investment (FDI) disbursement to its highest level in five years at nearly US$20 billion during the first eleven months, a year-on-year increase of 15%.

Production at Rhythm Precision Vietnam at Noi Bai Industrial Park. Photo: Pham Hung/The Hanoi Times

During the period, the majority of actual FDI was poured into the manufacturing and processing sector, which accounted for 78.8% of the total, or $15.52 billion.

According to Koen Soenens, director of the Business and Marketing Department at DEEP C Industrial Zone in Haiphong, 90% of the available lands have been secured by investors for the construction of manufacturing plants, a stark contrast compared to last year.

Vietnam’s economic outlook remains bright following the subdued Covid-19 situation since March, while investors from Europe and the US are still actively looking for long-term and safe investment destinations.

He said that Vietnam’s diversified network of free trade agreements with major economic powers continues to be the country’s competitive edge.

In early November, LEGO Group started the construction of its US$1-billion factory in the Southern province of Binh Duong.

At the ceremony, LEGO Vice President Prebn Elnef noted that the Vietnam plant would be the sixth worldwide but the first carbon neutral. Elf expected that once completed, the plan would provide LEGO’s toys to not only Vietnam but also the entire Southeast Asian region.

Data from the Foreign Invested Agency (FIA) revealed total FDI commitments to Vietnam as of November 20 stood at $25.14 billion, a decline of 5% year on year.

Despite a lower figure, the total number of fresh projects went up by 15% to 1,812, worth $11.52 billion.

The FIA suggested excluding two large-scale projects from last year, including the LNG Long An I and II at $3.1 billion and the O Mon Thermal Power Plant No.II at $1.3 billion, Vietnam’s total registered FDI would have increased by 19.3% year on year during the first 11 months of 2022.

Among economic fields, the manufacturing and processing sector attracted the largest FDI, with $14 billion, accounting for 66.5% of the total, followed by real estate with $2.76 billion, or 13.1%.

FIA also highlighted the injection of additional funds worth $9.54 billion into 994 ongoing projects, a year-on-year increase of 23.3% in value and 13.3% in a number of projects.

"The increase in FDI in existing projects is a positive sign demonstrating foreign investors' confidence in Vietnam's business and investment environment amid the gloomy global economic outlook," the agency stated.

EuroCham Chairman Alain Cany told The Hanoi Times the European businesses’ commitments to Vietnam’s market remain high given the country’s strong push for green growth transition and attracting high-quality FDI.

“The Vietnamese Government is turning commitments into action, along with creating a favorable environment in terms of legal and financial aspects to accelerate the energy transition process toward sustainable growth,” he said.

FDI to Hanoi increases by 12%

In November, Hanoi attracted 42 new FDI projects with a total registered capital of $20.7 million, along with 18 others subject to additional funds of $217.2 million. Foreign investors also contributed $20.4 million to purchase stakes in 26 projects.

Overall, investors committed $1.54 billion in FDI to Hanoi during the 11 months, up 11.6% year on year. This included $206 million in 382 new projects, $791 million being pumped into 181 ongoing projects, and $543 million in 356 projects in merger and acquisition activities.