Foreign direct investment, along with international trade, is one of the most important vehicles for the international transfer of technology and knowledge to the local firms. Multinational enterprises (MNEs) provide proprietary technology and knowledge to affiliates in the host country and enable the latter to compete successfully with local firms. The spillovers from the foreign affiliates can affect the host country’s economy— thus boosting the human capital and productivity of local firms. These spillover effects typically operate through forward and backward linkages that connect local and foreign firms in the supply chain.
Vietnam is becoming favorite destination for Japanese investors.
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Specifically, Vietnam has 2,600 newly approved projects with registered capital of 21.3 billion USD. Besides, there are 1,188 projects with additional registered capital amounting to 8.51 billion USD, up 49.2% compared to the same period of 2016 and 5,002 times of share purchasing of 6.19 billion USD, up 45.1% compared to 2016.
Also, foreign investors have invested in 19 fields of the economy, in which the industrial processing and manufacturing reached 15.87 billion USD, contributing to 44.2% of total investment. Fields of production and electricity provision have registered capital of 8.37 billion USD, contributing to 23.3% of total investment. In third place is real estate with total registered capital of 3.05 billion USD, contributing to 8.5%.
3 provinces/cities attracting the most FDI are Ho Chi Minh with 6.5 billion USD, Bac Ninh with 3.4 billion USD and Thanh Hoa with 3.17 billion USD. Also in 2017, there are 115 countries and regions investing in Vietnam, with Japan in the first place with total investment fund of 9.11 billion USD, contributing to 25.4% of total investment. Korea is in the second place with total registered capital of 8.49 billion USD, contributing to 23.7%; Singapore is in third place with total registered capital 5.3 billion USD, contributing to 14.8%.
In 2016, Korea was the largest FDI investor in Vietnam with 2 billion USD – projects of Samsung in Bac Ninh, Thai Nguyen and LG in Hai Phong. In the first few months of 2017, Korea continued in the top countries investing heavily in Vietnam. However, at the end of 2017, with many large projects, Japan has taken over as the largest FDI investor in Vietnam, such as Nghi Son 2 thermal power plant, Van Phong 1 thermal power plant, and Nam Dinh 1 thermal power plant.
At present, Korea is in the second place with total registered capital of 8.49 billion USD, contributing to 23.7% of total investment to Vietnam, while Singapore is in third place with registered capital of 5.3 billion USD, contributing to 14.8% of total investment.
