FDI capital expansion surges 66% in six months

Capital addition of foreign-invested companies in Vietnam during the first half of the year soared 65.6% year-on-year to $6.82 billion, reflecting investor confidence in the country's business climate.

A total 487 projects registered to have capital expansion in the year to June 20, up 5.9% against the same period last year, Foreign Investment Agency (FIA) data shows.

Of these, many are manufacturing and processing projects, especially those in high-tech and electronics industries, the agency noted.

“Surging capital expansion shows foreign investor confidence in Vietnam’s business climate. It also reflects the impact of inflation and rising prices due to political and trade conflicts in the world,” FIA stated in a release.

Capital contribution from foreign investors for stake acquisitions surged 41.4% in the period to $2.27 billion. The number of such acquisitions was 1,707, down 8% year-on-year.

Chairman of EuroCham Alain Cany told The Investor in a recent interview that the chamber's Business Climate Index (BCI) shows increasing confidence in Vietnam's investment climate. It rose to 73 during the first quarter of 2022, its highest level since the fourth wave of the pandemic. This is a 58-point rise from the third quarter of 2021.

“This upward trend is expected to continue next quarter, with business leaders predicting an even more positive outlook,” he said.

However, newly-registered capital has yet rebounded to pre-pandemic levels as an effect from the deployment of Covid-fighting measures in 2021.

As many as 752 foreign-invested projects worth $4.94 billion were newly-registered in the year to June 20, down 6.5% and 48.2% respectively. Pledges indicate future foreign direct investment (FDI) disbursement.

Foreign-invested project disbursement reached $10.06 billion, a 8.9% increase against the same period last year and a record high in five years.

In all, the total of newly-registered capital, expanded capital and capital contribution for stake acquisitions hit over $14.03 billion, down 8.9% year-on-year.

Of this, the manufacturing and processing sector led the pack with $8.84 billion, accounting for 63% of the entire sum. The real estate sector ranked second with $3.15 billion, or 22.5%.

Eighty-four countries and territories invested in Vietnam in the first half of the year, with Singapore being the first with $4.1 billion, making up 29.5% of the total, down 26.6% year-on-year. South Korea placed second with $2.66 billion or 19%, up 29.6%.

Denmark took the third position thanks to Lego Group’s $1.3 billion toy making project, making up 9.4%, followed by mainland China, Japan, and Hong Kong.

Some other major projects recorded in the period included Bac Ninh province-based Viet Nam-Singapore Industrial Park (VSIP), which raised its capital by nearly $941 million, and Korea’s Samsung Electro-mechanics Vietnam Co., which added $920 million to its investment.

In March, Goertek Technology Vina Ltd. in Bac Ninh raised its investment capital to $565.7 million from $260 million. As for Goertek Precision Industry Vietnam Ltd. in Nghe An, its parent Goertek in January decided to add $400 million to the $100 million manufacturing facility, making it the largest foreign-invested project in the central province.