FDI disbursement grows 16% in nine months

Disbursed foreign investment capital in Vietnam reached $15.4 billion in the year to September 20, up 16.2% year-on-year.

"Foreign-invested enterprises have been recovering and constantly expanding," the Foreign Investment Agency (FIA) stated Monday.

Additional capital invested by FDI projects soared 13.4.% to $8.3 billion in the nine-month period. Strong capital expansion was seen in many high-tech and electronics manufacturing projects including those of South Korean giant Samsung.

Samsung Electronics HCMC CE Complex in Ho Chi Minh City received approval in June to add $841 million to its capital. The complex, now with a total investment capital of $2.84 billion, is its second-largest manufacturing site worldwide for TV screens and home electronics, the largest being in Mexico.

Another unit, Samsung Electro-Mechanics Vietnam in the northern province of Thai Nguyen, got the go ahead for an additional $920 million in February, raising its total investment to $2.27 billion.

Capital contribution for stake acquisitions rose 1.9% to $3.28 billion, while the number of deals went down 4.7% to 2,697.

Newly-registered capital, however, continued to decline. The capital for 1,155 newly-registered projects in the first nine months was $7.12 billion, down 43% year-on-year.

The reasons behind the decline are Covid-19-related travel restrictions; global uncertainties like the geo-political conflict in Europe, surging inflationary pressure, and supply chain disruptions; and the fact that there were few projects with investment capital above $100 million, unlike the same period last year, according to the FIA.

The first nine months of last year witnessed large-scale projects registered like the $3.1-billion LNG-to-power Long An I and II and $1.3-billion O Mon II thermal power projects.

Total registered capital, which includes newly registered capital, additional capital of operational projects, and capital contributions for stake acquisitions, reached $18.7 billion, down 15.3%.

Manufacturing and processing received the biggest volume of registered FDI with $12.1 billion, accounting for 64.6% of the country's total, followed by the real estate sector with $3.5 billion and 18.7%, respectively.

Of the 88 countries and territories investing in Vietnam this year, Singapore led the pack with $4.75 billion or 25.3%, down 24.3% year-on-year. South Korea ranked second with nearly $3.8 billion or 20.3%, down 2.38%.

Japan was at the third position with $1.9 billion or 10.2%, followed by mainland China, Denmark, and Hong Kong.

According to property services company Savills, Vietnam, on a competitive basis versus China, other parts of Southeast Asia or India, offers a relative low-risk environment to do business.

“Vietnam has a very strong work ethic and a very highly educated labor force. We've already seen certainly up in places like Hanoi and Ho Chi Minh City high-end manufacturing in the technology, and electronics marketplace. With that growth of what I would call a base industry and a high-grade base industry in technology and electronics, it attracts investors,” said Christopher Marriott, Savills CEO, Southeast Asia.

Economist Brian Lee Shun Rong at Maybank, Malaysia's largest financial services group, told Forbes Vietnam’s recent business forum that Vietnam, a rising star in the global supply chain, has the potential to become a new tiger in Asia.

Vietnam's GDP growth is estimated at 6.5% for this year and 6.7% next year on strong economic fundamentals, key to fast recovery, Asian Development Bank (ADB) said on September 21. The 2022 figure is the highest in Southeast Asia and equals the Philippines'.

The World Bank on August 8 upped its Vietnam GDP growth estimate to 7.5% for 2022, much higher than the 5.8% it forecast early June.