FDI disbursement reaches an all-time high of $22.4 bln

Disbursed foreign direct investment capital in Vietnam rose 13.5% year-on-year to $22.4 billion in the year to December 20, while newly-registered capital declined by over 18% to $12.45 billion.

Capital expansion of operational FDI projects climbed 12.2% to $10.12 billion. A total 1,107 projects saw adjustments, up 12.4%, the Ministry of Planning and Investment reported on Monday.

Capital contributions for stake acquisitions dropped 25.2% compared to the same period last year to over $5.15 billion, while the number of deals fell 6.1% to 3,566.

Investment for 2,036 newly-registered projects hit $12.45 billion, up 17.1% in number but down 18.4% in value year-on-year.

Total registered capital, which includes newly registered capital, additional capital of operational projects, and capital contributions for stake acquisitions, was nearly $27.72 billion, down 11%.

Manufacturing and processing received the largest amount of registered FDI with $16.8 billion, accounting for 60.6% of the country's total, followed by the real estate sector with $4.45 billion.

Wholesale and retail, processing and manufacturing, and science and technology attracted the largest number of new projects, accounting for 30%, 25.1% and 16.3% of the total, respectively.

Of the 108 countries and territories investing in Vietnam this year, Singapore led the pack with $6.46 billion, or 23.3% of the total, down 39.7% year-on-year.

South Korea ranked second with nearly $4.88 billion, down 1.5%, followed by Japan with $4.78 billion, up 22.7%.

Ho Chi Minh City was the largest recipient in terms of registered FDI with over $3.94 billion, making up 14.2% of the country's total, and up 5.4% year-on-year.

Binh Duong province ranked second with $3.14 billion, accounting for 11.3%, up 47.3% year-on-year. The figures for Quang Ninh, which ranked third, were $2.37 billion, a two-fold increase.

One of the FDI highlights this year is the inauguration of Samsung Electronics' largest Southeast Asia research and development center in Hanoi on December 23. The launch elevated the importance of Vietnam not only as a manufacturing hub but also as a center for research.

The Samsung Electronics HCMC CE Complex in Ho Chi Minh City received approval in June to add $841 million to its investment capital. The complex, now with a total 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.

Another FDI highlight was Danish toymaker Lego Group commencing the construction of its first carbon-neutral factory site worldwide on November 3, located in southern Vietnam, with more than $1 billion in total investment.

Since 1986 when Vietnam introduced its open-door policy, the country has licensed 36,278 FDI projects that are still valid, with total investment capital of nearly $438.7 billion.

The accumulated realized capital of FDI projects is estimated at nearly $274 billion, equivalent to 62.5% of the total valid registered FDI capital.

Exports from the FDI sector, including crude oil, in the period were estimated at nearly $276.5 billion, up 12% year-on-year, accounting for 74.4% of the country's total. Excluding crude oil, the tally was more than $274.1 billion, up 11.8%, making up 73.8%.

The FDI sector's import turnover hit nearly $234.7 billion, up 7.4% and accounting for 65.1% of the country's total.

The sector posted a trade surplus of $41.8 billion this year, with crude oil taken into account. Excluding crude oil, the figure was nearly $39.5 billion.

Meanwhile, the domestic private sector recorded a trade deficit of more than $30.8 billion.

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

“Vietnam has a very strong work ethic and 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.