FDI: Prepare for a spectacular reverse

Vietnam’s economy will ‘turn upstream’

Recently, Mr. Paulo Medas – Head of Delegation in charge of Vietnam at the International Monetary Fund (IMF) said that Vietnam is performing better than most countries in the world, forecasting the economy of the country. Vietnam will recover in the second half of 2023 after exports start to recover and the government’s supportive policies come into play.

“Despite the slowdown in growth in the context of global economic difficulties, Vietnam is still considered an attractive destination for foreign direct investment (FDI) and is performing better than most. other countries in the world” – IMF commented.

This organization also predicts, Vietnam’s economic growth will reach about 4.7% for the whole year, inflation is expected to be controlled below the target of 4.5% of the State Bank. In the medium term, after structural reforms are carried out, Vietnam’s economy can achieve a high growth rate again.

DBS – Singapore’s leading multinational bank also shared this view: “Vietnam’s growth in 2023 is slowing amid global ‘headwinds’, however, its status as ‘FDI darling’ ‘ in the manufacturing sector remains intact”.

“We believe that Vietnam’s economy in the first quarter of 2023 has bottomed but will gradually recover in the second half of 2023” – DBS report writes – “Despite the cyclical headwinds, FDI will remain a distinctly structural headwind in the context of global supply chain diversification.”

According to DBS, Vietnam’s “FDI darling” position in the manufacturing sector remains intact, despite the “headwinds”.

In the long term, researchers at Harvard University’s Growth Laboratory (USA) say that Vietnam, along with China, India, Indonesia and Uganda is expected to be the fastest growing economies in the world. next decade.

“In Asia, a number of Asian economies have reached the economic level needed to drive the fastest growth over the next decade, through 2031. Led by China, Cambodia, Vietnam, Indonesia, Malaysia and India” – The researchers said.

FDI attraction: Vietnam leaps 95 places in 34 years

According to the World Bank (WB), if in 1989, the amount of FDI into Vietnam ranked 9/10 in ASEAN and 123/160th in the world, by 2022, that is 34 years later, Vietnam ranked 3/10 in ASEAN and 28th in the world. Thus, if calculated on a worldwide scale, Vietnam has jumped up to 95 places.

Besides, according to DBS, in the first half of 2023, total newly registered FDI into Vietnam increased by about 30% over the same period last year. In particular, new FDI inflows into the manufacturing sector increased sharply, showing that foreign investors’ confidence in Vietnam’s long-term potential has not diminished.

Experts say that Vietnam is holding “trumps” to attract FDI “eagles”. For example, Vietnam’s 3 steps up in the Global Peace Index is a positive signal that strengthens the already very open and dynamic business and investment environment for FDI enterprises.

A typical example of the attractiveness of the investment environment in Vietnam are two projects with a total capital of up to 250 million USD (about 5,800 billion VND) of Foxconn Group – a leading electronic equipment manufacturer. of Taiwan (China).

Accordingly, this group will build two new factories in Quang Ninh province, including an electric vehicle (EV) component factory and an electronic component assembly factory. Foxconn is also planning to establish a factory in Nghe An province with an initial investment of 100 million USD.

For Foxconn, the facility in Vietnam is an important location in the group’s global footprint.

Huge FDI from East Asian ‘eagle’

According to data from the Foreign Investment Agency – Ministry of Planning and Investment, as of July 20, 2023, the total newly registered capital, adjusted and contributed capital to buy shares, buy capital contribution of investors Foreigners in Vietnam reached nearly 16.24 billion USD, up 4.5% over the same period in 2022 and 8.8 percentage points higher than in the first 6 months of the year.

In July 2023 alone, there were 94 countries and territories investing in Vietnam, of which Singapore took the lead with 3.64 billion USD, followed by South Korea (2.34 billion USD) and China. ($2.33 billion).

At the end of June, a delegation of 205 Korean businesses went to Vietnam to look for investment opportunities. At the recent Vietnam – Korea Business Forum, Vietnamese – Korean businesses exchanged more than 100 MOUs on cooperation.

Details of these memorandums of understanding are not disclosed, but economic experts say that this is the basis for investment cooperation between Vietnam and Korea to enter the “boom” period of billion-dollar projects. .

Worth mentioning, if Korea’s total FDI into Vietnam in the first 6 months of the year reached 1.2 billion USD, by July 2023, this figure had reached 2.34 billion USD. Thus, in just 1 month, Korea has invested more than 1 billion USD in Vietnam, surpassing both Japan and China to become the second largest FDI investor in Vietnam in 7 months.

Korea is one of the “eagles” of FDI that has poured a huge amount of capital into Vietnam. The previous statistical data showed that, if in 2013, the investment capital from Korea into Vietnam only reached 3.8 billion USD, only 1 year later, this level nearly doubled, to 6.1 billion USD. USD, making Korea the largest investor in Vietnam.

Then, from 2015 to 2019, Korean investment in Vietnam increased steadily over the years.

From 2020-2022, due to the impact of the COVID-19 pandemic and the global geopolitical situation, investment capital from Korea into Vietnam has decreased to 4.88 billion USD. However, Korea is still the most active partner in investment, capital contribution and share purchase in Vietnam (accounting for 20.4% of new projects, 32.6% of adjustments and 34.1% of new projects). capital contribution, share purchase).

Notably, if before, Korea’s FDI projects in Vietnam were mainly small and medium-sized, but now, there have been a series of large-scale investment projects. It can be said that Vietnam has become a global production base for many leading Korean corporations.

With new developments, the quantity and quality of foreign investment inflows into Vietnam is being significantly improved. Experts say that the prospect of increasing foreign capital into Vietnam in the near future will be quite high, contributing to further boosting the economy.

Source: Vietnam Posts English