Vietnam still a magnet for quality FDI: HSBC

Vietnam continues to be on the frontline of absorbing quality foreign direct investment despite severe trade challenges, a new HSBC report says.

Titled “ASEAN Perspectives FDI: Keep calm and carry on,” the report says greenfield FDI rose 40% year-on-year in the first eight months of 2023, with manufacturing alone accounting for 85% of new investments.

In particular, new FDI into the manufacturing sector so far this year has surprisingly exceeded that of the whole year for the past three years.

“Despite a trade downturn, the trend provides hopes for Vietnam to see a strong rebound when the cycle turns,” the report says.

Data from the Vietnamese Ministry of Planning and Investment shows that foreign businesses committed $12.3 billion for Vietnam’s manufacturing and processing sector in the eight-month period, up 14.7% from a year earlier.

Since Vietnam’s Doi moi reforms in 1986, the country has received substantial FDI inflows, turning itself into a rising star in the global manufacturing supply chain.

While much of the initial investment entered the lower value-add textile and footwear space, Vietnam quickly climbed up the value chain and has since become an electronics assembly hub.

Much of the nation’s tech success stems from Samsung’s presence, with an investment of $18 billion over the last two decades. Half of Samsung’s global smartphone production happens in Vietnam. This has also incentivized other tech giants, particularly Apple, to expand their operations here, the report notes.

According to media reports, Apple has relocated 11 of its audio device production facilities to Vietnam. Meanwhile, Intel has initiated the expansion of its Phase 2 chip testing and packaging plant in Ho Chi Minh City.

The recently-concluded visit by President Joe Biden to Hanoi is expected to catalyze high-quality FDI into Vietnam. Arizona-based Amkor Technology will start operations of a $1.6-billion factory in the northern province of Bac Ninh next month. Semiconductor giant Marvell Technology plans to open a new facility in Vietnam next year.

Source: The Investor