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Vietnam: Foreign Direct Investment Hits 5-Year High in First 6 Months

Mr.Believer Mr.Believer posted on 03/07/2024

According to the Ministry of Planning and Investment, in the first six months of this year, foreign direct investment (FDI) in Vietnam reached approximately USD 10.84 billion, marking an 8.2% increase compared to the same period last year. This represents the highest FDI inflow in the first half of the year over the past five years.

Total registered capital amounted to nearly USD 15.2 billion, up 13.1% from the same period in 2023.

Foreign investors continue to view Vietnam as a crucial investment destination in both the medium and long term, amidst global supply chain restructuring. There has been significant improvement in the quality of investment projects, particularly in sectors such as semiconductors, energy (including solar cells and silicon wafers), component manufacturing, electronics, and high-value-added products. Many of these projects involve new investments and capital expansions.

FDI is concentrated in provinces and cities with advantageous infrastructure, stable labor resources, efficient administrative procedures, and proactive investment promotion. Vietnam's traditional partners predominantly hail from Asia, including Singapore, Japan, Hong Kong (China), South Korea, and China.

Bac Ninh has surged to the forefront due to a major capital adjustment project totaling USD 1.07 billion, raising its total registered investment to nearly USD 2.58 billion, accounting for 17% of the nationwide total. This project involves the establishment, assembly, and testing of semiconductor materials and equipment by Singaporean investors.

Ba Ria - Vung Tau ranks second with nearly USD 1.54 billion, followed by Quang Ninh in third place with total registered investment exceeding USD 1.36 billion. Hanoi, Hai Phong, and Ho Chi Minh City follow in subsequent positions.

Economic expert Nguyen Bich Lam observes that the highest increase in disbursed FDI compared to the same period last year in the past five years reflects foreign investors' fulfillment of commitments in the Vietnamese market and the economy's capacity to absorb and disburse investment capital.

Of note, there is a high number of new projects and newly registered capital. "This is a positive signal, and we expect this newly registered capital to be disbursed promptly, driving economic growth this year and in the coming years," Mr. Lam commented.

However, according to the Ministry of Planning and Investment, future trends in FDI relocation will be influenced by various factors, including new standards and even interventions by some governments to guide investment activities. The flow of FDI is projected to increase slowly and increasingly concentrate on countries with geopolitical linkages, particularly in strategic sectors.

Nevertheless, current assessments from both domestic and international financial institutions indicate that Vietnam's prospects for attracting FDI this year remain positive. Vietnam plays a crucial role and is increasingly reinforced in the diversification strategy of global multinational manufacturers' supply chains. Economic growth is showing more positive recovery, with stable macroeconomic conditions.

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