FDI expected to bounce back with improved investment climate

Vietnam’s continued efforts to improve its business and investment climate is expected to help the country to lure in further foreign direct investment (FDI), which is considered one of the key impetuses for economic growth.
FDI expected to bounce back with improved investment climate ảnh 1Illustrative image (Source: VNA)
Hanoi (VNA) - Vietnam’scontinued efforts to improve its business and investment climate is expected to helpthe country to lure in further foreign direct investment (FDI), which isconsidered one of the key impetuses for economic growth.

On February 24, the Vinh Phuc Industrial Parks Management Boardgranted an investment registration certificate to IL San Precision Vina Companyfrom the Republic of Korea to develop a 500,000 USD IL San Vina factoryproducing electronics products in the northern province’s Binh Xuyen IndustrialPark (IP).

Earlier, on February 21, the Vinh Phuc Industrial ParksManagement Board also granted a certificate to Italy’s Piaggio Vietnam toincrease its investment capital by an additional sum of 75 million USD, raisingits total investment capital in the province to 165 million USD.

According to the Vietnamese Ministry of Planning and Investment(MPI), Vinh Phuc is among top destinations of foreign investment in Vietnam.
“Despite difficulties caused by disruptions in supply chains andgeopolitical uncertainties, Vietnam remains attractive to foreign investors,”said Do Van Su, vice director of the MPI’s Foreign Investment Agency.

Specifically, in January when the Tet holiday took place and domesticproduction activities were almost halted, Vietnam reported 153 newly registeredprojects, worth 1.2 billion USD, representing a 48.5% increase in the number ofprojects and a 3.1-fold rise in value. This is a sign of the confidence offoreign investors in the investment environment of Vietnam, the FIA said.

Also in January, new capital added to operational projectswitnessed a year-on-year drop of 76% to 306.3 million USD, while capitalcontributions and stake purchases fell 61% year on year to more than 174million USD, resulting in a 19.8% year on year decrease in the total FDIcapital to 1.69 billion USD.

In the period from January to February 20, total newlyregistered and newly added FDI and capital contributions and stake acquisitionsin Vietnam hit 3.1 billion USD, down 38% year on year.

However, the newly registered capital surged 2.8 times year onyear to 1.76 billion USD, and capital contributions and stake acquisitionstouched 797.9 million USD – up 3.7% year on year. Meanwhile, newly addedcapital dropped 85.1% year on year  to 535.4million USD.

The MPI reported that as of February 20, accumulated FDI capitalin Vietnam hit nearly 442.3 billion USD in over 36,600 valid projects.

According to the ministry, Vietnam expects to lure in as much as36-38 billion USD worth of FDI this year, up strongly from the figure of nearly27.72 billion USD recorded last year. FDI will continue acting as one of thekey drivers of economic growth.

The MPI is also expecting that FDI disbursement in this yearwill likely reach as much as 22-23 billion USD, almost the same as 22.4 billionUSD last year.

According to MPI, the key factors for FDI to continue increasingthis year are the  economic growth in2022 and big efforts of the government, ministries, and localities inameliorating the domestic business and investment environment, in addition to significantadvantages brought by free trade agreements that Vietnam has signed.

One of the positive factors in Vietnam’s FDI landscape this year is that manyprojects registered last year will come into operation this year, helpingcreate hundreds of thousands of jobs.

Andrew Jeffries, ADB country director for Vietnam, said thatthere are also many reasons for optimism about Vietnam’s economic prospects in2023.

“In Vietnam, economic activities recovered faster than expectedfollowing the removal of COVID-19 restrictions and the achievement ofnationwide vaccine coverage,” Jeffries said. “Despite a volatile stock marketlast year, FDI has been strong and has even picked up. There is no doubt thatVietnam’s economic prospects for the medium and long term remain verypositive.”

“FDI investors think long-term when they make their investments,and we noted that continued strong interest in Vietnam as an FDI destination.That clearly shows a long-term vote of confidence in the country. With soundeconomic fundamentals and strong leadership, we strongly believe that Vietnamwill be able to brace the headwinds in 2023 and beyond,” Jeffries stressed.

MPI Minister Nguyen Chi Dung said that Vietnam has adopted aselective approach to attracting foreign investment inflow which willcontribute to the country's implementation of the sustainable developmentstrategy.

Priority will be given to projects using new and greentechnologies, with high added value, modern corporate governance, and highspill-over effects, ensuring technology transfer, and being integrated withglobal supply and production chains, Dung said.

A recent survey conducted by the MPI revealed that 76% ofenterprises, both domestic and foreign enterprises reported that they aresatisfied with the Vietnamese government’s support policies.

They were most satisfied with the VAT waiver and reductionpolicies, and those aiming to stabilise gasoline prices, improve the workpermit issuance process and customs clearance procedures, and supportimport-export and workers’ livelihoods./.
VNA

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