Vietnam looks to remain strong competitor for global FDI

Vietnam remained an exception in attracting foreign direct investment (FDI) on the global and regional scale last year. The Southeast Asian economy was expected to attract a large amount of FDI this year, said economists and analysts.

Monday, February 26, 2024 15:22

Vietnam looks to remain strong competitor for global FDI ảnh 1

Workers at a semiconductor factory located in HCM City. (Photo: VNA)

Hanoi (VNS/VNA) - Vietnam remained an exception inattracting foreign direct investment (FDI) on the global and regional scalelast year. The Southeast Asian economy was expected to attract a large amountof FDI this year, said economists and analysts.

Data from the United Nations Conference on Trade and Development(UNCTAD), according to Rong Viet Securities Company (VDSC), showed globalFDI in 2023 increased by 3% compared to the year before, reachingover 1.365 trillion USD, mainly attributed to a significant increase in EuropeanUnion countries. FDI in the Asia-Pacific, traditionally a major force of globalinvestment, recorded a 9% decline, amounting to 849 million USD, includinga 6% reduction in China, a 47% reduction in India and a 16% reduction in ASEAN.

Vietnam, Thailand and Indonesia, however, maintained impressivegrowth in FDI throughout 2023 with increases of 32.1%, 42% and 13.7%,respectively, with Vietnam topping the chart in FDI amount recorded.

"Vietnam remains an exception in attracting FDI in the globaland regional context in 2023," said VDSC.

According to the Foreign Investment Agency, underthe Ministry of Planning and Investment (MPI), the total registered FDIcapital in Vietnam reached 36.61 billion USD in 2023. Theaccumulated realised capital of foreign investment projects in theSoutheast Asian economy was estimated at 23.18 billion USD, a 3.5% increasefrom the previous year, setting a new national record inFDI disbursement.

The number of newly registered projects in 2023reached 3,188, a 56.6% increase compared to the same period in theprevious year, with the number of registered projects with increasedcapital growing by 14.0%. Average registered capital per new project increasedslightly by 3.6% compared to 2022.

According to fDi Markets, a global monitor of FDIsources, FDI into Vietnam's processing and manufacturing industryaccounted for 64% of the total registered FDI capital, reaching 23.5billion USD, a 39.9% increase compared to the same period last year.

Energy remained a bright spot in 2023 with large projectsincluding the 1.99 billion USD Thai Binh LNG Power Plant by Japan, the 1.5billion USD photovoltaic cell production project by Chinese Jinko Solarand the 1.05 billion USD electronic component manufacturing projectsby LG Innotek (the Republic of Korea).

As of January 20, 2024, the total FDI capital in Vietnam reachedapproximately 2.4 billion USD, a 40.2% increase compared to the sameperiod in 2023.

Newly registered capital reached 2.0 billion USD, a 66.9% increasefrom the same period. In comparison, additional registered capital and capitalcontribution decreased by 23.1% and 33.1%, reaching 35.4 million USD and 16.5million USD, respectively.

The significant increase in FDI in January 2024 has been said tobe mainly due to large-scale real estate investment projects.

A major urban development project in Hanoi with a total capital of662 million USD accounted for 53.9% of the total registeredinvestment capital attracted in the first month of the year in the real estatebusiness sector. Excluding this sudden surge, registered investment capital inthe year's first month was equivalent to the same period in 2023. However,actual investment capital for foreign investment projects was estimated to reach1.5 billion USD, a 9.6% increase.

Thanks to the positive growth in FDI throughout 2023, thecountry's disbursement rate of FDI capital has significantly improved. In 2023,FDI disbursement reached 23.2 billion USD, a 3.5% increase comparedto 2022.

"Growth in FDI in January 2024 continued to reinforceour view that FDI disbursement may continue to accelerate due to the largeamount of FDI registered in 2023 and multinational companies continuing todiversify their investments out of China. Vietnam looks to remain anattractive investment destination due to advantages such as its strategiclocation, various free trade agreements (FTAs), and competitive labour costs.Upgrading diplomatic relations with the United States and Japan will help boostinvestment in Vietnam," said Hanoi-based VietCap Securities Company.

According to UNCTAD's forecast, global FDI flows may experiencemodest growth in 2024 due to predictions about inflation and borrowing costs instable developing markets. However, negative developments are still overshadowingthe positive direction, related to political risks, high debt levels incountries, and the risk of declining global economic growth. In addition, in2024, voters in more than 80 countries and territories (representing over halfof the world's population) are expected to vote in elections, which will alsoimpact global investment.

VDSC experts said the prospects for attracting FDI in 2024 willremain positive due to Vietnam's position as a potential destination forstrategic diversification of supply chains by global manufacturers, thecountry's trend of positive economic growth, and a stable politicalenvironment./.

VNA

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