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Last updated: Thursday, March 23, 2017

 

New FDI Attraction Prospects

Posted: Wednesday, February 15, 2017


Foreign investors are still confident in Vietnam’s investment environment and they will certainly make quicker decisions to seize opportunities in the context of rapidly changing integration.

The Vietnamese economy witnessed certain bright spots in January 2017. The FDI sector continued to positively contribute to overall economic growth. According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, foreign investment value reached US$1.58 billion in January 2017, up 9.5 per cent over the same period in 2016.

Good beginning
Specifically, Vietnam licensed 175 new projects with a total registered capital of US$1.24 billion as of January 20, 2017, up 23 per cent year on year. 76 existing projects registered to add US$179.1 million to their capital base, down 44.4 per cent year on year and 194 M&A deals valued US$165 million. The FDI disbursement value continued to go up, estimated at US$850 million in the reporting period, up 6.3 per cent on last year.

In January 2017, foreign investors invested in 16 industries, led by the processing and manufacturing sector with US$1.04 billion, accounting for 65.5 per cent of total registered capital. The real estate sector came second with US$314.8 million, accounting for 19.8 per cent, followed by the wholesaling and retailing sector with US$88.75 million, or 5.6 per cent of total registered capital.

Only in January, over 50 countries and territories poured capital into Vietnam. Singapore ranked first with US$477.8 million, accounting for 30.1 per cent of total investment value, closely followed by South Korea with US$471.2 million, accounting for 29.7 per cent. China came third with US$338.3 million, or 21.3 per cent.

The biggest FDI project in January was registered by a Singaporean investor, making it the greatest recipient of FDI in the country in the month. The US$284.75-million Vietnam - Singapore Industrial Park III (VSIP III) registered to invest, build and operate infrastructure in the industrial park. This project raised FDI value in Binh Duong province to US$696.3 million in the month, accounting for 43.8 per cent of total FDI capital in the country. Ho Chi Minh City was the runner-up with US$201.2 million, followed by Bac Giang province with US$159.4 million.

Magnet to new capital
FDI flows into Vietnam are showing signs of continued growth. In January, the Provincial People’s Committee of Bac Ninh sent a letter to the Prime Minister expressing that Samsung Display Vietnam Co., Ltd wants to invest extra US$2.5 billion in five years from 2018. The South Korean company will thus raise its investment capital in Bac Ninh province to US$6.5 billion.

Earlier, Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), forecast that such investors as Samsung, Lotte and LG are particularly important to FDI attraction results in Vietnam. Therefore, Samsung’s intention of US$2.5 billion investment showed that are still confident in Vietnam’s investment environment and they will certainly make quicker decisions to seize opportunities in the context of rapidly changing integration.

He stressed that South Korea and Japan remain strategic investment partners because they absolutely have no contradictions in economic and political interests with Vietnam. “They want to cooperate with countries like Vietnam. With economic potential and high-quality human resources, they can help Vietnam develop to a high level,” he explained.

An FDI expert said that the biggest FDI project in January was an industrial zone infrastructure development project carried out by a Singaporean investor which has more than 20 years of experience of developing industrial parks in Vietnam. This is the third industrial park zone project of this investor. The new industrial park will provide business locations for secondary investors. This development showed that foreign investors are very confident in Vietnam’s FDI prospects.

In January, a decree on casino business and decree on horse racing, betting, dog racing and international football were issued by the Government of Vietnam. This will create a strong magnet to FDI flows in the coming time. Particularly, foreign investors have long-waited for casino business in Vietnam.

Accordingly, the Government allows Vietnamese people to play gambles in casino in three years on a so-called pilot basis, starting early March. Investment requirement for a casino project is reduced from US$4 billion to US$2 billion. This is a good sign for both domestic and foreign investors who have sought to invest in casino projects in Vietnam for long.

FDI flows are also expected to be channelled into BOT projects in the electricity industry. In 2016, this sector did not have billion-dollar projects because of unsuccessful negotiations. This year, the power sector hopes to draw to two BOT thermal power projects worth US$5 billion. As a result, FDI attraction will be certainly a bright spot in the economic picture in 2017.

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