Foreign investors registered to invest US$11.18 billion in Vietnam in the year to end-September, down 25 percent from the same period of 2013. But, the value of disbursed capital increased and new developments showed that Vietnam still has a lot of opportunities to attract FDI in the coming years.
South Korea was the biggest foreign investor in Vietnam in the first nine months of 2014 with US$3.55 billion, accounting for 31.8 percent of total FDI investment in the country. Hong Kong ranked second with US$1.52 billion, accounting for 13.6 percent. Japan ranked third with US$1.43 billion, accounting for 12.9 percent, followed by Singapore with US$1.07 billion, or 9.6 percent of the total.
Magnet from real estate
The Foreign Investment Agency (FIA) under the Ministry of Planning and Investment said the processing and manufacturing sectors drew 571 FDI projects with US$ 7.7 billion, accounting for 70 percent of the total FDI capital registered in the nine-month period. This proved that foreign investors have seen Vietnam as an attractive production base. In September alone, Binh Duong province granted investment licences to 37 FDI projects with nearly US$380 million. Two notable projects included Southern Textile Joint Venture Company and Kingtec Vietnam Industry Co., Ltd, which manufactures medical devices. Also in that month, Quang Ninh province handed the investment certificate to a US$300-million yarn production project in Texhong Hai Ha Industrial Park to Texhong Ngan Ha Science - Technique Co., Ltd. Many garment and textile companies are increasing their investments in Vietnam to tap benefits when Vietnam signs Trans-Pacific Partnership (TPP) Agreement.
The real estate sector attracted 27 projects with US$1.2 billion, ranking second amongst sectors with foreign-invested capital in the reporting period. The construction sector received US$612.1 million, ranking third. CBRE, a property market research company, said “Hotels are seeing good business performances and this will potentially attract more investors. Prolonged unrest in Thailand and Hong Kong showed the redirection of tourists to Vietnam.
Real estate in Vietnam is attracting the attention of foreign developers and investors. Mr Robert Mclntosh, Executive Director of CBRE Hotels Asia Pacific, said, "Vietnam has witnessed many big hotel and resort investment projects since the end of May 2013. Foreign investors are being fascinated by investment opportunities in Vietnam.”
Game played by old players
South Korea, Japan and Singapore remain the biggest investors in Vietnam. In the first nine months of 2014, South Korea invested US$3.22 billion in Vietnam, accounting for 31.5 percent of total foreign investment, followed by Japan with US$1.27 billion, accounting for 12.5 percent.
According to the Korea Chamber of Commerce in Vietnam (KorCham), more than 3,300 Korean companies are currently doing business in Vietnam and more companies are planning to make inroads into the country.
Capital flow from South Korea is forecast to continue to rise in Vietnam as more corporations are expanding their investments here. Most recently, Samsung Group added more than US$1 billion to its Samsung Display project in Bac Ninh province. The firm is also preparing plans to invest over US$1 billion in HCM City to expand its research and development. Currently, Samsung Thai Nguyen Project has disbursed about US$1.4 billion and Samsung Bac Ninh (SEV) also expended US$1.73 billion.
Lotte Group recently opened its over US$400 million hotel - office - residence complex called Lotte Centre Hanoi. Lee Jong Kook, CEO of Lotte Coralis Vietnam, affirmed that he is sure of success in Vietnam.
The investment wave from South Korean conglomerates may be raised by LG. When big corporations invest in a country, they think of not only benefits but also of accompanied benefits like labour costs and tax rates to boost their price and quality competitiveness.
Japanese investors also have equally ambitious plans in Vietnam. A major investment "wave" of Japanese SMEs into supporting industries in Vietnam is taking shape. A lot of Japanese business delegations have worked with the Ministry of Planning and Investment, Vietnam Chamber of Commerce and Industry (VCCI) and other agencies of Vietnam to study infrastructure and management policies before they make investment decisions in Vietnam.
Currently, many Japanese investors are very interested in the Vietnamese market. Not only small and medium-sized businesses, but well-established corporations of Japan like Sojitz, IHI and Itochu also studied investment expansions in Vietnam when they met with the Ministry of Planning and Investment as well as localities. In early 2013, IHI Group decided to invest US$48 million to build a steel structure, concrete and industrial machine factory in Dinh Vu Industrial Park, Hai Phong City. Sojitz invested in more than 20 factories across Vietnam. Recently, the firm revealed a plan to invest US$180 million into a pulp factory in Quang Ngai province.
Vietnamese
