Manufacturing and the processing industry is attracting the most investment capital from foreign investors and this trend has generated positive ripple effects on Vietnam’s economic restructuring process, as expected.
The reviving real estate market has also become a target of investors from Japan, South Korea, Malaysia, Singapore and other countries as it holds huge potential for development in various segments, particularly office, hotel and residence.
Noticeably, the FDI sector is playing a greater role in establishing and sustaining trade surplus in the past three years and maintaining growth motivations for the economy.
Geographically, South Korea, Hong Kong and Japan remained major foreign investors in Vietnam. Bac Ninh and Hai Phong have become favourite addresses for foreign investors. Remarkably, FDI flows were running into southern localities like Binh Duong province, Ho Chi Minh City and Dong Nai province where riotous worker strikes ruin many production bases in May and June when China escalated East Sea dispute tensions.
Particularly, Russia is emerging as a strategic investor in Vietnam as it focuses on important fields such as energy, oil and gas and supports Vietnam to build a totally new industry, nuclear industry. This will open up a "new horizon of cooperation" of Russia and Vietnam as Russian President Vladimir Putin stressed just before his visit to Vietnam in early 2014.
In addition, the amount of FDI tends to increase from corresponding periods of previous years, particularly disbursement value and added value. While PTT Group of Thailand has the intention to invest US$27 billion into Nhon Hoi oil refinery in Nhon Hoi Economic Zone, Binh Dinh province, the US-based ExxonMobil Group is planning to invest US$20 billion into a gas - electricity - fertiliser complex in Quang Ngai province. If these two titanic projects are approved in 2014, the picture of FDI attraction will dramatically change.
After signing the Vietnam - US Bilateral Trade Agreement (BTA) in 2000, and eight other regional and bilateral free trade agreements (FTAs), Vietnam is negotiating FTAs with 10 countries and market regions - key export markets of Vietnam, including the Trans-Pacific Partnership (TPP), FTA between Vietnam and the Custom Union of Russia, Belarus and Kazakhstan (VCUFTA), EU - Vietnam FTA (EVFTA), FTA between Vietnam and European Free Trade Association (EFTA: Iceland, Liechtenstein, Norway and Switzerland), Vietnam - South Korea FTA (VKFTA), Regional Comprehensive Economic Partnership (RCEP) between ASEAN and six partner countries (India, South Korea, Japan, New Zealand, Australia and China) and ASEAN - Hong Kong FTA AHKFTA). The combination of synergised effects of these agreements (coupled with the compliance to negotiation principles of respecting political institutions, ensuring benefits, taking into account development gaps and suiting the enforcement capacity of the country) and gradual global economic recovery (according to the World Bank, the global economic growth is 3 percent and 3.3 percent in 2014 and 2015, respectively, higher than 2.2 percent in 2013 while energy prices respectively fall 1 percent and 0.8 percent and non-energy commodity prices respectively drop 0.3 percent and 0.9 percent) will bring practical benefits to the people, businesses and the entire economy, especially with respect to expanding export markets (particularly for key commodities like agricultural products, seafood, apparels and footwear), attracting foreign investment, enhancing transparency and improving the business and investment climate to help the economy operate more effectively. This also enables Vietnam to diversify markets and partners to avoid excessive concentration on a certain area, thus boosting economic growth sustainability.
The reality is proving drastic and synchronous measures of the Government and the strong involvement of central and local authorities in compensating damages, preparing clean land fund with synchronised and modernised infrastructure, reforming administrative procedures in all stages, operating the one-door mechanism, attracting and guiding investors, speeding up the equitisation of State-owned enterprises (SOEs), uplifting foreign ownership limits, loosening regulations on mergers and acquisitions (M&A), project transfer to foreign investors on financial - property markets, reforming tax procedures, harmonising, modernising and facilitating customs, controlling inflation, stabilising macro economy, creating a more favourable and transparent environment for investors, prioritising the use of high technologies and new technologies. These efforts enhance the confidence and trust of foreign investors in the investment and business environment in Vietnam.
The above trends show that Vietnam’s FDI attraction is very optimistic. The country had overcome the most difficult phase in FDI attraction, lasting from 2008 to 2012, especially prevailing over psychological pressures arising from dispute tensions in the East Sea. Minister of Planning and Investment said FDI value attracted in 2014 will not be lower than that in 2013.
New developments are opening up opportunities, motivations, outlooks and expectations of FDI attraction and economic development in Vietnam.
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