FDI Attraction in Spotlight amidst Pandemic

10:31:50 AM | 25/12/2020

Despite the severe impacts of the COVID-19 pandemic, Vietnam still managed to gain remarkable achievements in FDI attraction. This is one of bright spots that has helped drive economic growth.

Encouraging outcome in FDI attraction

The COVID-19 pandemic resulted in mobility restrictions but Vietnam still obtained many positive outcomes in foreign investment attraction. According to the report released by the Ministry of Planning and Investment, foreign investors registered to invest US$26.43 billion in the year to November 20, equal to 83.1% of the same period in 2019. They disbursed US$17.2 billion to invest in fresh projects, expand their operations and buy equity in the period, equal to 97.6% of a year-ago value.

By sector, investors registered to invest in 19 industries, led by the processing and manufacturing sector with over US$12.7 billion, or for 48.2. % of the total registered FDI value. By partner, 109 countries and territories invested in Vietnam, led by Singapore with nearly US$8.1 billion, accounting for 30.6% of total FDI value in Vietnam, followed by South Korea, China, Japan, Taiwan and Thailand.

In addition, another good signal is the shift of investment flows of large multinational corporations toward Vietnam. For example, Hanwha Group of South Korea, among the Top 500 largest corporations in the world, inaugurated an aircraft parts manufacturing factory in Hanoi. Japan's Yokowo Group, which manufactures equipment for motor vehicles, has moved to Ha Nam province. Foxconn is also building a production line for iPad tablets and MacBook computers in Bac Giang province, planned to go into operation in 2021. These moves came after much optimistic information about the shift of investment flows to Vietnam. Mr. Do Nhat Hoang, Director of the Foreign Investment Agency (FIA), Ministry of Planning and Investment, said this move will bring many opportunities for Vietnam.

In addition, by joining many new-generation free trade agreements (FTAs) such as the EU - Vietnam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), Vietnam has a great opportunity to integrate more deeply into the world production network and select quality FDI projects to move forward in global value chains.

Improving investment environment

Vietnam has a great opportunity to accommodate foreign investment, especially as investment flows moved out of China due to the COVID-19 pandemic and the U.S. - China trade war. However, to catch this investment wave, Vietnam must further improve the business investment environment, prepare necessary conditions and strengthen effective investment promotions. This is considered a key to attracting long-term and sustainable FDI inflows.

Mr. Hoang said, to catch the investment wave as expected requires the coordination and participation of many ministries, branches and localities. Vietnam is reviewing the industrial park land fund, training human resources, building action programs, promoting supporting industries, and connecting with major FDI projects to solve existing difficulties and accelerating the process of creating an open corridor for investors. In addition, the Government has amended the Law on Enterprises and the Law on Investment to simplify procedures and create a clear open corridor for foreign investors to come to Vietnam for investment and business cooperation. The Government has also established an investment promotion workgroup led by Deputy Prime Minister Pham Binh Minh, assisted by Minister of Planning and Investment Nguyen Chi Dung, to remove investment bottlenecks and attract large-scale quality high-tech projects.

In particular, Prime Minister Nguyen Xuan Phuc hosted a private meeting with business associations to learn about difficulties and problems facing businesses and investors in this challenging year. At the meeting, the Prime Minister affirmed that he would request joint efforts for the best investment environment. In particular, he would check whether local commitments to investors are properly implemented. PM Phuc also pledged that Vietnam's policy system in the coming time would focus on investor facilitation.

In addition to improving the investment environment, in order to promote FDI inflows into Vietnam, the Ministry of Planning and Investment has made great efforts in the past time to implement measures to extend an arm to foreign investors, like organizing online seminars with Japanese enterprises and with investment funds, signing cooperation agreements with JETRO (Japan) and with UOB Bank (Singapore). Through investment promotion, many big enterprises expressed their interests in Vietnam. According to experts, this FDI inflow will positively help Vietnam's growth this year and beyond.

By Ha Linh, Vietnam Business Forum