FDI investors Increase Confidence in Vietnam

9:39:20 AM | 10/4/2021

After many consecutive months of decline, FDI flows into Vietnam started to rebound, which affirmed that foreign investors continued to choose Vietnam as their trusted destination.

Stable, safe, and attractive investment destination

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, foreign direct investment (FDI) in Vietnam reached US$22.15 billion in the year to September 20, representing year-on-year growth of 4.4%. Of the sum, new projects were registered with nearly US$12.5 billion, up 20.6%; existing projects were added with over US$6.4 billion, up 25.6%; and equity purchases reached nearly US$3.2 billion, down 43.8%.

While FDI inflows rebounded amid the peak of the Covid-19 pandemic, Vietnam continued to welcome many gigantic projects. Nestlé of Switzerland recently announced to invest more than US$130 million in Vietnam, bringing its total investment to US$730 million in the next two years. Tetra Pak, a 100% Swedish-invested firm, confirmed to invest EUR5 million more to scale up its EUR120 million factory in Binh Duong province. Previously, on August 30, Hai Phong licensed LG Display to invest US$1.4 billion more, bringing its project fund to US$4.65 billion. These positive figures are showing the optimism and confidence of foreign investors in Vietnam’s strong social and economic resilience.

At a recent seminar on "COVID-19 and FDI: Impacts and Prospects", Mr. Choi Joo Ho, General Director of Samsung Vietnam, affirmed that Samsung will not change its investment strategy in Vietnam although the fourth ongoing devastating outbreak of COVID-19 pandemic is causing numerous difficulties for manufacturing plants. Previously, the group only invested in manufacturing and assembling but it will upgrade and invest more in research and development to make Samsung Vietnam a major global production base in the coming time.

As one of the investors that recently decided to expand their investment in Vietnam, Mr. Binu Jacob, General Director of Nestlé Vietnam, emphasized that Vietnam has proved to be a strongly attractive destination for long-term and sustainable investment thanks to the following factors: stable and flexible political background, strategic geographical location, abundant young workforce and active regional and global economic integration.

According to World Bank Senior Economist in Vietnam, Dorsati Mandani, FDI investors are still confident about Vietnam’s economic prospects for many reasons. Signs of resilience show that Vietnam’s economic fundamentals are strong.

Besides, European, American, or South Korean businesses expressed their optimism about the likelihood of Vietnam's early economic recovery in 2021. 47% of surveyed European enterprises planned to scale up business in Vietnam.

Improving enforcement effect, business support

Given difficult challenges caused by the COVID-19 pandemic, the Government, Prime Minister and central authorities have actively supported businesses to deal with them.

According to Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc, the National Assembly, the Standing Committee of the National Assembly and the Government have been making efforts to carry out many solutions to control the pandemic and support enterprises to handle difficulties and obstacles with a lot of workable resolutions and decrees on tax and fee exemption and reduction and relaxed and postponed obligations to the state budget. Prime Minister Pham Minh Chinh announced many directives on prompt actions against the pandemic. Within a week in early September, he had three meetings with ambassadors, business representatives, and investment-intensive organizations in Vietnam.

However, according to Deputy Minister Nguyen Thi Bich Ngoc, to further keep investors, efforts must be made to quickly control the pandemic, normalize business operations and avoid supply chain disruptions in the coming time. In addition, this is an opportunity to improve institutions, governance capacity, and investment and business climate to woo investors.

Vice Chair of Dong Nai Provincial People's Committee Nguyen Thi Hoang said that Dong Nai province, one of the much FDI-attracted localities, worked out a plan to prevent the COVID-19 pandemic in the new context to facilitate businesses and people to gradually restore normal business activities. The province also established a special working group in charge of removing difficulties and obstacles for enterprises.

Bac Ninh province advocates diversifying investment and facilitating cooperation companies. The province has adopted a new model to materialize Resolution No. 50-NQ/TW of the Politburo on orientations to perfect institutions and policies, and improve quality and effect of foreign investment cooperation to 2030, including a focus on encouraging high-tech projects that require less land and labor and ready premises; providing ready high-quality human resources for investors; completing mechanisms, reforming procedures and policies, making the most of legal preferential policies; and solving any emerging problems.

Stressing the message sent to investors, Deputy Minister Nguyen Thi Bich Ngoc affirmed that when Vietnam carries out a group of short-term and long-term solutions, the Vietnamese business and investment environment will be further improved. Vietnam's strong foundations will help overlook short-term Covid-19 pandemic problems and investors will continue to choose Vietnam as a destination.

By Thu Ha, Vietnam Business Forum