Vietnam is an attractive destination for foreign investors thanks to its high, stable growth, large domestic market and young, well-educated human resources, said Paulo Medas, head of the International Monetary Fund (IMF) team to Vietnam at the Annual Meetings of the IMF and the World Bank Group (WB) held recently in the US.

According to Medas, despite rising geopolitical instability on the globe, Vietnam’s economy experienced a growth rate of 5.66% in the first quarter of this year. Exports continue to see an upward trend, facilitating overall growth until the end of this year.

He forecasted that Vietnam’s economic growth is predicted to expand by nearly 6% this year thanks to the recovery of domestic demand and the Government's support fiscal policies. However, Vietnam needs to have a flexible fiscal policy to cope with risks and ensure substantial growth, he noted.

A production line at the Republic of Korea's Bluecom Vina Co., Ltd, in the Trang Due Industrial Park in Hai Phong city. Photo: VNA

The expert said that the country continues to receive a large volume of foreign direct investment amidst the shifting of supply chains to Asia and Vietnam is one of the investment destinations for foreign investors.

Nevertheless, to remain its attractiveness, Vietnam should continue to improve its business environment, streamline administrative procedures, develop infrastructure, especially for green energy development, and promote innovation, he added.

Meanwhile, Director of the Department of Industry and Construction Statistics under the General Statistics Office Phi Thi Huong Nga called FDI attraction a bright spot that contributed to the country’s economic achievements in the three months, marking a good start for the year.

Vietnam’s rosy economic prospects have helped consolidate the confidence of foreign firms in the country, as reflected through their investment of USD 6.17 billion in the first quarter of this year, up 13.4% year-on-year, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Of the sum, newly registered capital stood at USD 4.77 billion, a rise of 57.9% from the corresponding time last year. Meanwhile, USD 934.6 million was added to 248 existing projects, and USD 466.2 million was earmarked for stake purchase and capital contribution. These are down 22.6% and 61.7% in value, respectively.

The foreign investment influx came from 62 countries and territories. Singapore was the biggest investor in Vietnam in the period with a total registered capital of over USD 2.55 billion, up by 51.3%, followed by Hong Kong (China) with USD 1.05 billion, 2.3 times higher.

The capital city of Hanoi was the top FDI destination with an influx of USD 970.8 million, rising by 6.1 times over the same period last year, followed by the northern province of Bac Ninh with USD 745.2 million.

However, foreign investors shared the view that apart from political stability and improved human resources, limitations still remain such as cumbersome administrative procedures, volatile investment attraction policies, and an incomplete supply chain.

Given this, Prof. Dr. Nguyen Mai, Chairman of Vietnam's Association of Foreign Invested Enterprises (VAFIE), suggested that the top priority should be given to perfecting institutions and legal regulations.

Ranjit Thambyrajah, Chairman and CEO of Acuity Funding, said Vietnam needs to invest further in education and training to provide industries with a competent workforce.

At the same time, the country should build fully integrated and energy-neutral industrial parks suitable for the future of manufacturing, he said.

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