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Successful control of Covid-19 boosts FDI inflows to Vietnam

May 06, 2020 | 13:03

Vietnam’s declining foreign investment inflow will be reversed soon with the government’s drastic anti-pandemic measures proving effective, experts believe.

successful control of covid 19 boosts fdi inflows to vietnam Vietnam attracts large projects promoting FDI's results positive
successful control of covid 19 boosts fdi inflows to vietnam FDI capital into projects still posts increase despite declining trend in Jan -Apr
successful control of covid 19 boosts fdi inflows to vietnam Foreign investment in Vietnam reached US$12.33 billion in the first 4 months
successful control of covid 19 boosts fdi inflows to vietnam
Investment in Vietnam will surge (Photo: Saigon Financial Investment)

Vietnam’s declining foreign investment inflow will be reversed soon with the government’s drastic anti-pandemic measures proving effective, experts believe.

"The drops are only temporary. When investors see that Vietnam has been able to contain the virus, investment will surge," Nguyen Mai, chairman of Vietnam’s Association of Foreign Invested Enterprises (VAFIE).

FDI attraction in the first four months fell 15.5 percent year-on-year to $12.3 billion, with drops in the number of newly-registered projects and value of stake acquisitions, according to the Ministry of Planning and Investment.

Committed FDI reached US$12.3 billion in the first four months, down 15.5 percent year-on-year. Registered FDI surprisingly rebounded in April, by 81 percent month-on-month and 62 percent year-on-year, according to the World Bank.

successful control of covid 19 boosts fdi inflows to vietnam
Vietnam’s success in containing the disease shows prospects for future investment (Photo: Production Management)

Dinh Trong Thinh, head of the International Finance Faculty of the Academy of Finance, said that Vietnam’s success in containing the disease shows prospects for future investment.

There have been many reports of major foreign companies considering starting production in Vietnam as a new manufacturing hub as they seek to shift away from China.

According to VnExpress, Taiwan’s Pegatron, which manufactures Apple iPhones, has announced plans to set up a factory in Vietnam by the end of the year.

The company, which is the world’s second largest contract manufacturer of electronics behind fellow Taiwanese company Foxconn, is set to establish a factory in a northern province to make devices for internet connectivity. It is scheduled to begin operation next year.

Taiwan's Inventec, Apple's main assembly partner for AirPods, is reportedly preparing to establish a unit in Vietnam.

Google is set to begin production of its low-cost smartphones with Vietnamese partners this year, while Microsoft is scheduled to produce notebooks and desktop computers in the northern region in the second quarter.

Japan’s Nintendo has also made plans to shift some of the production of its Switch gaming consoles from China to Vietnam.

successful control of covid 19 boosts fdi inflows to vietnam
Vietnam granted investment licenses to 758 new FDI projects (Photo: VNS)

Furthermore, foreign investors have been seeking real estate to set up their factories. Despite Covid-19 impacts, industrial land prices in the first quarter rose 6.5 percent in the north and 12 percent in the south, according to a report by real estate service firm Jones Lang LaSalle (JLL).

The report said companies looking to diversify their manufacturing portfolio outside China are attracted to Vietnam, thanks to its proximity to the former, cited VnExpress.

Vietnam granted investment licenses to 758 new FDI projects with a combined registered capital of 5.5 billion USD in the first quarter of 2020, an increase of nearly 45 percent year-on-year, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

More than 230 existing projects registered to add 1.07 billion USD to their existing capital in the quarter, equivalent to 82 percent of the figure in the same period last year. The value of capital contributions and share purchases by foreign investors reached almost 2 billion USD, equivalent to 34.4 percent of the figure in the same period of 2019.

Singapore topped the list of 87 countries and territories investing in Vietnam during the first three months, with 4.54 billion USD, or 53.1 percent of the total. It was followed by Japan (846.7 million USD) and China (815.6 million USD), reported by Vietnam Plus.

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