Vietnam Always Gains Foreign Investors' Trust in Quick Recovery

Recent announcements made by foreign investors on additional investment to expand production in Vietnam reflect their trust in Vietnam’s prospects for economic recovery despite the complexities of COVID-19, reported the Dau tu (Investment Review) newspaper.
September 27, 2021 | 15:19

Foreign investors keep trust in Vietnam’s recovery

At a factory of Nestle in Hung Yen province (Photo: baodautu.vn)
At a factory of Nestle in Hung Yen province (Photo: baodautu.vn)

The Swiss company Nestle said it is pouring an additional over US$130 million, raising its total investment in Vietnam to US$730 million to carry out a number of its projects in the next two years.

Urs Kloeti, Factory Manager of Nestle Bong Sen, was quoted by the newspaper as saying that his company believes in Vietnam’s role as an international and regional manufacturing hub in the future.

Alongside Nestle, other foreign firms have committed to maintaining operations in Vietnam despite the fourth wave of COVID-19 outbreaks that have forced various localities to apply stringent preventive measures.

Tetra Pak of Sweden has confirmed that it will pump EUR5 million (US$5.86 million) to expand its existing EUR120-million plant in Binh Duong southern province.

The investment demonstrates the company’s trust in Vietnam’s strong economic recovery after the pandemic, according to Managing Director and President at Tetra Pak Vietnam Eliseo Barcas.

In particular, the LG Display project in Hai Phong northern port city has received additional investment twice this year, with US$750 million in February and US$1.4 billion in August.

Earlier this month, authorities in the northern province of Quang Ninh presented an investment registration certificate to a US$365.6 million project of Jinko Solar Vietnam Co. Ltd., an affiliate of the Jinko Solar Holding Co. Ltd. The firm channeled nearly US$500 million into a project in the province in March, according to the VNA.

Danish investors are still expressing interest in Viet Nam with their plans for setting up here. Many factors making Viet Nam an attractive destination for FDI remain unchanged including the strategic geographical location, the integration into international trade with multiple bilateral and multilateral trade agreements with countries and regions, the third-biggest market in Southeast Asia, and a young and well-educated workforce.

Danish Ambassador to Viet Nam Kim Højlund Christensen made the point during an interview with the Viet Nam Government Web Portal (VGP).

Danish Ambassador to Viet Nam Kim Højlund Christensen - Photo: VGP
Danish Ambassador to Viet Nam Kim Højlund Christensen - Photo: VGP

In my opinion, we should always be cautious, of course, with monthly numbers like the one for August 2021, since they are based on decisions made months or even a couple of years ago. However, I am still happy to hear that the FDI figures for Viet Nam are still positive despite of COVID-19, which indicates that Viet Nam is still an attractive place to invest. I have also learnt that out of the total registered capital, the manufacturing sector is still accounting for the largest percentage with about 47%.

Apart from the challenges caused by COVID-19, which many other countries have also experienced, I believe many of the factors making Viet Nam an attractive destination for FDI remain unchanged such as: the strategic geographical location, the integration into international trade with multiple bilateral and multilateral trade agreements with countries and regions, the third-biggest market in Southeast Asia, and a young and well-educated workforce etc. In my opinion, the figures also showed the World Bank’s and foreign investors trust in the Vietnamese government’s capability to cope with COVID-19 in the first 8 months of 2021. It is key that focus is still on fighting COVID-19 while at the same time minimizing the negative consequences of lock downs and disruption of supply chains. The remaining part of the year will be crucial for Viet Nam to meet this year’s economic targets.

On a positive note, I would like to share that Danish investors are still expressing interest in VieN am with their plans for setting up here. The Danish Embassy in Viet Nam is working closely with these investors to assist.

Like many others, Danish companies have been facing numerous challenges during the last few months due to COVID-19 and the restrictions, such as getting employees vaccinated, delays of many projects, difficulties in getting experts into Viet Nam from abroad and moving staff between provinces amid the travel restrictions. However, the ones being affected most are companies having production facilities, especially in the South because this part of Viet Nam was hit harder by the outbreak this time. Restrictions and measures such as “3 at site” or “1 route 2 destinations” have resulted in temporary closure or significant downsizing in operation. All of this has placed a heavy burden on the companies in terms of costs and delivering orders – and it even impacted the global supply chain for some companies in niche areas.

Needless to say, Danish companies respect and comply with all regulations. And they have been taking very good care of the local employees despite all challenges. The companies carried out necessary measures to protect all the workers and staff, providing safe and comfortable working conditions for the ones staying in the factories, and do whatever they could to ensure their wellbeing.

Despite current challenges triggered by the pandemic, Japanese firms in Vietnam are working to adapt and improve their production system in the new situation, said Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi Nakajima Takeo.

For his part, Alain Cany, Chairman of the European Chamber of Commerce (EuroCham) in Vietnam, said the European business community is determined to stand side by side with the Vietnamese Government in this tough time and believes that the Government will successfully bring COVID-19 under control like it did before.

As they have showed their determination to maintain operations in Vietnam, most foreign investors hope that the Government will promptly devise a clear plan for reopening and economic recovery, or else current investment plans will be delayed and newcomers cannot enter the country to study investment possibilities.

Despite COVID-19 impacts, foreign direct investment (FDI) inflows into Vietnam during the first nine months of this year rose 4.4% year on year to US$22.15 billion, reported the Foreign Investment Agency under the Ministry of Planning and Investment.

The total imports-exports value of the FDI sector in the first eight months of the year also surged 31.2% to US$297.43 billion, with exports accounting for US$156.64 billion.

Vietnam may attract 30 billion USD in FDI this year

Vietnam may attract about 30 billion USD in foreign direct investment (FDI) in 2021, posting a year-on-year rise of 2 percent, economists forecast, pointing to positive signs in FDI attraction in the first eight months of 2021 despite the complexities of COVID-19.

At an assembly workshop of Ford Vietnam CO., Ltd in Hai Duong province.(Photo: VNA)
At an assembly workshop of Ford Vietnam CO., Ltd in Hai Duong province.(Photo: VNA)

According to the Ministry of Planning and Investment, foreign investors channelled 19.12 billion USD into the country in January-August, equalling nearly 98 percent of the same period last year, with several multi-billion USD projects.

Singaporean investors poured over 3.1 billion USD into the Long An LNG power plants No 1 and 2 while the O Mon 2 thermal power plant in Can Tho city invested by Japan received 1.31 billion USD in the period. The LG Display project in Hai Phong city has received additional investment twice this year, with 750 million USD in February and 1.4 billion USD in August.

Despite social distancing measures to curb the spread of COVID-19, the country’s FDI inflow in the first eight months only saw a slight decline of 2.1 percent against the same period last year, said Nguyen Van Toan, deputy head of the Vietnam’s Association of Foreign Invested Enterprises.

Of note, new registered capital surged 16.3 percent and disbursement of FDI capital hit 11.58 billion USD, up 2 percent.

Speaking with Cong Thuong (Industry and Trade) newspaper, Phan Huu Thang, former head of the Vietnam Trade Promotion Agency (Vietrade) at the Ministry of Industry and Trade, voiced his belief that FDI inflow into Vietnam may still reach about 30 billion USD this year.

To address current difficulties facing foreign investors when they want to enter the country to study investment possibilities or to implement investment projects, the Government and relevant ministries and agencies are urged to consider reducing quarantine period for those who have been fully vaccinated and hold a negative COVID-19 testing certificate.

In the first eight months of this year, , Vietnam attracted investors from 92 countries and territories. Singapore was the leading investor with registered capital exceeding 6.2 billion USD, or 32.5 percent of the total FDI inflow.

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