Vietnam's FDI in 7 Months Reaches 5-Year High
|Many investors still choose Vietnam as a destination for business expansion. Photo: VNA.|
"Vietnam has always maintained its position as an attractive investment destination, particularly in the context of the ongoing restructuring and capital movement on a global scale", said GSO Director General Nguyen Thi Huong.
Although the newly registered capital has not fully recovered after being interrupted by Covid-19 prevention and control measures in 2021, the adjusted capital and capital contribution and share purchase have witnessed a sharp rise, by 59.3% and 25.7% respectively.
According to a representative from the Foreign Investment Agency, Ministry of Planning and Investment, the surge in investment capital displays foreign investors' unwavering confidence in Vietnam's economy and investment environment. On the other hand, it partially reflects the impacts of inflation and soaring prices under the influence of political and trade conflicts around the world.
Specifically, as of July 20, foreign investors' newly registered capital, adjusted capital, and contributed capital for the purchase of shares and capital contributions reached over USD15.41 billion in total, equivalent to 92.9% compared to the same period in 2021. to the official statistics, the amount of newly granted capital declined over the same period. specifically, there were 927 new projects licensed for investment (down 7.9% over the same period), with the total registered capital reaching over USD5.72 billion (down 43.5% over the same period).
To Do Nhat Hoang, Director General of Foreign Investment Agency, Ministry of Planning and Investment, enterprises are continuously increasing, maintaining, and expanding their production and businesses. This testifies to foreign investors' enormous faith in Vietnam's link in the global supply chain.
On the contrary, adjusted capital continued to mark a considerable rise. The growth rate in the number of projects with capital adjustment was down compared to in the first months of the year, nevertheless, the average scale of capital adjustment per project was relatively high. Many manufacturing projects of electronic and high-tech products, such as Samsung, saw their capital climb on a large scale in the first 7 months of the year.
|Manufacturing projects of electronic and high-tech products saw their capital climb on a large scale in the first 7 months of 2022 (Photo: VnEconomy).|
For the first 7 months of 2022, there have been 78 countries and territories whose investment projects have been newly licensed in Vietnam, with Denmark being the largest investor with USD1.32 billion, accounting for 23.1% of the total newly registered capital, followed by Singapore with USD1.22 billion (21.3%), China USD651.4 million (11.4%), Korea USD567.8 million (9.9%), Japan USD534.8 million (9.3%).
As regards adjusted registered capital, 579 projects licensed from previous years have registered for investment capital adjustment, rising by USD7.24 billion, up 59.3% in comparison to the same period last year. If taking into account newly registered capital and adjusted registered capital of projects licensed in previous years, the registered foreign direct investment capital in the processing and manufacturing industry has reached USD9.37 billion, constituting 72.3% of the total newly and additionally registered capital, in which real estate business has reached USD2.06 billion, accounting for 15.9%; the remaining industries has reached USD1.53 billion, accounting for 11.8%.
Currently, the processing and manufacturing industry maintains its leading position in FDI attraction, with a total investment capital of over USD10 billion, taking up 64.3% of the total registered investment capital. The real estate business comes in second, with a total investment capital of over USD3.21 billion, constituting roughly 20.7% of the total registered investment capital, followed by professional activities in science and technology and information communication respectively.
According to Nguyen Thi Huong, Vietnam needs to implement a variety of effective measures so as to attract quality FDI inflows in the coming time. effectively, it is necessary to step up administrative procedures, improve the investment environment, raise the quality of labor resources, and efficiently implement the one-stop procedure to create a favorable environment for businesses to establish and develop. It is also necessary to eliminate informal costs, a real bottleneck for investment capital flow not only of FDI enterprises but also of domestic private enterprises. Also, a review of all industrial zones should be conducted for expansion or downsizing accordingly.
|Vietnam needs to implement a variety of effective measures to attract quality FDI inflows in the coming time (Photo: kinhtedothi.vn).|
The fact that Vietnam has been able to attract many large FDI projects into the processing and manufacturing industry not only creates jobs but also increases the attractiveness of the investment environment, elevating its position on the global economic map, experts said. This is a silver lining to a still-recovering economy after 2 years of stagnation due to the Covid-19 pandemic.
However, in order for FDI projects in the processing and manufacturing industry to bring high efficiency without prejudice to other areas, Vietnam also needs to be "more strictness" in project selection. In this way, it can attract projects which have a high level of financial potential and modern technology, are less labor-intensive, and bring high added value. At the same time, a limit needs to be imposed upon projects employing outdated technology, being labor-intensive, polluting the environment, and wasting resources.
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