ADB report underlines recovery driven by FDI
ADB report underlines recovery driven by FDI
Foreign direct investment and its manufacturing exports will continue being the key drivers of Vietnam’s economy this year.
The Asian Development Bank’s Asian Development Outlook 2015 report released last week claimed Vietnam’s gross domestic product growth was set to edge up to 6.1 per cent in 2015 and 6.2 per cent in 2016, higher than last year’s 5.98 per cent, with foreign direct investment (FDI) and manufacturing exports being important drivers.
The report stated that on a sector basis, industry was expected to be the major driver of growth. FDI and government investment would spur construction while recent increases in imports of manufacturing inputs, including chemicals, cotton, and plastics, signalled renewed strength in the industrial sector.
The report is practically illustrated by a series of billion-dollar projects inagurated in the first quarter of 2015, starting with the $1 billion high-resolution screen manufacturing line put into operation in Bac Ninh province by Samsung Display in early March. It was followed by the $1.95 billion Mong Duong 2 thermopower plant’s official operation of its first turbine station with a capacity of 560MW in Quang Ninh province in the middle of March.
And last Friday saw the official opening of LG Electronics Vietnam’s $1.5 billion factory in Haiphong City.
Many smaller foreign invested projects have also come online recently, adding to the country’s manufacturing and export capacity.
Last week, Japan-backed Yazaki Haiphong Company put into operation its $35 million car electrics component factory in Quang Ninh province. Covering 7ha, the factory licensed last August will annually produce 2.76 million sets of products.
Last week also saw South Korean-backed Chadiostech Vina Company licensed in Vinh Phuc province for a $13.9 million project to manufacture voice coil motors and camera lens for mobile phones and other electronics equipment, on an area of 2.3ha. The plant is expected to come into operation in November 2015 and annually produce 167 million units for export.
Earlier, Vinh Phuc authority also granted an investment certificate to South Korea’s Partron Vina Company for raising investment and charter capital for the 18th time to $140.5 million and $122.5 million, respectively. This was also the second time that this company has increased its investment and charter capital since early this year.
The company makes electronic spare parts provided for South Korea’s Samsung Group.
Data from the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency also revealed that new FDI commitments rose to $15.6 billion in 2014, while an additional $4.6 billion committed to existing foreign-funded projects.
The MPI reported that Vietnam’s first quarter export turnover totalled $35.7 billion, up 6.9 per cent on-year. Of which, foreign enterprises held $24.02 billion (including crude oil exports) occupying 67.5 per cent of Vietnam’s total export turnover and up 16.2 per cent on-year.
According to the ADB report, better economic performance in the major industrial economies - particularly the US, Vietnam’s biggest export market - would spur exports. Exports of manufactured products will continue to expand, given that 76 per cent of last year’s disbursed FDI was directed into manufacturing.
