Foreign investment in Vietnam going strong despite pandemic

Foreign investment in Vietnam going strong despite pandemic

As of October, the processing and manufacturing industries led foreign direct investment (FDI) with capital of US$10.7 billion, according to the Ministry of Planning and Investment (MPI).

Over 2,000 new projects

As of October 20th, 2020, the total newly registered capital, adjusted capital and capital contribution or share purchase by foreign investors in Vietnam reached US$23.48 billion, equaling 80.6 percent compared to the same period of 2019. Capital generated by FDI projects was estimated at US$15.8 billion, or 97.5 percent of the total in the same period last year.

In the first 10 months of 2020, 2,100 new projects were registered around the country with total capital of US$11.66 billion, a 9.1 percent year-on-year decline.

Regarding adjusted capital, 907 projects registered for adjustment of investment capital, a year-on-year decrease of 20.8 percent while the total additional registered capital topped US$5.71 billion (up by 4.4 percent year on year).

The Foreign Investment Agency (FIA) explained that the increase in adjusted capital during the period was mainly due to the capital expansion of the Vietnam Southern Petrochemical Complex in Ba Ria-Vung Tau by more than US$1.38 billion and of the urban renewal project in the western area of Hanoi’s West Lake (the Republic of Korea - RoK) by US$774 million.

Most foreign investment in the first 10 months targeted 18 sectors, of which the processing and manufacturing industries led with total investment capital of US$10.7 billion, accounting for 45.7 percent of registered investment capital. Electricity production and distribution ranked second with over US$4.8 billion, accounting for 20.5 percent, followed by the real estate business, wholesale and retail with the total registered capital of nearly US$3.5 billion and US$1.4 billion respectively.

However, capital contribution and share purchase by foreign investors totaled US$6.11 billion, down 43.5 percent year on year.

It is noteworthy that the realized capital of foreign direct investment projects, estimated at US$15.8 billion, continued to decrease reflecting the serious impacts of the Covid-19 pandemic on foreign investment, whether newly registered capital or capital invested through share purchase, or disbursed capital.

Gradual recovery

The FIA reported that many foreign-invested enterprises are gradually recovering production and business activities, creating momentum for faster growth in the final months of 2020. Many foreign investors are still specifically interested in Vietnam.

The Covid-19 pandemic has affected the travel of investors as well as new investment decisions and the expansion scale of foreign investment projects. However, given the strong decline in global investment, Vietnam’s results are better than those of many other countries, demonstrating its attractiveness to international investors.

In terms of investment partners, Singapore led the list with total capital of US$7.51 billion, accounting for 31.9 percent of total investment capital in Vietnam. The RoK ranked second with total investment capital of US$3.42 billion, accounting for 14.6 percent; China went third with a total capital of US$2.17 billion, accounting for 9.2 percent, followed by Japan, Thailand, and Chinese Taipei.

However, in terms of the number of new projects, the RoK ranked first (528 projects); China second with 294 projects; Japan third with 226 projects and followed by Hong Kong 164 projects.

Exports, including crude oil, reached US$147.97 billion, equaling 97.6 percent of the same period in 2019, accounting for 64.7 percent of export revenue while imports of foreign-invested sector reached nearly US$117.56 billion, equivalent to 97 percent of the same 2019 period and 55.8 percent of the country’s import revenue.

Thus, despite a decline compared to the same period last year, the foreign investment sector still recorded a trade surplus of US$30.4 billion, offsetting the trade deficit of US$12.2 billion of the domestic sector and contributing to the country’s trade surplus of US$18.2 billion.

VietNam Economic News