Diverse FDI augurs well for 2024
Diverse FDI augurs well for 2024
With plans to establish itself as an attractive high-tech manufacturing market, Vietnam is boosting its business-oriented diplomatic activities to attract investment and expand trade
Currently, US-backed Nvidia is the most valuable chip manufacturer in the world, with a market value of nearly $1.2 trillion. Established in 1993, it now boasts 27,000 employees and gained revenues of $27 billion in the 2023 fiscal year.
Last September, Vietnamese Prime Minister Pham Minh Chinh visited the corporation’s headquarters in California, and invited president and CEO Jensen Huang to pay a working visit to Vietnam.
Less than three months later, Huang came to Vietnam, where Nvidia has already invested $250 million. He explored more investment potential and then said that Nvidia wishes to establish a base in Vietnam to develop the country’s semiconductor industry as it considers the market an important one.
“The base will be for attracting talent from around the world to contribute to the development of Vietnam’s semiconductor ecosystem and digitalisation,” Huang said.
Nvidia has discussed cooperation deals on semiconductors with Vietnamese tech firms and authorities.
According to the Ministry of Foreign Affairs (MoFA), it is not accidental that giants like Nvidia have come to Vietnam. One of the key reasons is that the country has been making its great efforts to boost business-oriented diplomatic activities to lure in big projects worth multi-billions of US dollars, in the context of increasing competition in luring this kind of funding in the region.
“Such activities are implemented by the leaders of the country and of ministries and agencies,” said Tran Anh Vu, deputy general director of the MoFA’s Department of General Economic Affairs. “Business-oriented diplomacy has been playing a key role in helping the nation to attract foreign direct investment (FDI).”
For instance, when upon hearing Denmark’s toy maker Lego Group was seeking a suitable location to build a large-scale carbon-neutral plant overseas, the Vietnamese prime minister and one deputy prime minister had three talks on the phone with Lego’s leader, persuading him to invest in Vietnam.
“As a result, Lego has come to Vietnam,” Vu said. “In Southeast Asia, a number of nations such as Malaysia and Thailand are strongly deploying business-oriented diplomatic activities to woo such big groups as Lego, and this is creating big pressure for Vietnam.”
In early November 2022, construction of a $1-billion, 44-hectare Lego plant was commenced in the southern province of Binh Duong. The plant is scheduled to generate about 4,000 jobs and market its first products in 2024. This is the sixth plant of the Danish toy company, and its second in Asia.
Lego CEO Niels Christiansen said the group selected Vietnam for its big pool of skilled staff, commitment to carbon-neutrality by 2050, and location as a gateway to the Asia-Pacific region, which has a growing market of young consumers. The government has underlined many a time that Vietnam will attract FDI selectively based on ensuring the environment and sustainability.
“Priorities will be given to projects with high added values and advanced technology in service of infrastructure development, digital economy, digital transformation, and green growth,” said Deputy Prime Minister Tran Luu Quang.
“We will also focus on boosting economic diplomatic activities to woo high-quality FDI from multinational corporations. This will help elevate Vietnam’s status in the global supply chains.”
Cumulatively as of December 20, Vietnam wooed 39,140 projects registered at $468.9 billion, of which $317.2 billion has been disbursed.
The MoFA has been assigned by the government to expand business-oriented and economic diplomatic activities, amid many nations opening their economies to Vietnam’s goods, and many big investors globally seeking safe and attractive investment destinations.
“Vietnam’s leaders have also met with leaders of many groups, including Nike, Adidas, and Adani. Visible outcomes have been seen,” said Nguyen Hoang Phuong, a representative from the MoFA’s Department of Foreign Policy.
In late December, PM Chinh received Gautam Adani, president of Adani, India’s largest business group. Adani is exploring the Vietnamese market, where it wants to invest about $10 billion over the next 10 years in energy and infrastructure.
Currently, Adani has established a representative in Vietnam with a long-term investment plan here.
The MoFA has and will also continue working with many localities nationwide to connect them with foreign investors. For instance, many South Korean investors are seeking locations in Vietnam for their upcoming projects, and we are introducing them with localities so that they can select the suitable places for the projects. Total accumulative registered capital from South Korea as of December 20 reached $85.86 billion, making the Northeast Asian economy the largest foreign investor in Vietnam, followed by Singapore at $74.52 billion and Japan at $73.96 billion.
In 2024, the MoFA will also continue cooperating with localities to organise FDI events. “The diplomatic sector has been making positive contributions to boosting Vietnam’s international integration and connectivity. It has actively mobilised and engaged overseas resources in service of new growth impetuses,” said MoFA Deputy Minister Nguyen Minh Vu.
“Besides successfully attracting green and high-tech investment projects such as Lego and Samsung, the MoFA has also actively been boosting the implementation and support for the establishment of cooperation frameworks in service of Vietnam’s trade expansion and attraction of official development assistance (ODA),” Vu said.
Vietnam has over 50 bilateral and multilateral donors, with a total committed ODA of over $90 billion to the country.
The MoFA also reported that the diplomatic sector had contributed to helping Vietnam attract a large sum of overseas remittance, at $17.2 billion in 2020 and more than 18 billion in 2021, nearly $19 billion in 2022. The figure in 2023 is estimated to climb up to 30 per cent on-year.
