China leads number of newly-registered projects in Vietnam

Foreign direct investment (FDI) is on a positive curve, and in May 2024, new investment capital and additional capital were nearly equal.

According to newly-released figures from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), May witnessed the largest amount of adjusted investment capital in the first months of 2024.

“The total adjusted investment capital in the first five months of the year was down compared to the same period in 2023, but the decrease has gradually narrowed. In the first five months, adjusted investment capital only decreased by 8.7 per cent, lower than a decrease of 25.6 per cent in the first four months, and 22.6 per cent in the first three months," said Do Nhat Hoang, director general of the FIA.

The acceleration of adjusted capital in May has made an important contribution to bringing the total registered FDI capital in the first five months to more than $11.07 billion, up 2 per cent on-year.

Nguyen Van Toan, vice chairman of the Vietnam Association of Foreign-Invested Enterprises, said Vietnam remains highly regarded by international investors. “However, these figures do not represent a massive leap forward, especially given that American and European investors are showing strong interest in semiconductor and AI projects in Vietnam,” Toan said.

Data from the FIA shows that in the first five months of the year, US investors registered around $90 million into Vietnam, a very modest number.

"The largest investors in the first five months of the year were all traditional partners in Asia," commented Hoang from the FIA.

In the first five months, Singapore led in terms of investment in Vietnam, with nearly $3.25 billion, accounting for 29.3 per cent of the total and an increase of 28.2 per cent on-year. It was followed by Hong Kong, Japan, China, and South Korea, accounting for 73 per cent of new projects and 73.5 per cent of the total registered investment capital.

Notably, although Singapore leads in terms of registered capital, China is the leading partner (making up for 28.3 per cent) for the number of new projects, while South Korea leads in the number of capital adjustments (24.1 per cent), and capital contributions and share purchases (26.3 per cent).

Chinese investors have registered 347 new projects, 55 capital adjustments, and 172 capital contributions and share purchases, with total registered capital of $1.126 billion, ranking fourth among the countries and territories investing in Vietnam.

The 2023 Provincial Competitiveness Index published last month confirmed the investment trends of Chinese investors. "The past year saw an unprecedented surge in investment funding from China, especially in the northern provinces and economic zones. This trend is expected to continue due to cause tensions between global economic powers with the need for diversification in supply chains, and rising labour costs in the world’s largest manufacturing centre," the report highlighted.

Minister of Planning and Investment Nguyen Chi Dung also emphasised the trend of accelerating investment in Vietnam by Chinese investors. Accordingly, numerous large-scale corporations have appeared in the fields of technology, electricity - electronics, processing, manufacturing, infrastructure, renewable energy, and electric vehicles.

"The Vietnamese government still encourages and expects Chinese investors to increase their investments in Vietnam. Vietnam welcomes Chinese investors in high technology, renewable energy, supporting industries, electronic components, electric cars, electric batteries, and infrastructure, as well as forming an international financial centre, green finance, smart urban areas, eco-industrial parks, and free trade zones," Minister Dung said.

"These are industries and fields that China has experience and strengths in," he added.

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