Foreign investment inflows experiencing stable movement

October 06, 2021 | 08:00
Along with the positive business outcomes of foreign-invested enterprises in recent years and their decision to expand investments in Vietnam, long-term commitments are being confirmed.
Foreign investment inflows experiencing stable movement
During the last two years, Vietnam remained a regional spotlight in mobilising FDI. Photo: Le Toan

Over the last few months, manufacturers and exporters reported decent business results. “In the first half of the year, it was not hard for Samsung to reach its export goals. If the home electronics complex in Ho Chi Minh City resumes its operations soon, we can even surpass our export goals of the year,” said Choi Joo Ho, CEO of Samsung Vietnam.

The Samsung Vietnam leader confirmed to disburse the total investment approved annually, and that he is asking for hundreds of millions of US dollars more every year to upgrade production lines in the group’s six complexes across Vietnam. “We will continue pouring funds into our facilities to enhance productivity and quality and diversify products like 5G equipment and laptops,” added the CEO.

In addition to improving production lines, Samsung is planning to enhance the position of the group in the country. “Vietnam is not only a global manufacturing hub of Samsung, we are also building a $220-million research and development centre in Hanoi to improve our capacity in the medium and long term. Its progress stands at more than 50 per cent, and the facility is expected to be inaugurated at the end of 2022,” Ho said.

The centre will focus on AI, 5G, big data, and other modern technologies.

In addition to Samsung, a number of other well-known corporations have already disclosed expansion plans in the country.

Long-term commitments

Sweden’s food processing and packaging solution company Tetra Pak has just confirmed to add $5.9 million to the $141 material factory in the southern province of Binh Duong a few weeks ago. “This reflects our confidence in Vietnam’s post-pandemic recovery,” said Eliseo Barcas, CEO of Tetra Pak Vietnam.

In another case, LG Display in the northern port city of Haiphong asked to add $1.4 billion in early September after already adding $750 million in February.

The north-eastern province of Quang Ninh has also welcomed a second project of Jinko Solar with the total investment of $365 million, following the $500-million project in late March.

This is also confirmed in the foreign direct investment (FDI) report of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency (FIA). Both newly- and additionally-registered investment in the first nine months of the year reported a sharp increase on-year (about 22 per cent) to $18.9 billion.

“These funds have been concentrating on quality, and the scale of foreign-invested projects has been increasing 2-4-fold on-year. In the context of globally declining investment flows, the soar of newly- and additionally-registered capital in the first nine months to Vietnam shows the confidence of foreign investors in the country’s investment and business climate,” an FIA representative said.

In the update on Vietnam’s macroeconomic situation in September, the World Bank said that many macro indicators of Vietnam’s economy in the first eight months of 2021 remained stable, in which FDI inflow was maintained, demonstrating the confidence of foreign investors in the Vietnamese economy in the medium and long term.

In the view of the Asian Development Bank’s expert Andrew Jeffries, Vietnam remains an attractive destination for FDI and continues to benefit from a changing global supply chain, US-China trade tensions, and production disruptions in other regions.

“During the last two years, Vietnam remained a regional spotlight in mobilising FDI. Thanks to its rapid growth and dense population, they choose Vietnam for its domestic market and as a manufacturing hub for export,” Jeffries said, adding, “In comparison with other regional countries, Vietnam remains an attractive destination for foreign investors, especially if the social distancing rules are lifted entirely.”

According to a recent survey by the MPI covering 500 foreign-invested enterprises, Japanese investors confirmed their optimism on Vietnam’s economic recovery in 2021, and 47 per cent of them have plans to expand production and business in the country.

South Korean enterprises participating in the survey have also new investment plans in Vietnam, with 61.9 per cent of them pledging to expand funding.

Non-stop manufacturing

The confidence of investors is built on the efforts of the Vietnamese government to accompany them. Most recently, the government’s Resolution No.105/NQ-CP has been issued to restart and develop the production and business activities of enterprises in parallel with ensuring the prevention and control of COVID-19. The official document aims to support and resolve difficulties and bottlenecks hindering production and business activities.

As the CEO of one of the largest foreign investors in Vietnam with six complexes in the northern provinces of Bac Ninh and Thai Nguyen, and Ho Chi Minh City – including the two largest smartphone facilities in the world – Ho of Samsung Vietnam highly appreciates the investment climate in Vietnam and Resolution 105, which he sees as “good news for foreign investors” as the regulations also aims to ease regulations on the extension of work permits for foreign labourers into Vietnam.

“In addition to Samsung, other foreign investors can enjoy attractive incentives and favourable investment policies in combination with abundant labour resources, stable politics, and a good infrastructure for manufacturing and transport,” Ho said.

He also highly appreciated that the coronavirus had been controlled in Bac Ninh and Bac Giang during May and June, and that the support of the government for all businesses helps them to resume operations soon. “Bac Ninh is the first province to implement camping at work, so Samsung did not have to halt its operations during the pandemic,” the Samsung Vietnam CEO emphasised.

“It is necessary to continue with our manufacturing activities, even in difficult situations, because we are a part of global supply chains,” Ho emphasised. “For the long term, Vietnam remains an ideal destination for foreign investors. If Vietnam succeeds in both preventing the pandemic and operating within the supply chains, FDI into the country will certainly increase in the future.”

By Minh Vu

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional