Haiphong named on map of Vietnam's billion-dollar FDI projects in 2021

LG Group has invested nearly 6 billion USD in Haiphong (Photo: Thanh Tan)

“Foreign investment suddenly increased again,” announced the Foreign Investment Agency (FIA) of the Ministry of Planning and Investment, publishing statistics on Vietnam‘s foreign investment attraction – and LG Display was one of the projects contributing to this "surprise".

According to the FIA, as of September 20, the total registered foreign investment capital in Vietnam reached $22.15 billion, increasing by 4.4 per cent compared to the same period in 2020. Of this, newly registered FDI capital reached nearly $12.5 billion (up 20.6 per cent on-year); adjusted capital reached over $6.4 billion (up 25.6 per cent); and investment capital from capital contribution and share purchases reached nearly $3.2 billion (down 43.8 per cent).

After two instances of capital increase in 2021, LG Display contributed $2.15 billion of this, while at the same time bringing the total project investment capital in Haiphong to $4.65 billion, making it the largest foreign investor in Haiphong until now.

LG Display was granted an investment certificate for the first time in 2016, with a total investment of $1.5 billion. The factory specializes in manufacturing all kinds of plastic OLED screens for mobile devices, OLED TV screens, as well as LCD screens.

Reporting efficient production and business, LG Display has continuously increased investment capital in Vietnam. In early February 2021, it increased capital by $750 million. Details were not disclosed but many sources show that LG Display's increase in capital and expansion of production activities in Vietnam is to meet Apple's demand.

At the end of August, LG Display continued to increase capital by $1.4 billion, and at the same time increased its output of plastic OLED screens from 9.6-10 to 13-14 million products per month. Its export revenue is expected to increase by about $6.5 billion a year, contributing about $25 million a year to the state budget and creating jobs for 10,000 workers.

In 2020, LG Display Haiphong achieved an export revenue of more than $9 billion, created jobs for 14,000 workers, and paid $19.4 million into the state budget.

In Haiphong, in addition to the LG Display project, LG Group also placed an LG Electronics factory specialising in the production of household electronics, with an investment of $1.5 billion. In addition, there is the LG Innotek project, which was initially registered with an investment of $550 million, then adjusted to $1.051 billion.

With $3 billion of projects in Haiphong, LG is also the largest foreign investor in Haiphong today. Especially, LG Display's expansion project in Haiphong is the third billion-dollar project to be granted an investment registration certificate this year.

Fulfilling the full-year plan

According to Haiphong Statistics Office, the city plans to attract $2.5-3 billion of FDI for the whole year. However, only after three quarters, the city has reached over $2.8 billion, over 3.2 times higher than in the same period last year, and is on track to reach $3 billion with three months left.

Meanwhile, many positive signs from National Assembly Chairman Vuong Dinh Hue's working visit with the European Parliament and some European countries with many large multinational corporations have opened up opportunities to welcome capital inflows to Vietnam, including Haiphong.

Among the large corporations interested in the energy segment, the largest name is Exxon Mobil (US). This investor is determined to pursue the Blue Whale mining project, with an expected capital of tens of billions of dollars. Not only investing this project, Exxon Mobil plans to invest in a billion-dollar gas-fired power project in Haiphong. Currently, the Draft Power Development Plan VIII has proposed the development of a number of LNG power projects in the morth, including the Haiphong LNG project.

Besides, Infra Asia Investment (IAI) has invested in industrial parks in Haiphong and Quang Ninh, with a total investment of $1.2 billion. According to Fabien De Jonge, member of the IAI Board of Directors, the company is still looking to expand investment in renewable energy, including wind and solar power, among others.

Obviously, Haiphong is a hot spot on Vietnam's industrial real estate map for foreign investors.

With the results achieved in the first nine months, despite COVID-19 affecting investment promotion activities, as well as business enterprises, and infrastructure, FDI inflows into Haiphong were not interrupted.

According to Nguyen Hoang Long, director of the Haiphong Department of Planning and Investment, in the coming time, FDI will not only increase in volume but also improve in quality. Haiphong is focusing on attracting projects using advanced technology, high value-added products, and connections to the global product chains of major economic groups in the world.

National Assembly Chairman Vuong Dinh Hue receives representatives of Infra Asia Investment Company (Photo - VNA)

New challenges

The results are significant, but Long said that there are still challenges in the next stages of investment promotion and attraction. The growth rate of investment attraction in industrial parks and economic zones in 2015-2020 increased rapidly, but through analysis, the attracted capital mainly focused on a few well-known brands. Only three big corporations – LG, Bridgestone, and Regina Miracle – accounted for 82.2 per cent, while the remaining more than 200 projects accounted for only 17.8 per cent, with an average of $8.6 million per project.

“Therefore, in order to reach the goal of attracting $12.5-15 billion in 2020-2025, the challenge is to focus on attracting large investors. The policy is commensurate with the resources the city has invested in,” said Long.

According to a report by the Management Board of Haiphong Economic Zone, the current labour force in industrial zones is mainly over 30 per cent (more than 50,000 people). It is relatively difficult to attract, train, and provide high-quality human resources to meet enterprises’ demand. In addition, competitive pressure is increasing as provinces and cities bordering Haiphong are improving investment attraction, completing the infrastructure of industrial parks and economic zones in a modern and synchronous direction, while creating attractive investment policies.

Tran Luu Quang, Secretary of the Haiphong City Party Committee, emphasised that the investment attraction target for 2021-2025 is high while investment promotion will be greatly limited by the pandemic. Therefore, relevant agencies need to actively seek as well as provide advice and suggestions to attract large, quality projects that ensure environmental protection and can make important contributions to Haiphong’s development.

Accordingly, the task of adjusting the general construction planning of Dinh Vu-Cat Hai EZ, aligning with the general construction planning of Ho Chi Minh City. Besides, administrative reforms, promoting IT and digitisation to serve investors coming to Haiphong also need to be more practical.

From the perspective of an investor in industrial park infrastructure, a representative of DEEP C Haiphong said: “The pandemic is complicated in 2021, Haiphong has implemented many strict pandemic prevention measures to protect people, and other enterprises. However, this has restricted travel, hampering the company's investment promotion activities. We hope that Haiphong will accelerate vaccination to soon achieve community immunity and change the pandemic prevention plan from Zero COVID-19 to living together safely according to the current orientation of the Vietnamese government."