Scale-up seen in key foreign ventures

Many multinational corporations are attracted by Vietnam’s lasting economic and political stability, photo Le Tien

Construction is due to start on January 21 on a factory manufacturing electronic products, network equipment, and multimedia audio products for China’s high-tech firm Goertek Group, after Nghe An People’s Committee last week awarded a $400 million investment adjustment registration certificate. The adjustment contributed to increasing the group’s investment to $500 million in total. The original investment certificate was granted three months ago.

The investor is expected to complete the construction of phase 1 by June 2022, after which, it will go into production and create around 5,000 jobs. The phase-2 construction is planned to be completed in mid-2023, creating jobs for more than 30,000 workers.

Jiang Hong Zhai, senior vice president of Goertek Group and general director of Goertek Vina, said, “Along with preferential policies in investment promotion, the company is impressed with the efficiency of the administrative procedure approval. We took only 10 working days to complete the application for the phase 1, which creates confidence for the group to continue to expand investment.”

In late December 2021, Hong Kong-based Ju Teng International Holdings Ltd. was granted an investment certificate for its electronic component and automobile accessories project also in the central province of Nghe An, worth $200 million. Work on the project is expected to commence in March and come into operation in October next year.

Nguyen Dinh Nam, founder and CEO of investment consultancy IPA Vietnam, told VIR that numerous partners are preparing for procedures such as vaccine inoculations, the booking of plane tickets, and isolation policies in order to enter Vietnam to survey investment opportunities.

Among them, an investment fund from Singapore is interested in contributing capital and purchasing stakes in commercial real estate, renewable energy, and technology in Vietnam, with a total investment capital sum of $500 million.

“The fund selected the partner in Vietnam, they are just waiting for approval to enter the country to sign an agreement,” Nam said.

Major multinationals like Nike and Foxconn expanded their operations in Vietnam last year, showcasing increased interest in doing business in the country.

Despite COVID-19, the total registered foreign direct investment (FDI) inflows into 2021 hit $31.15 billion, an increase of 9.2 per cent on-year, according to the statistics published by the Foreign Investment Agency under the Ministry of Planning and Investment.

As of December 20, 2021, both newly- and additionally- registered capital were up against the year previously. Just over $15 billion was poured into 1,738 newly-licensed projects, a decrease of 31.1 per cent in number but a rise of 4.1 per cent in value. Another 985 projects registered additional capital of more than $9 billion, down 13.6 per cent in volume but up 40.5 per cent in value annually.

The volume of projects with investment capital of less than $5 million declined by 33.9 per cent on-year, and ventures at a scale of less than $1 million hit 33.2 per cent.

Tran Thi Thu Huong, senior investment expert for Sojitz and deputy general director of Long Duc Industrial Park in the southern province of Dong Nai, said, “Small-sized investors are cautious when it comes to placing money overseas, which is why the number of small-scale projects has decreased recently. However, large-scale groups with power potential are still expanding their operations.”

Huong added that multinationals have been encouraged to shift operations to ensure their supply chains. “They place a priority on selecting countries with political and social stability, including Vietnam,” she added.

In a bid to attract large-scale and high-quality investments, the government has issued preferential policies to attract investors. For example, in October 2021, the prime minister issued Decision No.29/2021/QD-TTg, providing the levels, duration, and conditions for the application of special incentives for investment projects specified in Article 20.2 of the 2020 Law on Investment.

As the new rules aim to raise the quality and efficiency of foreign investment as well as constitutionalise the resolutions to catch up with Industry 4.0, Decision 29 is expected to help attract more FDI flows to Vietnam, especially projects which may have a greater impact on socioeconomic development.