Bright "door" in attracting FDI in 2024

After a successful 2023, Vietnam's foreign direct investment (FDI) attraction is forecast to continue to be positive in 2024.

Deli Vietnam's factory in Bac Ninh . Photo: Duc Thanh

Waiting for good news

Although there are no large-scale projects, the fact that Hai Duong has just granted investment registration certificates to foreign investment projects right after the 2024 Lunar New Year holiday can be considered good news at the beginning of the year for attracting foreign investment in Vietnam. Among these, we can mention projects to produce toys, stationery, household appliances... by investor Korninghill Group Ltd (Hong Kong), with an investment capital of 3 million USD; or the project of investor Jia Ri Xing Ltd to produce walkie-talkies and plastic products, with an investment capital of about 4 million USD...

Previously, in early January 2024, on the occasion of announcing the Provincial Planning for the period 2021-2030, with a vision to 2050, Hai Duong also awarded a series of investment registration certificates and investment policies for large-scale projects, with a total scale of up to 1.5 billion USD. Among them, projects such as the Stationery Factory of Deli Vietnam Office Technology Co., Ltd. (270 million USD); the Project of Biel Crystal Technology Production Co., Ltd. (260 million USD); or the Boviet Hai Duong Solar Photovoltaic Cell Factory Project (120 million USD) ...

All are promising that Hai Duong will continue to have a successful year in attracting foreign investment. Last year, the province attracted more than 1.2 billion USD in foreign investment capital. Although ranked 11th among the localities attracting the most foreign investment last year, it is still a remarkable progress. In 2022, Hai Duong attracted only 370 million USD in foreign investment capital, ranking 17th.

At the same time Hai Duong granted investment certificates to new projects, Thai Binh received news that the Good Way Vietnam Factory Project (Taiwan) officially started construction at Lien Ha Thai Industrial Park. With a total investment capital of not much, only 45 million USD, but the fact that this project was started, with the goal of building a factory specializing in manufacturing products, connection devices, and computer peripherals, could also be a good start for the "new star" Thai Binh.

With a relatively modest capital base in attracting foreign investment (the figure in 2022 was only 307 million USD), Thai Binh is emerging as a destination chosen by many investors. In 2023, Thai Binh attracted nearly 2.8 billion USD, surpassing the 5th position among localities attracting the most foreign investment in the country.

Similarly, in 2023, Nghe An also had a breakthrough, with more than 1.6 billion USD, ranking 8th. Mr. Nguyen Duc Trung, Chairman of Nghe An Provincial People's Committee, proudly said many times that Nghe An is gathering 5 technology giants, including Foxconn, Luxshare, Goertek, Everwin and JuTeng. Investment promotion efforts are being carried out by this province, with the goal of continuing to be in the top 10 localities attracting the largest foreign investment in the country in 2024.

“We have been implementing 5 readiness measures to attract investment,” said Mr. Nguyen Duc Trung. The 5 readiness measures are readiness in planning, readiness in essential infrastructure, readiness in investment sites, readiness in human resources, and readiness in improving administrative procedures and the investment environment…

Sharing the same efforts, other localities are also actively promoting investment to attract large projects. Believing in the potential of the Vietnamese market, many investors are looking for and planning to invest, as well as expand their investment in Vietnam.

Bright "door" for Vietnam

The early signs of the year are positive. Deputy Minister of Planning and Investment Tran Quoc Phuong, when talking to reporters of Dau Tu Newspaper, also mentioned the figure of more than 2.36 billion USD of foreign investment capital registered in Vietnam in January 2024, an increase of 40.2% over the same period in 2023 and the disbursement figure of 1.48 billion USD, an increase of 9.6% over the same period last year, to emphasize that Vietnam's foreign investment attraction will continue to be positive.

“This is a very good number, showing Vietnam's attractiveness to foreign investors,” said Deputy Minister Tran Quoc Phuong.

According to the Foreign Investment Agency, in 2024, realized investment capital could reach about 23.5 billion USD, an increase of 1.3% compared to 2023. If this scenario occurs, a new record will be set. Meanwhile, with disbursed capital, the number estimated by the Foreign Investment Agency is about 36-37 billion USD, equivalent to 2023. Although there is no acceleration, this is a very meaningful number in the context of global investment flows being forecast to continue to slow down in 2024. Even China's foreign investment attraction has declined quite sharply.

The figure was just announced a few days ago, the total FDI capital in China only reached 33 billion USD in 2023, down about 80% compared to 2022. Thus, foreign investment in China has decreased for the second consecutive year and is only less than 10% compared to the peak of 344 billion USD recorded in 2021.

If foreign investment does not flow into China, it is expected that this capital flow will flow into other economies, including Vietnam, especially in new investment fields such as semiconductors, AI, high-tech industry, etc. This is the field that Vietnam is recently looking to attract investment in and foreign investors are also considering Vietnam as the center of the global supply chain.

Vietnam is expected to be one of the economies to benefit from the US CHIPS and Science Act, which will see the US spend $500 million to improve semiconductor manufacturing capacity, cybersecurity and the global business environment.

In a discussion related to the development of Vietnam's semiconductor industry, Minister of Planning and Investment Nguyen Chi Dung also called on the US side to allocate resources from this 500 million USD to support Vietnam in developing the semiconductor industry.

The opportunity is huge for Vietnam, because most of the projects in the semiconductor sector are large-scale. However, speaking with reporters from Dau Tu Newspaper, Mr. Le Quang Tuan, Vietnam Economic and Cultural Office in Taipei, said that investing in semiconductors is a special field. To attract investment, Vietnam must solve problems related to human resources and supply ecosystem.

“Investment support policies are also an issue. In TSMC’s latest overseas investment project in Germany, the German government supported up to 7 billion EUR out of the total 10 billion EUR investment of the project,” said Mr. Le Quang Tuan.

Currently, Vietnam is still making efforts to find and build the most effective investment support mechanism for foreign investors, including cash support options. However, competition to attract foreign investment is still fierce and it is not easy for Vietnam to win.

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