A bright future awaits in attracting FDI in 2024.

Báo Đầu tư•23/02/2024

Following a successful 2023, the outlook for Vietnam's foreign direct investment (FDI) attraction remains positive in 2024.

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

Waiting for good news.

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

Earlier, in early January 2024, coinciding with the announcement of the Provincial Planning for the period 2021-2030, with a vision to 2050, Hai Duong also granted a series of investment registration certificates and investment approvals for large-scale projects, totaling up to 1.5 billion USD. These include projects such as the Stationery Manufacturing Plant of Deli Vietnam Office Technology Co., Ltd. (270 million USD); the project of Biel Crystal Technology Manufacturing Co., Ltd. (260 million USD); and the Boviet Hai Duong Solar Photovoltaic Panel Manufacturing Plant (120 million USD)...

All signs point to Hai Duong continuing its successful year in attracting foreign investment. Last year, the province attracted over $1.2 billion in foreign investment. While ranking 11th among localities attracting the most foreign investment last year, this is still a remarkable improvement. In 2022, Hai Duong only attracted $370 million in foreign investment, ranking 17th.

At the same time that Hai Duong province was awarding investment certificates to new projects, Thai Binh province received news that the Good Way Vietnam Factory Project (Taiwan) had officially commenced construction in the Lien Ha Thai Industrial Park. With a relatively small total investment of only 45 million USD, the commencement of this project, aiming to build a factory specializing in the production of computer connectors and peripherals, could also be a promising start for Thai Binh, a "new star" in the province.

Despite its relatively modest foreign investment attraction figures (only $307 million in 2022), Thai Binh is rapidly emerging as a preferred destination for investors. In 2023, Thai Binh attracted nearly $2.8 billion, rising to fifth place among localities attracting the most foreign investment nationwide.

Similarly, in 2023, Nghe An also made a breakthrough, attracting over $1.6 billion, ranking 8th. Mr. Nguyen Duc Trung, Chairman of the People's Committee of Nghe An province, has repeatedly and proudly stated that Nghe An is attracting five major technology companies, including Foxconn, Luxshare, Goertek, Everwin, and JuTeng. The province is making efforts to promote investment, aiming to remain in the top 10 localities attracting the most foreign investment in the country in 2024.

"We have been implementing five readiness measures to attract investment," said Mr. Nguyen Duc Trung. These five readiness measures are: readiness in planning, readiness in essential infrastructure, readiness in investment land, readiness in human resources, and readiness to improve administrative procedures and the investment environment…

In line with this effort, other localities are also actively promoting investment to attract large projects. Confident in the potential of the Vietnamese market, many investors are seeking out and planning investments, as well as expanding investments in Vietnam.

A bright "door" for Vietnam

The early year signals are positive. Deputy Minister of Planning and Investment Tran Quoc Phuong, in an interview with a reporter from the Investment Newspaper, also mentioned the figure of over US$2.36 billion in registered foreign investment in Vietnam in January 2024, a 40.2% increase compared to the same period in 2023, and disbursed capital reaching US$1.48 billion, a 9.6% increase compared to the same period last year, emphasizing that Vietnam's foreign investment attraction will continue to be promising.

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

According to the Foreign Investment Agency, in 2024, realized investment capital could reach approximately US$23.5 billion, a 1.3% increase compared to 2023. If this scenario occurs, a new record will be set. Meanwhile, the disbursed capital is estimated by the Foreign Investment Agency to be around US$36-37 billion, equivalent to 2023. Although there is no acceleration, this is a very significant figure in the context of global investment flows being projected to continue slowing down in 2024. Even China has seen a significant decline in attracting foreign investment.

According to figures released a few days ago, total FDI into China reached only $33 billion in 2023, a decrease of approximately 80% compared to 2022. Thus, foreign investment in China has declined for the second consecutive year and is less than 10% of the peak of $344 billion recorded in 2021.

If foreign investment does not flow into China, then it is expected that this capital will go to other economies, including Vietnam, especially in new investment areas such as semiconductors, AI, and high-tech industries. These are precisely the areas that Vietnam has recently been seeking to attract investment in, and foreign investors are also considering Vietnam as a focal point of the global supply chain.

Recent information indicates that Vietnam will be one of the economies benefiting from the US Chips and Science Act. Under this act, the US will spend $500 million to improve semiconductor manufacturing capabilities, cybersecurity, and the business environment globally.

During a roundtable discussion on the development of Vietnam's semiconductor industry, Minister of Planning and Investment Nguyen Chi Dung also called on the US to allocate resources from this $500 million grant to support Vietnam's semiconductor industry development.

The opportunities are immense for Vietnam, as most semiconductor projects are large-scale. However, in an interview with a reporter from the Investment Newspaper, Mr. Le Quang Tuan, from the Vietnam Economic and Cultural Office in Taipei, stated that investing in semiconductors is a specialized field. To attract investment, Vietnam must address issues related to human resources and the supply chain ecosystem.

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

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

Source