Attracting foreign investment waiting for a breakthrough

To achieve the target of attracting $39-40 billion in foreign investment this year, a breakthrough in the final months of the year is crucial.

The government expects to attract foreign investment this year at a level similar to last year, around 39-40 billion USD. Photo: D.T.

Signs of deceleration are appearing.

Attracting foreign investment remains a bright spot in the economy . This was reaffirmed once again when the Government reported to the National Assembly and when National Assembly deputies discussed the socio-economic situation in the plenary session. “Exports and imports and foreign direct investment have become outstanding highlights, reflecting the confidence of international investors in Vietnam’s investment environment,” said Delegate Be Minh Duc (Cao Bang).

Furthermore, not only in terms of quantity, but also in terms of quality, the emergence of large investment projects in the fields of semiconductors, energy (battery production, photovoltaic cells, silicon rods), component manufacturing, electronic products, and high value-added products… is also highly appreciated by National Assembly delegates.

“It is projected that total import and export turnover in 2024 will reach a record high, exceeding 800 billion USD. This shows the recovery of domestic production and consumer demand in various markets, with exports from the foreign-invested sector accounting for a high proportion. Thus, businesses in this sector are doing very well based on the preferential mechanisms and policies of the State, as evidenced by the fact that many large corporations are researching and committing to invest in the fields of electronics, semiconductor chips, green energy, and renewable energy,” commented delegate Trinh Lam Sinh (An Giang).

This is a fact. However, recent statistics on foreign investment attraction show that foreign investment in Vietnam is showing signs of slowing down. According to the Foreign Investment Agency (Ministry of Planning and Investment), in the first 10 months of 2024, registered foreign investment in Vietnam reached nearly US$27.26 billion, of which newly registered capital was nearly US$12.23 billion; investment through capital contributions and share purchases reached over US$3.68 billion; and adjusted capital reached nearly US$8.35 billion.

It can be seen that, although foreign investment in Vietnam remains on a positive trend, there are signs of slowing growth. In the first 10 months of 2024, total registered foreign investment in Vietnam increased by only 1.9%, a decrease of 9.7 percentage points compared to the increase in the first 9 months. Notably, new investment capital, after a period of relatively strong growth, decreased by 2.5%; even the number of newly registered projects only increased slightly by 1.4% compared to the same period last year.

This is noteworthy. The reason, as pointed out by the Foreign Investment Agency, is that new investment projects in October 2024 were small-scale, with only a few projects having investment capital ranging from over $100 million to over $300 million. In contrast, October 2023 saw three projects with large investment capital ranging from over $500 million to $1.5 billion.

Although these are only initial signs, a slowdown in attracting foreign investment has already emerged. The lack of large-scale projects is also noteworthy. It is highly likely that these factors will impact the foreign investment attraction targets for this year.

The government, in its report to the National Assembly, stated that it projected foreign investment attraction this year to reach a figure similar to last year, approximately $39-40 billion. However, after 10 months, the figure has only reached nearly $27.26 billion, still more than $10 billion short of the target. Bridging this gap will require considerable effort.

Over the past 10 months, the country has only attracted nearly $27.26 billion in foreign investment, falling short of the target set for 2024 by more than $10 billion. Photo: Duc Thanh. Graphics: Dan Nguyen

Waiting for a breakthrough

Although foreign investment in Vietnam is beginning to show signs of slowing down, opportunities and expectations remain very high, especially as several large-scale investment projects, such as Samsung's project, are awaiting investment registration certificates. At the same time, opportunities to attract investment in high-tech sectors, including the semiconductor industry, are opening up.

Speaking at the opening ceremony of the Vietnam Semiconductor Industry Exhibition 2024 yesterday (November 7th), Mr. KC Ang, Chairman of the Southeast Asia Advisory Board of SEMI and Chairman of the Asia region of Global Foundries, once again affirmed: "Vietnam has many opportunities to contribute to the semiconductor industry supply chain."

In response, Minister of Planning and Investment Nguyen Chi Dung, Deputy Head of the National Steering Committee on Semiconductor Industry Development, emphasized Vietnam's determination to attract investment and develop the semiconductor industry in particular, and high-tech industries in general.

According to the Minister, to promote investment in this sector, Vietnam has been building an attractive business environment with many incentives for high-tech enterprises, including the application of special investment procedures. These policies are expected to be approved by the National Assembly at its eighth session.

In addition, according to Minister Nguyen Chi Dung, the Government will issue a Decree on the establishment, management, and use of the Investment Support Fund to directly support businesses in this sector in training, human resource development, investment in fixed assets, production of high-tech products, etc., thereby contributing to enhancing Vietnam's position on the global semiconductor industry map.

Currently, many investors are also waiting for Vietnam to approve these policies before making new investment decisions. Once the policies are enacted, and if necessary, in 2024, more large-scale projects will be poured into Vietnam.

During discussions in the National Assembly, delegates also emphasized the need to improve the investment and business environment, train high-quality human resources, and prepare necessary resources such as land and energy for large-scale projects. "We need to accelerate the reduction and simplification of administrative procedures and business regulations," said delegate Nguyen Thanh Nam (Phu Tho).

Mr. Nguyen Thanh Nam cited the example of the implementation of two key projects for the construction and operation of industrial park infrastructure in Ha Hoa and Tam Nong districts of Phu Tho province. Although regulations stipulate that the total time for processing investment approval procedures should not exceed 3 months, and the time for obtaining opinions from relevant state agencies on the appraisal process should not exceed 15 days, the investment procedures for these two projects have not been completed for 4-5 years.

"Investors are still waiting anxiously, leading to missed investment opportunities, and they are left with the thought that the road ahead is long and fraught with uncertainty," said delegate Nguyen Thanh Nam.

To achieve a breakthrough in attracting investment, especially in high-tech sectors such as semiconductors and AI, this is clearly something that needs to be improved quickly.

Source: https://baodautu.vn/thu-hut-dau-tu-nuoc-ngoai-cho-dot-pha-d229442.html