Attracting FDI still awaits European investors.

Although Vietnam is actively attracting foreign investment, the majority of this capital comes from traditional partners, and there has not been a breakthrough from European and American investors.

Foreign direct investment (FDI) attracted in the first two months of the year reached US$4.29 billion, an increase of 38.6% compared to the same period in 2023. Photo: D.T.

New investments are accelerating.

As expected, following a series of large-scale projects receiving investment registration certificates in February 2024, such as the $454 million project of Trina Solar Cell in Thai Nguyen, or the $275 million project of Gokin Solar Hai Ha Vietnam in Quang Ninh ..., registered foreign investment in Vietnam has seen a significant surge.

Specifically, according to data recently released by the Foreign Investment Agency ( Ministry of Planning and Investment ), as of February 20, 2024, the total registered capital for new investments, adjustments, and capital contributions through share purchases and equity investments by foreign investors reached over US$4.29 billion, an increase of 38.6% compared to the same period in 2023. This is in stark contrast to the trend of the first two months of last year.

This time last year, policymakers were concerned as foreign direct investment (FDI) into Vietnam fell by 38% compared to the same period in 2022. But now, the situation has reversed. Registered FDI in Vietnam has increased sharply. Specifically, newly registered capital reached nearly $3.6 billion, more than double the amount registered in the same period last year and a 36.9 percentage point increase compared to January 2024. The number of newly registered projects also increased by 55.2%, reaching 405 projects.

"New investments have increased sharply in both the number of projects and the total registered capital," said Mr. Do Nhat Hoang, Director of the Foreign Investment Agency, explaining that this strong acceleration is not only due to the significant increase in the number of projects, but also to the emergence of large-scale projects worth around 400-600 million USD.

The largest project at the moment is probably still CapitaLand's $662 million investment in the construction of an urban area in the Tay Mo - Dai Mo New Urban Area - Vinhomes Park in Hanoi . Currently, this project is the focus of attention in the Hanoi real estate market, amidst a significant slowdown in the supply of apartment projects recently, causing a dramatic increase in apartment prices.

However, data from the Foreign Investment Agency shows that, contrary to the strong upward trend of newly registered capital, both adjusted investment capital and investment through capital contributions and share purchases decreased, reaching US$442.1 million (down 17.4%) and US$255.4 million (down 68% compared to the same period) respectively.

Nevertheless, the Foreign Investment Agency remains optimistic, believing that the improved rate of decline in adjusted capital compared to January 2024 (adjusted capital in the first two months of 2024 increased by 5.7 percentage points compared to January 2024 - PV) shows that foreign investors continue to have confidence and expand their investment and business activities in Vietnam.

Trina Solar Cell's $454 million investment in Thai Nguyen proves this point. Prior to this project, Trina Solar had already invested in two other projects in Thai Nguyen, totaling $478 million.

Similarly, confident in the growth potential of the Vietnamese market, Nestlé has also invested an additional $100 million to expand its factory in Dong Nai. Adding this capital, Nestlé's total investment in Dong Nai has reached over $500 million.

“This project is a testament to Nestlé’s long-term investment commitment in Vietnam,” said Binu Jacob, General Director of Nestlé Vietnam.

Waiting for European and American investors.

It's easy to see that, although Vietnam's foreign investment attraction remains very active, the majority of this capital comes from traditional partners, and there hasn't been a breakthrough from European and American investors.

According to a report on foreign investment attraction in the first two months of 2024, the Foreign Investment Agency also stated that Vietnam's largest investment partners are all traditional partners from Asia. The top five partners (Singapore, Hong Kong, Japan, China, and South Korea) alone accounted for 77% of new investment projects and nearly 85.5% of the total registered investment capital nationwide. Meanwhile, investment capital from European and American partners remains very modest.

Looking at the overall ranking of Vietnam's investment attraction, although American investors registered 12 new projects in Vietnam, the total registered capital only reached $3.22 million - a very small figure. The total registered investment capital from the US in Vietnam over the past two months was only $5.6 million. American investors, who should be the "number one investor," are currently ranked 18th.

Meanwhile, the UK registered investments in Vietnam totaling $36.2 million. The figures for the Netherlands were $29.24 million; Germany $5.86 million; and France $7.7 million…

Although it's only the first two months of the year, the current figures don't fully reflect the trend, but it's clear that investment from Europe and America into Vietnam has yet to meet expectations. Following a series of positive assessments and affirmations of investment interest in the Vietnamese market from American and European investors last year, especially in high-tech sectors, semiconductors, and artificial intelligence (AI), the public is expecting a stronger acceleration of this capital flow, and is anticipating large corporations like Intel, Nvidia, and Marvell investing heavily in Vietnam.

Last year, during a visit to Vietnam, billionaire Jensen Huang, Chairman and CEO of Nvidia Semiconductor Corporation, pledged to do everything possible to "make Vietnam Nvidia's second home." Mr. Huang also stated that Nvidia would establish a legal entity in Vietnam.

The market capitalization of this world-leading AI chip manufacturer has just reached $2 trillion, doubling the $1 trillion figure from May 2023. Nvidia, with its rapid growth, is attracting many partners worldwide eager to collaborate and invest. We are certainly also waiting for Mr. Jensen Huang's interests in Vietnam to materialize. The commitments from other European and American partners are similar…

Source