FDI attraction still waiting for European investors

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

Foreign investment attraction in the first two months of the year reached 4.29 billion USD, up 38.6% over the same period in 2023. Photo: D.T

New investment spurt

As expected, after a series of large-scale projects were granted investment registration certificates in February 2024, such as the 454 million USD project of Trina Solar Cell in Thai Nguyen, or the 275 million USD project of Gokin Solar Hai Ha Vietnam in Quang Ninh ..., foreign investment capital registered in Vietnam has accelerated quite strongly.

Specifically, according to data just announced by the Foreign Investment Agency ( Ministry of Planning and Investment ), as of February 20, 2024, the total newly registered capital, adjusted capital and capital contribution to buy shares and purchase capital contributions by foreign investors reached more than 4.29 billion USD, an increase of 38.6% over the same period in 2023. This is in complete contrast to the trend of the first 2 months of last year.

At this time last year, managers were worried when foreign investment in Vietnam fell by 38% compared to the same period in 2022. But now, the situation has turned around. Registered investment capital in Vietnam has increased sharply. Of which, newly registered capital alone reached nearly 3.6 billion USD, more than double the same period last year and up 36.9 percentage points compared to the increase in January 2024. The number of newly registered projects also increased by 55.2%, reaching 405 projects.

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

The largest at the moment is probably still the 662 million USD project of CapitaLand, investing in building an urban area in the Tay Mo - Dai Mo - Vinhomes Park Hanoi New Urban Area. Currently, this project is the focus of attention of the Hanoi real estate market, in the context of the supply of apartment projects slowing down significantly in recent times, causing apartment prices to increase dramatically.

However, data from the Foreign Investment Agency shows that, contrary to the strong increase in newly registered capital, both adjusted investment capital and investment capital through capital contribution and share purchase decreased, reaching 442.1 million USD (down 17.4%) and 255.4 million USD (down 68% over the same period), respectively.

However, the Foreign Investment Agency is still optimistic that the improved rate of decrease 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 trust and expand their investment and business activities in Vietnam.

Trina Solar Cell’s $454 million investment in Thai Nguyen can prove this belief. Because, before this project, Trina Solar invested in 2 other projects in Thai Nguyen, with an investment capital of $478 million.

Similarly, believing in the development potential of the Vietnamese market, Nestlé has also invested an additional 100 million USD to expand its factory in Dong Nai. With this additional capital, Nestlé's total investment in Dong Nai has reached more than 500 million USD.

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

Waiting for European and American investors

It is not difficult to see that although Vietnam's foreign investment attraction is still very positive, most of this capital comes from traditional partners, without any breakthrough from European and American investors.

In its report on foreign investment attraction in the first two months of 2024, the Foreign Investment Agency also said that Vietnam's largest investment partners are all traditional partners and come from Asia. The top 5 partners (Singapore, Hong Kong, Japan, China, and South Korea) alone account for 77% of new investment projects and nearly 85.5% of the country's total registered investment capital. Meanwhile, investment capital from European and American partners remains very modest.

Looking at the “overall ranking” of Vietnam’s investment attraction, although US investors have registered 12 new investment projects in Vietnam, the total registered capital is only 3.22 million USD - a very small number. The total registered US investment capital in Vietnam in the past 2 months is only 5.6 million USD. US investors, which should be the “number 1 investor”, are currently ranked 18th.

Meanwhile, the UK registered to invest 36.2 million USD in Vietnam. The figure for the Netherlands is 29.24 million USD; Germany is 5.86 million USD; France is 7.7 million USD…

Although it is only the first two months of the year, the current figures cannot fully reflect the trend, but clearly, investment capital from Europe and the US in Vietnam has not yet met expectations. After a series of high evaluations and affirmations of investment interest in the Vietnamese market by US and European investors last year, especially in the fields of high technology, semiconductor chips, artificial intelligence (AI) ..., public opinion is expecting a stronger acceleration of this capital flow, as well as waiting for large corporations such as Intel, Nvidia, Marvell ... to pour their money into investing in Vietnam.

Last year, when visiting Vietnam, billionaire Jensen Huang, Chairman and CEO of Nvidia Semiconductor Corporation, pledged to do his best to “make Vietnam Nvidia’s second home”. Mr. Jensen Huang also said that Nvidia will establish a legal entity in Vietnam.

The market capitalization of the world's leading AI chip company has just reached the $2 trillion mark, doubling the $1 trillion mark in May 2023. Nvidia, with its rapid growth rate, is making many partners around the world want to join hands and invest. We are certainly also waiting for Mr. Jensen Huang's interests in Vietnam to be realized. The commitments of other European and American partners are similar...

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