Billionaire Nvidia wants to turn Vietnam into his "second homeland", how many "eagles" will follow?

Upon arriving in Vietnam, billionaire Jensen Huang, Chairman and CEO of Nvidia Corporation, stated his desire to make Vietnam Nvidia's "second home." This statement inspired investors, but how many "big players" would choose Vietnam as their second home, and how can Vietnam be chosen?

How many "big players" would like to choose Vietnam as their second home, and how can Vietnam be chosen? (Source: VNA)

Brightly colored puzzle piece

From a major concern at the beginning of the year, attracting foreign investment has unexpectedly become a bright spot in the 2023 economic picture. Since the Foreign Investment Agency ( Ministry of Planning and Investment ) announced in late December 2023 that Vietnam had registered $36.61 billion in foreign investment and achieved a record disbursement of nearly $23.2 billion, this has been widely discussed.

On the morning of December 29, 2023, when the General Statistics Office held a press conference on the socio -economic situation in 2023, attracting foreign investment became a major concern, even though this question has rarely been mentioned at such meetings in the past. This is understandable, given the impressive figure of US$36.61 billion, a 32.1% increase compared to the same period in 2022. Notably, of this amount, newly registered capital reached nearly US$20.2 billion, a 62.2% increase year-on-year. Meanwhile, investment through capital contributions and share purchases reached over US$8.5 billion, a 65.7% increase. These are all impressive growth rates.

In fact, at the beginning of 2023, in an interview with a reporter from the Investment Newspaper, Mr. Do Van Su, Deputy Director of the Foreign Investment Agency, predicted that foreign investment attraction in 2023 could reach 36-38 billion USD, while disbursed capital would be around 22-23 billion USD. One of the reasons is that China's opening up of its economy will have a positive impact on attracting foreign investment to Vietnam.

“In the region, China remains the top investment destination, so when they open up, capital will flow into this market, limiting investment in Vietnam and other economies. Conversely, the shift of investment capital from South Korea, Japan, Taiwan… away from China will accelerate. This shift will be accelerated until 2025,” said Mr. Do Van Su.

But perhaps, until the final months of 2023, especially in the first half of the year, few believed that figure could be achieved. This is because, in the first six months, the registered capital was only $13.43 billion, a decrease of 4.3% compared to the same period in 2022. Only when LG Innotek's project to increase its capital by over $1 billion in Hai Phong was recorded did foreign investment in Vietnam "reverse course." In the first seven months, the figure reached nearly $16.24 billion, an increase of 4.5% compared to the same period in 2022.

Since then, the trend has been increasingly positive, especially with continued investment in large-scale projects. From the JINKO Solar Hai Ha photovoltaic cell technology complex project, with an investment of $1.5 billion; to the $690 million Lite-ON project in Quang Ninh; then the $500 million SK project in Hai Phong; the Sumitomo Mitsui Banking Corporation's $1.5 billion acquisition of VPBank shares; and most recently, the nearly $2 billion gas-fired power plant project in Thai Binh… All of these contribute to a bright picture of the 2023 economy.

"Vietnam continues to be a safe and attractive destination for investors," said Mr. Do Nhat Hoang, Director of the Foreign Investment Agency.

Vietnam has clearly continued to achieve great success in attracting foreign investment, after more than 35 years of effort.

Second home

The figures, especially the record-breaking disbursement of funds, are very exciting. But perhaps that excitement comes more from government agencies and policymakers.

Investors and businesses, both domestic and foreign, are perhaps more enthusiastic about the high-level visits to Vietnam by US President Joe Biden, Chinese President Xi Jinping, South Korean President Yoon Suk Yeol, and other foreign trips by national leaders. This is because these visits open up unprecedented opportunities for investment and business cooperation.

President Joe Biden's visit alone, when the two countries decided to focus their cooperation on innovation, science and technology, including semiconductors and AI, created multi-billion dollar opportunities. A host of major players, such as Intel, Qualcomm, Ampere, ARM, Synopsys, Infineon, Marvell, and others, continued to seek strategic partnerships.

Han Micron also inaugurated a new factory, worth $600 million, which will be expanded to $1 billion in the coming years. Amkor has put phase I of its $1.6 billion factory into operation. Sysnosys, Marvell, Nvidia, and others are also exploring new collaboration opportunities in Vietnam.

“We see incredible opportunities for Vietnam to develop its footprint in the global semiconductor supply chain,” said John Neuffer, President of the Semiconductor Business Association of America.

But this "incredible" opportunity is not limited to the semiconductor industry in particular, but extends to high-tech industries in general. Therefore, a series of investment and production expansion plans in Vietnam by Foxconn, Compal, Goertek, Luxshare, Samsung, LG, and others have been and are being implemented.

John Neuffer mentioned the "boom" in the semiconductor market in 2023, after the difficulties of the Covid-19 pandemic had passed. Vietnam also seems to be "booming" in attracting foreign investment.

Immediately following the visit of the American Semiconductor Association delegation to Vietnam, billionaire Jensen Huang, Chairman and CEO of Nvidia Corporation, visited Vietnam. This visit instantly created a huge stir in the global technology community and among investors. This is because Jensen Huang is considered a "wizard" in the global AI industry. Furthermore, Nvidia's growth has been astonishing, with its market capitalization reaching $1 trillion by the end of May 2023.

“We are committed to making every effort to make Vietnam Nvidia’s second home. We will establish a legal entity in Vietnam,” Jensen Huang said during his visit to Vietnam.

And this has generated great excitement and inspiration among investors. Although Jensen Huang's statement has not yet come true, the question remains: how many more "eagles" want to make Vietnam their second home?

This figure is actually quite significant. For many years, Samsung has considered Vietnam its second home, and that's why this investor has poured $20 billion into the Vietnamese market, making Vietnam not only an investment hub but also an R&D center.

“We will contribute to building our second home by striving for Vietnam’s development, for example by supporting the development of supporting industries in Vietnam,” said Mr. Choi Joo Ho, General Director of Samsung Vietnam, adding that the philosophy of “shared prosperity” has always been Samsung’s focus since its early days in Vietnam.

While not explicitly stating that Vietnam is a "second home," Mr. Furusawa Yasuyuki, a member of the Executive Board of AEON Group (Japan) in charge of the Vietnamese market and General Director of AEON Vietnam, said that for AEON, Vietnam is its "second most important market" alongside Japan. Therefore, AEON is accelerating its investment, having recently signed cooperation agreements to open large shopping malls in Can Tho and Bac Giang. The investment for these two malls could reach up to 500 million USD.

Meanwhile, companies like Foxconn, Goertek, and Intel all consider Vietnam one of their most important manufacturing hubs. They continue to invest in the promising Vietnamese market.

Attracting "big players" to build houses.

In late 2023, Intel decided to invest $25 billion in Israel. Although this information had been rumored beforehand, the figure of $25 billion surprised observers. Reuters reported that to secure this project, the Israeli government agreed to provide Intel with a grant of $3.2 billion, equivalent to 12.8% of the total investment.

This story is similar to previous ones, where both Poland and Germany made significant commitments to secure large Intel projects. In Poland, it was $4.6 billion, while in Germany it was €30 billion ($33 billion). Meanwhile, there are reports that Intel has canceled its Phase II investment plan in Vietnam.

Although the information has not been confirmed, this shows that competition to attract investment is becoming increasingly fierce. Vietnam's "rivals" will not only be regional economies such as Thailand, Malaysia, India, and even China, but potentially even further afield.

In its latest report, the 1317 Macroeconomic Steering Task Force stated that, despite expectations of a new wave of investment opening up in Vietnam, especially following cooperation commitments from US partners and while Vietnam remains a top priority, significant challenges remain. The forecast for 2024 indicates greater uncertainty in global foreign investment prospects, impacting capital flows, including the "repatriation" trend and the relocation of production closer to and to friendly allies.

Furthermore, according to the 1317 Macroeconomic Management Task Force, from January 1, 2024, Vietnam will also participate in the global minimum tax framework. Therefore, the Government needs to promptly issue policies to attract and retain investors, as well as support businesses in seizing new opportunities from the shift in production supply chains, and attract more multinational corporations to invest in new fields such as semiconductor chips and AI.

The Ministry of Planning and Investment is drafting a Decree on the establishment, management, and use of an Investment Support Fund, with the goal of attracting and retaining major investors, especially in the high-tech sector. “Recently, the National Assembly issued a Resolution allowing the Government to develop a Decree establishing an Investment Support Fund for a number of high-tech projects, including those in the semiconductor industry. We are actively working on it and will soon issue it by mid-2024,” said Minister of Planning and Investment Nguyen Chi Dung.

But along with incentive mechanisms, what investors also need is readiness in terms of land, infrastructure, human resources, and even more robust reforms of administrative procedures and the investment environment, as well as the development of supporting industries, and even the strengthening of the domestic business sector, to be strong enough to become their partners in the global game.

(according to Investment Newspaper)

Source: https://baoquocte.vn/ty-phu-nvidia-muon-bien-viet-nam-thanh-que-huong-thu-hai-co-bao-nhieu-dai-bang-se-theo-got-256077.html