Vietnam is in the top foreign investment destinations.

Article and photos: GIA BAO

Over the past 35 years, foreign direct investment (FDI) has affirmed its role as a dynamic economic sector, actively contributing to Vietnam's achievements in growth, development and international economic integration. Vietnam's investment and business environment has improved significantly in recent times and has become an attractive destination for foreign enterprises. FDI enterprises investing in Vietnam also tend to expand and develop into the fields of technology, energy, etc., opening up many new development opportunities.

Trade and services are attractive sectors for foreign investors.

FDI wave shift

In the context of the COVID-19 pandemic, international organizations forecast that foreign investment flows will stagnate from mid-2022 and may remain flat in 2023. Competition to attract FDI is becoming increasingly fierce among countries in the region and around the world . According to the January 2023 survey on the business environment by the European Chamber of Commerce (EuroCham), EuroCham member enterprises assessed that Vietnam is in the top 5 global investment destinations. Specifically, the survey results showed that 41% of enterprises are shifting their operations from China to Vietnam. About 35% said that Vietnam is in the top 5 global investment destinations; 12% rated Vietnam as the leading international investment destination.

According to the 2022 survey results of the Japan External Trade Organization (JETRO) with Japanese enterprises operating in Vietnam, 60% said they would "expand their business in the next 1-2 years" (the highest in ASEAN). More than half of Japanese companies in Vietnam are export-oriented and 22% are 100% exporters. Enterprises also commented that Vietnam has advantages in high growth potential, enterprises can increase revenue by expanding markets, increasing exports... According to JETRO, in the first quarter of 2023, although the investment value decreased, the number of investments in Vietnam increased by 53%, Japanese enterprises still maintained capital-intensive investments and aimed to penetrate the expanding B2C and B2B markets in Vietnam.

At the Prime Minister's conference with foreign investors at the end of April 2023, a representative of the Korean Business Association in Vietnam (Kocham) said that there are currently 9,000 Korean enterprises investing in Vietnam and trade between the two countries has increased 175 times in the 30 years since the establishment of diplomatic relations (1992). Trade turnover in 2022 reached a historical high of 87.7 billion USD. Korean enterprises operating in Vietnam are employing about 700,000 workers...

According to Kocham, many Korean enterprises are diversifying their investment structure from manufacturing to service industry and high-tech industries, reducing the proportion of investment in labor-intensive industries. Samsung Electronics - the Korean enterprise investing the most in Vietnam - has also invested an additional 20 billion USD in the manufacturing sector, completing the construction and putting into operation the largest R&D Center in Southeast Asia from the end of 2022, elevating Vietnam to become a research and development base of Samsung Electronics. Companies such as LG Electronics, LG Display, LG Innotek are also expanding their investment to develop into a global production base for automobiles, electronics and home appliances... Lotte is considering Vietnam as a global base with 19 member companies in the group, including shopping centers, large supermarkets, hotels, duty-free shops and manufacturing companies investing in Vietnam.

Vietnam's economic growth in 2022 is a "bright spot in the gray picture" of the global economy. According to the World Bank's forecast, global growth in 2023 is at 1.7% - the lowest growth rate in the past 3 decades. The global economy remains gloomy, so investment flows are forecast to decline sharply in 2023. However, with Vietnam's efforts to facilitate FDI enterprises and a large shift of FDI capital flows from other countries to Vietnam, this promises to contribute positively to Vietnam's economic growth in the coming time.

Improve investment environment more attractive

Of the total of over 800,000 enterprises operating in Vietnam, there are more than 25,000 FDI enterprises. Speaking at a recent meeting with FDI enterprises, Minister of Planning and Investment Nguyen Chi Dung proposed a number of solutions to promote economic growth and attract FDI capital. In the short term, in addition to removing difficulties and obstacles for FDI enterprises operating in Vietnam, it is necessary to prepare to welcome the investment wave. Specifically: preparing clean land, completing infrastructure, energy, skilled labor supply, improving the capacity of domestic enterprises to participate in the value chain of FDI enterprises, increasing the competitiveness of the investment environment and harmonizing investment benefits. In the long term, continue to create a fair, open and transparent investment environment; enhance the capacity of domestic enterprises; maximize human resources to create endogenous strength; actively innovate, create, increase domestic and foreign connections; Promote investment with focus and key points; build a balanced and reasonable FDI attraction policy between regions...

According to the Vietnam Federation of Commerce and Industry, foreign investors are still increasing investment capital for projects that are being effectively implemented in Vietnam. According to the Foreign Investment Agency (Ministry of Planning and Investment), by the end of April 2023, the country had 37,065 valid FDI projects with registered capital of nearly 445.87 billion USD. Realized capital reached more than 279.8 billion USD, equivalent to nearly 62% of the total registered capital in effect. The FDI sector currently accounts for about 74% of export turnover and 65.2% of import turnover in Vietnam's total export and import turnover.

The size of Vietnam's economy in 2022 will reach about 409 billion USD. Vietnam currently has 15 new-generation free trade agreements with 60 countries and territories; including the largest markets in the world and is increasingly diversifying markets, products, and supply chains. FDI enterprises have had a positive impact on reforming and innovating economic institutions, improving the investment and business environment, the state management apparatus, and significantly improving Vietnam's reputation and position in the international arena. With the current large openness of the economy, along with the dynamism and commitment to building an action-oriented and serving Government... it is expected to create a breakthrough in attracting FDI in the coming period.

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