Foreign investment rapidly rebounds with record-breaking disbursement

Numerous foreign investors, particularly from Korea, continue to participate in Vietnam's expansion. Photo: Duc Thanh

Do Nhat Hoang, director general of the FIA said, "Although it is not the greatest growth over the same time period, it is a positive indicator that businesses are progressively recovering, sustaining, and extending their production and commercial operations following the epidemic."

In terms of dispensed capital, $22.4 billion is a record, as although 2019 was a year with a high level of disbursed foreign investment, it only reached $20.38 billion. Foreign investment spending declined over the course of two years during the epidemic, reaching $19.98 billion and $17.74 billion, respectively in 2020 and 2021.

This year, however, the figure increased to $22.4 billion, greater than before the pandemic. This indicates that Vietnam's ability to attract foreign investment is rapidly making a comeback. Disbursed money is likewise a significant factor in attracting foreign investment.

The pandemic is under control, the economic life cycle has returned to normal, and investment, production, and company endeavours are encouraged. This is why so many large-scale foreign investment projects have been constructed and finished in recent years.

Samsung Vietnam's most recent investment, the Samsung Research and Development Centre, is valued at $220 million. Attending the inauguration ceremony, Prime Minister Pham Minh Chinh stated that Samsung's inauguration of the project demonstrated responsibility, which is a prerequisite for Samsung to realise its development goals in Vietnam. It is also a testimony to the proper guidelines and procedures of the Party and the State of Vietnam in encouraging investors in science, technology, advancement, and high-tech development.

Exactly one month ago, the PM also visited the inaugural ceremony of the specialised port complex—tanks and a central utility facility—of the $5 billion SCG Chemicals project.

According to Roongrote Rangsiyopash, chairman and general director of SCG, the whole commercial venture of the project will be operational by mid-2023. Thus, after a lengthy period of anticipation, the project has almost "reached the summit" and this will undoubtedly add significantly the distribution of foreign investment capital in Vietnam now and in 2023.

In addition, a number of significant projects by international investors, such as Samsung, Goertek, and Foxconn are being expedited. Three months ago, Heineken launched the biggest brewery in Southeast Asia in the southern province of Ba Ria-Vung Tau, with the ability to produce 130,000 beer cans per hour.

Meanwhile, LEGO began building a $1.3 billion facility in the southern province of Binh Duong in early November. When projects are initiated and implemented, foreign investment statistics will accelerate dramatically. But more crucially, it implies that the economy's productive capacity is increased, thus providing a significant contribution to economic development when the economy needs additional growth engines to hasten its recovery from the pandemic's disastrous effects.

While disbursed capital has increased, registered capital has not, which has many economic experts concerned. Minister of Planning and Investment Nguyen Chi Dung has repeatedly emphasised this. Despite attracting foreign investment, notably newly registered capital has not yet rebounded, which is still seen as timely and is a general investment market trend.

The United Nations Conference on Trade and Development predicted at the beginning of the year that worldwide foreign investment would decrease or remain flat in 2022. As a result, Vietnam is not an outlier.

“Although it is not the greatest growth over the same time period, it is a positive indicator that businesses are progressively recovering, sustaining, and extending their production and commercial operations following the epidemic.”

"Due to the overall challenges of the global economy, total investment in 2022 was lower than in 2021, and the trajectory of outbound investment from industrialised nations showed symptoms of a downturn," said Hoang. "Investor uncertainty and risk due to the impact of global political conflicts, rising inflationary pressures, and supply chain disruptions will exert significant downward pressure on international foreign investment in 2022, negatively impacting the elongated investment flows of major economies, particularly investment partners of Vietnam."

According to FIA statistics, as of December 20, the total newly registered capital, adjusted and contributed money to purchase shares, and bought capital contribution of foreign investors reached roughly $27.72 billion, an increase of 89 per cent over the same period in 2021.

Although it is a far cry from last year's record of more than $38 billion, $27.72 billion is nevertheless a solid result in light of global problems.

Moreover, according to the FIA, although freshly registered investment capital declined, the number of new investment projects grew, and adjusted investment capital climbed within the same period. Specifically, 2,036 new projects recieved investment registration certificates in 2022, a 17.1 per cent increase. Newly registered capital only reached around $12.45 billion, a decrease of 18.4 per cent compared to last year, mainly because few large-scale enterprises received investment certificates this year.

Along with newly registered capital, investment capital via capital contribution and share acquisition has slowed dramatically on the worldwide market. The statistic for the whole year is 3,566 projects with capital contribution and share purchase of $5.15 billion, a decrease of 6.1 per cent in quantity and 25.5 per cent in capital compared to the same period the previous year.

In contrast, adjusted capital remains favourable. There were 1,107 projects registered to adjust investment capital in 2022 (an increase of 12.4 per cent), with the total extra registered capital amounting to almost $10.12 billion (an increase of 12.4 per cent). According to the FIA, this demonstrates the trust of international investors in Vietnam's economy and investment climate.

Many international investors, particularly Koreans, are considering new investments and expansion in Vietnam. The promises made by big firms during the Vietnamese government's recent trips to Europe, Korea, and Indonesia indicate that foreign investment in Vietnam will intensify soon.

With billions of US dollars worth of high-quality investment committed, Vietnam is set to elevate itself to value chains, becoming a key manufacturing hub in the region.

Disbursement of foreign direct investment (FDI) in the first nine months of this year reached 15.4 billion USD, up 16.2 percent year-on-year and marking a record high, a report from the Foreign Investment Department (FIA) has shown.

The consecutive on-year reduction of newly registered capital since early this year may dampen the foreign-invested capital landscape for the whole 2022 compared to initial expectations, but a rise in disbursement is showing investors’ growing confidence in the economy for the long term.