FDI inflows have been recognized as one of the "pillars" of Vietnam’s economic growth.

A series of FDI "eagles" come to Vietnam to find strategic locations

Vietnam is becoming a promising destination for large enterprises. Recently, 205 Korean businesses accompanied President Yoon Suk-yeol to Vietnam on a 3-day trip.

According to Pulse News (Korea), Mr. Yoon Suk-yeol was accompanied by the largest business delegation ever, which shows that Korea attaches great importance to strengthening economic ties, especially in the fields of services and infrastructure.

Leaders of leading Korean corporations were present on this trip, including Samsung Electronics Executive Chairman Jay Y. Lee, SK Group Chairman Chey Tae-won, Hyundai Motor Group Chairman Euisun Chung, LG Group Chairman Koo Kwang-mo, Lotte Group Chairman Shin Dong-bin, and Hanwha Group Vice Chairman Kim Dong-kwan.

Pulse News said that Vietnam is currently the third largest trading partner and an important ASEAN partner of South Korea. Both countries are aiming to reach $150 billion in trade by 2030.

At the Vietnam - Korea Business Forum, held on the afternoon of June 23, an important information was shared by Mr. Do Nhat Hoang, Director of the Foreign Investment Department (Ministry of Planning and Investment), that Korean investors will invest billions of USD in Vietnam in the near future.

“ We have a list of dozens of projects waiting, some hundreds of millions of dollars, but also billions of dollars. We will soon have new information about these projects,” said Mr. Do Nhat Hoang.

President Yoon Suk Yeol speaks during a dinner with a Korean business delegation at a hotel in Hanoi on June 22, 2023. Photo: Yonhap

Previously, according to the Foreign Investment Agency (Ministry of Planning and Investment), in the first 5 months of 2023, Korean investors poured 666.52 million USD into Vietnam. This is the registered capital of 167 new investment projects, 122 capital adjustment projects and 364 capital contribution and share purchase projects of investment projects in Vietnam.

In particular, in the past 6-7 years, Korea has always been the leading foreign investment partner in investing in Vietnam, surpassing Singapore with 9,666 projects, with a total registered capital of 81.5 billion USD.

Previously, in March this year, the business delegation of the US-ASEAN Business Council (USABC) had a visit and worked in Vietnam. This is also the largest US business delegation to Vietnam ever. with very notable names such as military-industrial corporation Lockheed Martin, Boeing, SpaceX, Apple, Amazon, Meta, Netflix...

US-ASEAN Business Council President Ted Osius said that US businesses consider Vietnam a strategic market with long-term investment commitments. Businesses participating in the trip have proposed new ideas and new opportunities for business investment in Vietnam, especially in the fields of creative industries, tourism, automobiles, aviation, digital economy, medical equipment, energy, banking...

The American business delegation discussed with the leaders of the Ministry of Finance on March 21. Photo: Ministry of Finance

Why has Vietnam become a ’magnet’ to attract FDI?

According to the investment report 2021 of the United Nations Conference on Trade and Development, Vietnam has for the first time entered the top 20 countries attracting the most FDI in the world in 2020, with a total foreign direct investment capital of up to 16 billion USD at that time.

Meanwhile, assessing the year 2022, Prof. Edmund Malesky of Duke University (USA), said that Vietnam ended this year as "the best performing economy in Asia", largely due to its ability to attract FDI moving from China.

Entering 2023, despite world fluctuations, Vietnam’s total registered FDI in the first four months of the year still reached nearly $8.9 billion. Mr. Do Nhat Hoang - Director of the Foreign Investment Department (Ministry of Planning and Investment) said that foreign investors are still very confident in the growth potential of the Vietnamese market.

Source: Vietnam News Agency

Explaining Vietnam’s attraction to foreign investors, Sputnik news agency (Russia) said that Vietnam has had a high growth rate despite having to cope with the epidemic and unstable world situation. The manufacturing industry in Vietnam continues to expand, especially in high-tech fields, creating momentum for large enterprises to shift production from China to Vietnam.

In addition, with more than 10 international Free Trade Agreements signed, including with the European Union (EU) and the United Kingdom, the Government of Vietnam is an important partner in the world community. When moving to Vietnam, companies not only benefit from continuing to export to the US, but also to other markets.

Geographical location and improved infrastructure are also contributing factors to Vietnam’s investment attraction. Besides, Vietnamese labor is relatively cheap and Vietnamese workers have good discipline and capacity.

Growth forecast far exceeds the world average

Up to now, FDI inflows have been recognized as one of the "pillars" of Vietnam’s economic growth.

The export value of goods of the FDI enterprise sector accounted for 27% in 1995 but has nearly tripled to 73.6% of the country’s total export turnover (reaching $245.22 billion, including crude oil) in 2021.

In the period 2016-2020, the group of electronics, computers and components of Vietnam, with FDI capital, has grown by 23.8% on average, bringing Vietnam from 47th position in 2001 to 12th position in the world and 3rd in ASEAN in terms of electronics export.

The OECD forecasts that Vietnam will continue to lead the top 5 largest economies in Southeast Asia. Photo: Government Newspaper

Vietnam’s digital economy growth rate according to Google Temasek’s estimate in 2021 has increased by 28%, ranking first in Southeast Asia with 1,400 digital technology enterprises with foreign revenue.

Recently, speaking at the opening of the ASEAN Investment Conference organized by Maybank in Singapore, Mr. Khairussaleh Ramli, Chairman and Chief Executive Officer (CEO) of Maybank Group, affirmed that Vietnam’s economy is in the group expected to grow rapidly in ASEAN, and far exceeds the expected global GDP growth of only 2 % .

Meanwhile, in April, the Organization for Economic Co-operation and Development (OECD) forecast that Vietnam’s economy will grow by 6.6% in 2023 and at a similar rate in 2024 thanks to foreign investment as the main driving force. Vietnam’s growth rate will continue to lead the top 5 largest economies in Southeast Asia.

According to experts, in order to make a difference and continue to retain foreign businesses, Vietnam needs to create a business environment suitable to the requirements of corporations, especially large corporations that can make long-term investments.

Besides, Vietnam also needs to strengthen infrastructure, reform institutions and administrative procedures to compete more strongly with other countries in the region in bringing benefits to investors.