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Vietnams FDI attraction: Jumping 95 places in 34 years
Date: 7/24/2023 9:46:42 AM
Currently, Vietnam ranks 25th out of 60 countries attracting the most attractive FDI in the world, surpassing countries in Southeast Asia that are very strong in attracting FDI such as Indonesia, Philippines and Thailand.
According to the World Bank (WB), in 1989, in terms of attracting foreign investment, Vietnam ranked 9/10 in ASEAN and 123/160 in the world. 34 years later, in 2022, Vietnam ranks 3/10 in ASEAN and 28th in the world.
From 123/160th place jumped to 28th/160th
Within 34 years, in the World Bank’s ranking of attracting foreign investment in the world for the period 1989 - 2022, Vietnam has risen from 123/160 position to 28th, which is 95 places. Foreign investment in Vietnam has increased 4,634 times during this period, from $4.07 million in 1989 to $19 billion in 2022.
On December 29, 1987, the National Assembly of Vietnam officially passed the Law on Foreign Investment in Vietnam/ This is the most important legal document formalizing the receipt of foreign investment in Vietnam.
In 1988, the first foreign direct investment (FDI) project license was officially granted by the Ministry of Foreign Affairs for a joint venture between Hochimex Company of Hong Kong (China) and Ba Ria - Vung Tau Tourism Company.
Currently , Vietnam attracts FDI from more than 143 countries and territories. The biggest investors come from Singapore, Japan, Korea. And one point to note is that FDI from these countries is still increasing every year, regardless of COVID or geopolitical fluctuations in the region and globally. Currently, FDI tends to focus on industries with high gray matter content such as software industry, electronics and informatics, pharmaceuticals, and precision mechanics," - economist Le Hoa told Sputnik.
According to data released by the General Statistics Office, the Ministry of Planning and Investment during the press conference to announce the socio-economic statistics of the second quarter and the first six months of 2023 in Hanoi on June 29, foreign investment capital into Vietnam in the first half of 2023 reached more than 13.43 billion USD, equaling 95.7% over the same period in 2022. Although decreasing, it is still high.
Strengths in Vietnam’s foreign investment attraction policy
According to the general assessment of economic experts, in attracting FDI, Vietnam has strong points such as: Stable political and security situation; macroeconomic stability and great potential for development; the ability to access the large market thanks to the free trade agreements that Vietnam has signed; abundant young labor force; favorable geographical location; the size of the domestic market is quite large ( nearly 100 million people, the middle class is growing rapidly, the market has quite large purchasing power); policies are increasingly improved, associated with integration.
At the recent "Vietnam National Strategic Dialogue and the World Economic Forum (WEF)" in Tianjin, China, Vietnamese Prime Minister Pham Minh Chinh emphasized that Vietnam is continuing to strongly innovate its growth model, restructure the economy, promote innovation and digital transformation, accelerate energy transformation, develop a green economy, and a circular economy. Vietnam also promotes the implementation of three strategic breakthroughs in synchronous improvement of laws and institutions, development of high-quality human resources, and construction of synchronous and modern infrastructure. These factors have created more favorable conditions for foreign businesses to invest in Vietnam.
"Another point that cannot be ignored is that Vietnam not only creates favorable conditions for foreign investors to work in Vietnam for a long time, but also helps their businesses participate in the global supply chain and value chain in a favorable way," - international relations professor Hoang Giang told Sputnik.
Vietnamese Prime Minister Pham Minh Chinh has said many times that it is necessary to have good planning, with good planning, there will be good projects.” Planning is the first and most important premise to call for investment. Some provinces that have attracted billions of dollars of FDI this year, such as Bac Giang, have good planning, up to 2030, even with a vision to 2050.
When it comes to perfecting mechanisms, institutions and policies to attract investment, it is also necessary to emphasize the importance of efforts to improve the investment and business environment in localities, specifically, such as active, regular, fast and timely support for investors from the local government. The leading localities in attracting FDI in Vietnam such as Ho Chi Minh City, Hanoi, Binh Duong, Thai Nguyen, and Bac Giang have been doing this well.
Prospects to attract FDI
Vietnam sets a target in the period of 2021 - 2030 to attract more large foreign-invested corporations, especially those on the Fortune 500 list. Currently, only more than 100 corporations on this list have investments in Vietnam, while the set goal is to increase the number of corporations named in the Fortune 500 list by 50%.
“Vietnam can attract more FDI in the coming years, Vietnam’s prospects for attracting FDI are very bright, but the goal of getting 50% of the number of multinational corporations named in the Fortune 500 list by 2030 is challenging. The investment business environment in Vietnam is highly appreciated by the community of foreign investors and international organizations, and new-generation free trade agreements such as CPTPP, EVFTA, and RCEP have come into effect. Investment from Japan, Korea, Singapore and Asia is still increasing, while investment from the US, Germany, France, UK and some other European countries in modern technology, future technology, education and training, research and development is also increasing", - economist Le Hoa commented to Sputnik.
Currently, Vietnam ranks 25th out of 60 countries attracting the most attractive FDI in the world, surpassing countries in Southeast Asia that are very strong in attracting FDI such as Indonesia, Philippines and Thailand.
“Vietnam has achieved this success primarily thanks to its efforts in reducing total costs for FDI, the size of a sizable domestic market and attractive spending power. Among 122 Japanese enterprises, 42.3% chose Vietnam as an investment destination, followed by Thailand with 20.6%, the Philippines -18.6%. According to international organizations, the World Bank (WB), the Asian Development Bank (ADB), foreign investment in Vietnam will continue to accelerate and the FDI sector will continue to play a driving role in Vietnam’s economic growth, "- Dr. Hoang Giang told Sputnik.
Meanwhile, the Foreign Investment Agency, Ministry of Planning and Investment forecast, this year, Vietnam can attract 36-38 billion USD of foreign direct investment. Vietnam continues to be the leading destination for FDI inflows.
(Source:Sputnik news)
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