Vietnam’s enhanced competitiveness bodes well for increased FDI inflows into the country

Photo: Le Toan

The Ministry of Planning and Investment’s (MPI) Foreign Investment Agency last week reported that foreign investors had poured $505 million of fresh investments into Vietnam during January, up 8.6 per cent from a year earlier. Meanwhile, the new commitment of investments  in the period reached $663 million, strongly increasing 67 per cent year-on-year.

The industrial manufacturing remains the largest recipient of foreign direct investment, accounting 91.3 per cent of the total foreign direct investment (FDI) commitment in the month, followed by the retail and distribution industry. China’s garment and textile firm Shenzhou International Group Holdings Limited, through its affiliate Worldon Company, last month registered to build a $300 million factory in Ho Chi Minh City. Another Chinese garment and textile company, Regina Miracle International, also decided to invest an additional $90 million to its existing factory in the northern port city of  Haiphong.

The rise in the FDI disbursement highlights the growing momentum in foreign investment expansion in Vietnam during 2013-2014. Last year, the total commitment of inward investments in the country reached $20.2 billion, with disbursement of $12.3 billion.

“I believe FDI will keep on increasing in Vietnam, as the nation has become increasingly competitive,” said Hong Sun, secretary general at Korea’s Chamber of Business in Vietnam. He said many South Korean companies were studying investment opportunities in Vietnam, especially small and medium enterprises, following electronic giants like Samsung and LG. In addition, he said, the upcoming free trade agreements with the European Union, South Korea and Customs Union of Russia, Belarus and Kazakhstan would also boost investments into the country. Sun added that FDI this year would benefit from the amended laws on Investment and Enterprises, which will take effect from the middle of this year.

“We expect FDI this year will exceed last year. We’re already working hard on introducing locations for foreign investors who plan to build factories here,” said Tran Duy Dong, director of the MPI’s Economic Zones Management Department.

India’s Tata Group, for instance, is thinking of producing its Titan watch in Vietnam this year, and also expands its investments in car manufacturing. The Indian group is now negotiating with the Ministry of Industry and Trade for a $2 billion coal-fired power plant in the southern province of Soc Trang.