FDI disbursement increased

On the afternoon of June 29, Quang Ninh Provincial People’s Committee awarded investment certificates for two projects with a total investment of more than 246 million USD of Foxconn Singapore PTE Ltd. In which, Foxconn Quang Ninh FECV Factory project has a total investment of more than 200 million USD specializing in manufacturing and assembling electronic components, chargers, electric vehicle charge controllers. It is expected that in January 2025, the project will be completed and put into official operation. 3 days earlier, Hai Phong City People’s Committee also awarded an adjusted registration certificate for LG Innotek Hai Phong project with an additional capital of more than 1 billion USD, bringing the total investment capital to over 2 billion USD.

NGOC DUONG

The expansion of foreign investment capital is significantly improving for FDI attraction in the last month of the second quarter. Data recently updated by the Department of Foreign Investment (MPI) shows that in the first 6 months of the year, the total registered FDI capital reached 13.43 billion USD, down 4.3%, but the decrease was much more positive than in previous months. Specifically, in May, the decrease was 7.3%, in April it decreased by nearly 18%, in March it decreased by 38.8%... However, in the structure of foreign investment capital into Vietnam in the first 6 months, only adjusted capital decreased over the same period (down more than 57%). The remaining newly registered capital increased more than 31%, reaching more than 6.49 billion USD; investment capital through capital contribution and share purchase reached more than 4 billion USD, up 76.8% over the same period.

Notably, data from the Foreign Investment Agency also showed that disbursed FDI increased slightly in the past 6 months, estimated at 10.2 billion USD, up 0.5% over the same period. The increase is slight, but this could be a positive start for the uptrend of disbursed capital. Director of Foreign Investment Department, Mr. Do Nhat Hoang, commented that the increase in disbursement shows that drastic solutions of the Government and Prime Minister in recent months have partly supported and removed difficulties for the business community. Mr. Hoang is also the one who revealed that "in hand there is a very long list of large-scale projects intending to invest in Vietnam" at the VN-Korea Business Forum held in the last week of June.

Evidence for effective and important administrative reforms that help attract FDI can lead the story of Quang Ninh. According to a representative of the Quang Ninh Economic Zone Management Board, the above two Foxconn projects were processed within 12 working hours, since the investor submitted the application on the afternoon of June 27, the investment registration certificate was issued one day later on the afternoon of June 28. Up to now, Foxconn has had 3 investment projects in Quang Ninh province with a total registered investment capital of 383 million USD.

Administrative procedure reform to welcome billion USD projects

In fact, the absence of large-scale projects to expand investment is the main reason why adjusted capital is still falling sharply compared to the same period last year. However, the growth rate of the number of new projects is higher than the growth rate of total investment capital, showing that small and medium-sized foreign investors continue to care and believe in Vietnam’s investment environment. According to the Foreign Investment Agency, new investment projects still focus on provinces and cities that have many advantages in attracting foreign investment such as good infrastructure, stable human resources, efforts to reform administrative procedures and dynamism in investment promotion.... such as Hanoi, Ho Chi Minh City, Bac Giang, Binh Duong, Hai Phong, Bac Ninh, Dong Nai.

Economist Vu Quoc Chinh (HCMC) commented that he has seen remarkable highlights in attracting FDI. In particular, the economic locomotive of the country, Ho Chi Minh City, has shown signs of strong growth, more than 30% of FDI capital on "fronts". In terms of projects, Ho Chi Minh City is currently leading the country in the number of new FDI projects in the past 6 months, accounting for nearly 40%, adjusted projects accounted for 25% and capital contribution and share purchase also accounted for more than 65%. 

Mr. Vu Quoc Chinh said: "The production and business results of some large enterprises in China were not as expected. The country’s growth in the first 5 months of the year was also not as expected, so many investors looked for ways to expand production to neighboring countries. Vietnam is welcoming this investment shift, as evidenced by large technology corporations, making large investments in China, are still expanding the investment wave in Vietnam, but FDI in Vietnam is not necessarily expanding in the past 6 months. Exports from countries with reduced growth prospects to Vietnam are very clear.

A remarkable information in the Foreign Investment Bureau’s 6-month report is that China ranks third in terms of registered capital, with 1.95 billion USD, but ranks first in the number of new projects, accounting for 18% of the total 1,293 projects.

In addition, Mr. Chinh also said that there will be billion-dollar projects in Vietnam in the near future. "It is not without grounds that the Director of the Foreign Investment Agency emphasized the list of large foreign investment projects being considered in Vietnam. It is necessary to recall the "landing" of more than 50 large US enterprises into Vietnam in March and the important trip of the Korean President to Vietnam in June, accompanied by more than 200 large Korean enterprises. 

It’s all in that sequence of movements. The acceleration of investment expansion and disbursement are inevitable consequences of diplomatic trips that have played an important role in attracting FDI. More important now is that we must actively anticipate this capital flow shift. They must be carpeted with drastic administrative reform, coupled with action. The story of  administrative reform  of Quang Ninh, Hai Phong... is worthy of reference and application by localities with strategies to attract FDI. Only with strong administrative reform can the million- or billion-dollar project return to us in a grand manner."