Foreign direct investment (FDI) in Viet Nam surged to US$7.71 billion in the first quarter of 2017, exceeding the amount during the same period in 2016 by 91.5 per cent.
A mobile phone assembly line of Samsung electronic Viet Nam in the northern Bac Ninh Province’s Yen Phong Industrial Park.
Figures released Friday by the planning and investment ministry’s Foreign Investment Agency (FIA) showed that during this period, there were 493 newly approved projects with a total registered capital of up to $2.9 billion, up by 6.5 per cent compared to the same period last year.
At the same time, 223 projects from the previous years applied for capital adjustment, for an added amount of $3.94 billion, representing a 206 per cent year-on-year rise. Foreign investors also contributed $852.8 million to local projects in the period, a 171.5 per cent from the corresponding period last year.
Capital disbursement for FDI in the first quarter of 2017 was estimated to reach $3.62 billion, up by 3.4 per cent compared to the same period in 2016.
The rapid increase of FDI in Viet Nam is because of several large-scale newly approved projects in March. Notably, the Samsung Display project got expansion approval in northern Bac Ninh Province, with an additional investment of $2.5 billion. This pushed the FDI figures to US$7.71 billion in the first quarter, which is double that in the first two months.
The other big projects that got the nod include Taiwan Polytex Far Eastern (Viet Nam) Company in southern Binh Duong Province ($485.8 million); Coca-Cola Viet Nam in Ha Noi ($319.8 million additional capital); Viet Nam Singapore Industrial Park III ($284.75 million); Tole Panel plant in southern Binh Phuoc Province ($269.5 million), and Kolon Industries Inc ($220 million).
Thanks to Samsung’s billion-dollar project, Bac Ninh Province saw the largest registered capital of $2.61 billion, accounting for 34 per cent of the total FDI in Viet Nam in Q1. It is followed by Binh Duong Province at $1.39 million or 18 per cent of the country’s total FDI. HCM City took the third place with $600 million.
South Korea was the most significant investor with $3.74 billion, followed by Singapore with $910.8 million and China with $823.6 million.
The processing and manufacturing sector remained the most attractive area to foreign investors, and saw a total investment of $6.54 billion. Real estate followed with $343 million. The wholesale and retail sectors took the third place at $296.8 million.
Viet Nam a targeted market
The surge of FDI in Viet Nam in the first quarter, in turn, has made it a more attractive destination for foreign investors.
Cushman & Wakefield Consulting Group’s latest report on capital market showed that Viet Nam has been a potential destination for global investment inflows. In the 2014-16 period, the country received around $66 billion in FDI, an average increase of $2 billion a year.
Ben Gray, director of capital market department at Cushman & Wakefield Viet Nam, said foreign investors paid a lot of attention to Viet Nam. This year and the years to come will be a favourable time to invest in assets in the country.
A lot of FDI has come into the property market, accounting for 10 per cent of the average FDI per year, and this sector is considered a possible investment channel to help managers earn profits.
FDI disbursement in 2016 was a record high at $15.8 billion.
The Provincial Competitiveness Index (PCI) 2016, released last week by the Viet Nam Chamber of Commerce and Industry, said the record FDI disbursement in 2016 is an important step for the economy as it shows investor trust.
The PCI report also quoted analysis from fDi Intelligence that stated that Viet Nam held the top position in the Greenfield Investment Index among new emerging economies.
Nguyen Mai, former vice-chairman of the State Committee for Co-operation and Investment, said high FDI inflows could go beyond 2020 if the country continues to maintain its advantages of steady growth rate, stable politics and economy.
Sounding a word of caution, Phan Huu Thang, former director of FIA, said Viet Nam had viewed attracting FDI as an achievement in the past few years, but that there had been issues such as environmental pollution and transfer pricing. Viet Nam should not aim to attract FDI at any price, he said. The country should choose suitable FDI projects and maintain a good balance of partners to avoid a lot of dependence on only a few investors.
Mai agreed and said the government should change direction and policies for attracting FDI in the future. The new policies should focus on clean energy development, environment-friendly technologies and hi-tech agriculture.