FDI disbursement to Vietnam still grow despite the impacts of the pandemic

, FDI disbursement to Vietnam still grow despite the impacts of the pandemic

Total FDI commitments to Vietnam stood at US$16.7 billion in seven months as FDI disbursement from January to July climbs to US$10.5 billion.

Disbursement of foreign direct investment (FDI) to Vietnam rose by 3.8% year-on-year in the January-July period to US$10.5 billion, a report of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has shown.

While the actual FDI inflows remain positive, the serious Covid-19 situation led to a 37.9% decline in the number of fresh projects to Vietnam but registered capital rose 7% inter-annually to US$10.13 billion.

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The report also noted 561 existing projects have been injected an additional US$4.54 billion, down 9.4% in number and 3.7% in the capital. 

During this period, 2,403 projects had over US$2.05 billion in capital contributed by foreign investors, down 46.1% in the number of projects and 55.8% in value year-on-year, according to the Hanoi Times.

Economists suggested Vietnam’s prospect of FDI attraction would continue to be affected by the pandemic. A recent survey conducted by the European Chamber of Commerce in Vietnam (EuroCham) suggested European businesses sentiment has declined due to the fourth Covid-19 outbreak in Vietnam.

The outlook, however, remains bright as Co-Head of HSBC’s Asian Economic Research Frederic Neumann said Vietnam is one of the two standout economies in Southeast Asia that is able to capture new supply chains moving near.

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In fact, among 18 fields and sectors that have received foreign capital during the period, manufacturing and processing led the pack with investment capital of nearly US$7.9 billion, accounting for 47.2% of total registered capital. Electricity production and distribution came second with US$5.49 billion, or 32.8%, followed by real estate with US$1.16 billion.

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FIA’s report added that out of 86 countries and territories having projects in Vietnam in the first seven months of the year, Singapore took the lead with US$5.92 billion, or 35.4% of the total registered FDI for new projects, followed by Japan with US$2.54 billion, or 15.2% and South Korea with US$2.2 billion or 13.1%.

Among 57 cities and provinces having received FDI in the January-July period, the southern province Long An has attracted the largest portion of capital commitments with US$3.58 billion, or 21.4% of the total. Ho Chi Minh City came second with nearly US$1.78 billion (10.7%), followed by the southern city of Binh Duong with US$1.33 billion (8%).

As of present, Vietnam is home to 33,967 valid foreign investment projects with a combined registered capital of US$399 billion, while the disbursed amount stood at US$242.36 billion, or 60.7% of the committed amount.

Big-ticket projects in January-July include the Long An liquefied natural gas (LNG) power plant project worth US$3.1 billion from Singaporean investors; Japanese US$1.31-billion O Mon II thermal power plant; an additional injection worth US$750 million into LG Display Haiphong from South Korean investors; a tire manufacturing plant in the southern province of Tay Ninh with an additional fund of US$312 million; and Kodi New Material Vietnam manufacturing plan from Singaporean investor worth US$270 million to make tablets and laptops in the northern province of Bac Giang, the Hanoi Times reported.

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