The foreign direct investment (FDI) is set to boom thanks to Vietnam’s attractive investment policies and economic reopening after two years of struggling with the Covid-19 pandemic.

Electronics production at Rhythm Precision Vietnam at Noi Bai Industrial Park. Photo: Pham Hung

The early sign of such a trend came from a 4.2% year-on-year increase in the registered FDI to Vietnam in the first month of 2022, while the disbursed FDI also rose by nearly 7% to $1.61 billion for the same period.

The highlight of the FDI in the first month was the presence of large-scale FDI projects, including the addition of $260 million being pumped into the expansion of the electronics manufacturing plant of Goertek (Hong Kong, China) at the WHA Industrial Zone in Nghe An Province.

The plant, whose construction started on January 21, 2021, is scheduled to operate in June 2022 and create jobs for 30,000 locals.

As one of the largest FDI projects in Nghe An province, Nguyen Duc Trung, chairman of the Nghe An Province People’s Committee, expected the project would help attract further FDI to the locality.

“Nghe An Province is determined to continue gearing up administrative reform and ensuring a stable business environment for investors and businesses,” Trung told local media.

Meanwhile, the GE Vietnam commercial and services project (South Korea) in the northern province of Bac Ninh also expanded its scale by an addition of $216.9 million, or the JNTC of South Korea in Phu Tho Province which raised its registered capital by $163 million to expand the production of electronic parts for cars, watches, and cameras.

The increasing number of large-scale FDI projects expanding investment capital proved foreign firms are feeling settled with the overall economic recovery initiated since late 2021, and they are now focusing on operating, said the Foreign Investment Agency under the Ministry of Planning and Investment.

“In January alone, Vietnam recorded a total of 71 FDI projects adjusting investment capital. Higher investment capital and the number of fresh projects are evident to the confidence of FDI companies to Vietnam’s investment environment,” noted the agency in a report.

Bright prospects for FDI inflows

Director of the Foreign Investment Agency Do Nhat Hoang said Vietnam remains in a favorable position to further attract FDI, despite uncertainties surrounding the pandemic.

According to Hoang, Vietnam is currently among the top destinations for investors looking to diversify their supply chains, which, in turn, offers opportunities for local companies to further integrate into the global value chains.

“In 2022, FDI commitments to Vietnam are set to rise as more countries are reopening the economy and adapting to a new situation,” he added.

Sharing the view, Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi Takeo Nakajima expected more FDI from Japan to Vietnam in 2022.

Nakajima told The Hanoi Times the visit of Prime Minister Pham Minh Chinh to Japan last November was a “timely boost” for bilateral economic cooperation, noting the Government leader “delivered a clear message that Vietnam is a solid investment destination, where the new normal and living with Covid-19 policy is in effect.”

Latest findings from the Business Climate Index (BCI) of the European Chamber of Commerce (EuroCham Vietnam) in the final quarter of 2021  indicated the BCI reached the highest point following the fourth wave of Covid-19, with positive sentiment reaching 61 points or a jump of 42% since quarter three of 2021.

In addition, 58% of leaders of European businesses in Vietnam are expecting stability and improved business results in the first quarter of 2022, eight percentage points higher than the previous survey.

As Vietnam has emerged from lockdown and resumed normal business activities, EuroCham Vice Chairman suggested the situation has now given their members renewed optimism about the prospects of both of their enterprises and Vietnam’s business environment.

“We can be confident and optimistic in a strong bounce in the development of trade and investment cooperation between Vietnam and the EU in the context of the new normal,” EuroCham Vietnam’s Vice Chairman Jean Jacques Bouflet told The Hanoi Times.

Taking a view on the FDI prospects, Minister of Planning and Investment Nguyen Chi Dung said amid severe Covid-19 impacts, FDI to Vietnam in 2021 rose by 9.2% year-on-year to $31.15 billion.

“There have been no changes in investors’ view over Vietnam’s business environment,” Dung said, referring to those from Japan, Europe, or South Korea who are planning for investment expansion in Vietnam.

“Vietnam stands firm as a safe, attractive, and high potential investment option for foreign investors in 2022,” Dung said.

Dung noted in the coming time, Vietnam should be ready to compete with regional countries in attracting high-quality FDI projects.

“Providing adequate infrastructure, high-quality workforce, incentive policies for supporting industries are among steps the country would focus on to remain competitive in FDI attraction,” he said.