Vietnam continues being a big FDI magnet

The US Amkor Technology Vietnam’s 1.6 billion USD semiconductor plant, in the northern province of Bac Ninh, Amkor’s largest facility worldwide, was officially inaugurated on October 11, though it has come into operation since July.

Amkor is one of the world’s largest providers of outsourced semiconductor packaging, design, and test services. The firm offers deep submicron wafer fabrication, wafer probe testing, integrated circuit packaging assembly and design, and reliability testing.

“It is expected that many more big investors like Amkor will come to Vietnam for investment in the coming time,” said Do Nhat Hoang, general director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI).

In late September, Dutch-backed De Heus and the US’ Cargill simultaneously inaugurated new factories in Vietnam. If De Heus’s 20 million USD factory is located in the Mekong Delta city of Can Tho, focused on producing feed for pangasius and basa fish, Cargill’s factory is located in the southern province of Dong Nai, with an investment capital of 28 million USD, specialised in manufacturing pet nutrition products.

“Vietnam continues to be an important market for Cargill globally. This expansion is part of our long-term strategic vision for Vietnam and is in line with the growth predictions for the country’s agricultural sector, and the Asia Pacific region. We remain committed to the success of our customers and the progress of the nation,” said Scott Ainslie, group director for Cargill Animal Nutrition in South and Southeast Asia.

“We’re very proud of the fact that we’ve been in Vietnam for almost 30 years. I lived in Vietnam from 2004 to 2008, and my first time in Vietnam was in 2000. So for me, it’s great to come back and see how everything has grown and how the Vietnamese market has become bigger and bigger, and more important to us,” Ainslie added.

Previously, on the morning of September 22, Lotte from the Republic of Korea inaugurated and put into operation Lotte Mall West Lake Hanoi, with an investment of 643 million USD. That afternoon, SK Group, also coming from the same nation, was awarded an investment registration certificate by the northern port city of Hai Phong to implement a project to produce high-tech biodegradable materials, with an investment capital of 500 million USD.

On the same afternoon of September 22, Haiphong awarded investment certificates to a series of other projects, including a project to increase capital by 238 million USD, from Japanese-backed Kyocera Vietnam. 

The total investment capital of the projects is 1.4 billion USD, which will contribute to improving statistics on Vietnam’s FDI until the year’s end.

Meanwhile, a few weeks ago, the central province of Nghe An licensed Sunny Group’s new facility investment project Sunny Automotive Optics Vina. With a total investment capital of 150 million USD, this project makes an important contribution, to raising Nghe An's total FDI registered in the first nine months of this year, to 1.27 billion USD.

Earlier on September 11, the southern province of Binh Phuoc licensed Shandong Haohua Tire, to develop an all-steel tubeless radial tire factory at the Minh Hung Sikico Industrial Park. With a total investment capital of 500 million USD, this is the largest foreign-invested project ever in this province.

Rising confidence

Statistics from the MPI showed that cumulatively, as of September 20, 2023, total newly registered and newly-added capital, stake acquisitions, and capital contributions, reached as much as 20.21 billion, up 7.7% as compared to the same period last year.

“Disbursed FDI capital is also very positive. The figure after nine months is more than 15.9 billion USD, up 2.2% year-on-year. This is attributed to the government’s great support for investors and enterprises,” said Hoang of the FIA. 

A few days ago, the European Chamber of Commerce Vietnam (EuroCham) released its quarterly Business Confidence Index (BCI), which was conducted by over 1,300 EuroCham members across a diverse range of sectors. The BCI has regained its upward trajectory in Q3 of 2023, offering a glimmer of hope for the Vietnamese business environment, after a turbulent year.

Vietnam’s global investment appeal remains strong. A notable 63% of surveyed businesses positioned Vietnam within their top 10 FDI destinations. Even more striking, 31% ranked Vietnam among their top three, while an impressive 16% hailed it as their foremost investment destination. Reflecting this confidence, over half of those surveyed plan to increase their foreign direct investment in Vietnam by the end of the year.

EuroCham Chairman Gabor Fluit, commented on the BCI, “Nearly one-third of our members rank Vietnam as a top-three investment location, which sends a powerful message about our faith in this partnership.”

Marko Walde, chief representative of the Delegation of German Industry and Commerce (AHK) in Vietnam, Myanmar, Cambodia, and Laos, also commented that the investment situation from Germany to Vietnam, in the first nine months of 2023 [2.56 billion USD], has demonstrated positive momentum and increasing confidence among German businesses. Despite the challenges and risks, the Vietnamese market remains attractive, and German companies are keen on expanding their presence and operations in the country.

“German businesses are expressing high expectations for the prospects of business development and strong commitment when investing in Vietnam,” Walde said.

This past July, Ziehl-Abegg, a German company specialising in electric motors, air conditioning equipment, and fans, announced its plan to launch a factory producing products related to air ducts in Vietnam, with an investment capital of about 20 million USD. 

“This marks a significant step towards expanding their global presence and committing to sustainable development by responsibly using natural resources,” Walde said.

Needing more improvements

According to the American Chamber of Commerce (AmCham), the organisation now represents more than 650 corporate and 2,500 individual business representatives throughout Vietnam, accounting for billions of US dollars in foreign investment, tens of thousands of direct employees, hundreds of thousands of indirect employees, and a significant share of Vietnam’s exports and tax revenues. 

“The United States is one of the top foreign investors in Vietnam, with American companies investing in manufacturing and infrastructure, providing high-quality consumer, agricultural, and industrial goods and services. The US is Vietnam’s biggest export market and Vietnam is now the seventh largest trading partner of the US,” said Adam Sitkoff, executive director of the AmCham in Hanoi.

According to the MPI, cumulatively as of September 20, 2023, total US registered investment capital in Vietnam hit 11.8 billion USD, for more than 1,300 valid projects, making the US the 11th largest foreign investor in Vietnam. 

From January to September 20 of this year, total newly-registered and newly-added capital, stake acquisitions, and capital contributions from US investors in Vietnam, hit 505.1 million USD – including 87 new projects registered with 82.5 million USD. This has made the US the ninth-largest foreign investor in Vietnam.

However, Sitkoff also pinpointed some challenges facing foreign investors.

“Some regulations continue to introduce new administrative procedures such as licensing, approvals, and heavy reporting requirements,” he said. “For example, there is still uncertainty and a lack of clarity regarding the requirements to obtain work permits for foreigners. We encourage the government to clarify those elements of Vietnamese law, that hinder the efficient deployment of foreign investment and that any additional administrative burdens in draft laws and regulations, be carefully considered and avoided whenever possible.”

Walde of the AHK also noted, that to further improve investment in Vietnam and enhance its attractiveness as a destination for foreign investors, the government “should continue its efforts to streamline administrative procedures, to invest in infrastructure development, particularly in transportation and logistics.”

“In addition, enhancing the competitiveness of local businesses, developing robust industry clusters, imparting specialised workforce training, adhering to international standards, and ensuring a stable electricity supply for sustainability, are pivotal steps to enhance Vietnam’s investment appeal,” Walde said.

Source: Nhân Dân