VIETNAM - AN ATTRACTIVE INVESTMENT DESTINATION - OTIS LAWYERS

According to the assessment of the Minister of Planning and Investment, Nguyen Chi Dung, Vietnam's position and role in the global FDI flow continue to rise. Vietnam is indeed an attractive investment destination, with the total registered FDI in 2023, including newly registered capital, adjusted capital, and capital contribution to buy shares, reaching about $36.6 billion - a 32.1% increase compared to the previous year.

Increased Attraction of Foreign Investment

Data from the Foreign Investment Agency (MPI) shows that there were 3,188 new projects granted investment registration certificates in 2023, an increase of 56.6% compared to the previous year. The total registered capital reached nearly $20.19 billion, up 62.2%. There were 1,262 projects registering capital adjustment, an increase of 14%, with additional investment capital exceeding $7.88 billion, a decrease of 22.1%. There were 3,451 transactions of capital contribution to buy shares by foreign investors, a decrease of 3.2%, but the total contributed capital reached over $8.5 billion, up 65.7%. Therefore, despite the decrease in adjusted investment capital, new investment capital and capital contribution to buy shares by foreign investors increased significantly compared to the previous year.

According to the analysis of Do Nhat Hoang, Director of the Foreign Investment Agency, FDI capital has increased significantly in both new investment capital and the number of new investment projects. It is concentrated in provinces and cities with many advantages in attracting foreign investment, such as good infrastructure, stable labor force, efforts to reform administrative procedures, and dynamism in investment promotion. Examples include Ho Chi Minh City, Hai Phong, Quang Ninh, Bac Giang, Thai Binh, Hanoi, Bac Ninh, Nghe An, Binh Duong, and Dong Nai. These 10 localities accounted for 78.6% of new projects and 74.4% of the total capital in the country in 2023.

Additionally, despite a decrease in adjusted capital, the reduction rate has improved over time. It should be noted that although the capital decreased, the number of projects adjusting capital increased by 14% compared to the previous year, affirming investors' confidence in Vietnam's investment environment and their decisions to expand existing projects.

Foreign investors have invested in 18 out of the total 21 national economic sectors. The processing and manufacturing industry leads with total investment capital exceeding $23.5 billion, accounting for 64.2% of the total registered capital and a 39.9% increase from the previous year. In terms of the number of new projects, the processing and manufacturing industry also leads, accounting for 33.7%, and the number of projects adjusting capital accounts for 54.8%.

At the same time, the region's FDI exports have decreased, but the trade surplus has been increasing. The surplus has helped offset the trade deficit of domestic business regions. Specifically, with a trade surplus of nearly $48.8 billion, including crude oil, and nearly $46.9 billion excluding crude oil, the FDI region has compensated for more than $21.9 billion of the domestic business region's trade deficit, providing significant support to the country's overall trade surplus of about $26.9 billion.

Investors' Confidence in Future Prospects

Economic experts also affirm that the total FDI attracted in 2023 is nearly equivalent to the pre-Covid-19 period, demonstrating foreign investors' confidence in the economic recovery in 2024 and the following years. A survey by the European Chamber of Commerce in Vietnam (EuroCham) further supports this view, with 62% of surveyed European investors ranking Vietnam in the top 10 global investment destinations, including 17% ranking Vietnam as their top choice.

According to the survey, 31% of European businesses plan to expand their workforce in the first quarter of 2024, and 34% intend to increase investment. These figures indicate strong growth momentum and opportunities for Vietnam in 2024. Gabor Fluit, Chairman of EuroCham, emphasizes that the confidence of the foreign business community in Vietnam is increasing, and Vietnam is becoming a rising star in global investment.

Statistical data shows that the actual foreign investment capital implemented by December 20, 2023, is estimated at $23.18 billion, an increase of 3.5% compared to the previous year. According to Minister Nguyen Chi Dung, the increased implementation of foreign investment projects in 2023 is the result of the government's support and effective coordination among ministries, sectors, and localities in proactively approaching, addressing, and removing legal barriers hindering business investment activities.

To enhance the efficiency of FDI attraction in 2024 and the following years, the Ministry of Planning and Investment will vigorously promote innovation, digital economy, green growth, circular economy, and new economic sectors such as semiconductor manufacturing, high-tech agriculture, and high-quality human resource training. It will also focus on improving the effectiveness of investment promotion and support for outbound investment to better leverage Vietnam's opportunities in the strategic competition among major countries and the global shift in FDI flows.

The successful attraction of FDI, especially in the second half of the year, has contributed to the increase in FDI implementation, and in terms of scale, 2023 is the year with the highest actual FDI implementation scale to date, according to the leaders of the Foreign Investment Agency. The recovery and resumption of growth in FDI inflows into Vietnam in the second half of the year, after a 4.6% decrease in total registered FDI in the first six months, are significant drivers for boosting Vietnam's economic growth in 2023 and the following years, considering the challenges faced by the global and domestic economies.

This result confirms the confidence of foreign investors in Vietnam's stable macroeconomic policies, transparent and secure investment environment. The various fiscal and monetary policies aimed at effectively supporting businesses have positively influenced foreign investors' decisions to make new investments and expand existing projects in Vietnam./.

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