Foreign capital continues pouring into Vietnam

In the first two months of this year, the electricity, electrical refrigeration, processing, and manufacturing industries continued leading in the foreign direct investment (FDI) capital attraction into Vietnam. According to experts, this comes from the advantage that the country has successfully signed the EU-Vietnam Free Trade Agreement.

Foreign capital continues pouring into Vietnam

On the other hand, the wave of investment shift of foreign enterprises to Vietnam, which has happened since the end of last year, is accelerated at the beginning of this year.

Statistics by the Ministry of Planning and Investment, since the beginning of this year to now, if including the additional capital of projects that were licensed in previous years, the FDI capital invested in the electricity, gas, water, and air conditioning generation and distribution industries reached more than US$3.84 billion, accounting for 68.1 percent of the total registered capital. Meanwhile, the industrial processing and manufacturing industry nearly touched $1.43 billion, accounting for 25.3 percent; the rest industries hit $371.8 million, accounting for 6.6 percent.

Currently, 38 countries and territories have their projects newly licensed in Vietnam. Of which, Singapore rose to become the largest investors with more than $4.11 billion, accounting for 82.2 percent of the total investment capital. China followed with $418 million, accounting for 8.4 percent. By 2019, the EU was the fourth largest investment partner in Vietnam with over 2,240 valid projects with total registered capital at $24.67 billion, or 7.6 percent of the total FDI capital invested in Vietnam. The EU has invested in 18 out of 21 industries according to the national economic classification system and is present in 54 provinces and cities across the country.

According to the Japan External Trade Organization (JETRO), its survey released last February showed that Vietnam is the top destination of Japanese enterprises this year. Particularly, among 122 enterprises participated in the survey said that they will move their factories. Of which, 62.7 percent of the source of the movement is China while the destination is Vietnam with 42.3 percent, followed by Thailand with 20.6 percent, the Philippines with 18.6 percent, and Indonesia with 16.5 percent.

However, unlike European investors, Japanese investors tend to diversify their investment in Vietnam. Accordingly, Japanese enterprises invest heavily in the processing and manufacturing sector, at the same time support domestic enterprises to improve their capacity to participate deeply into the global supply chain. Increasing the number of enterprises manufacturing industrial supporting products in Vietnam will help Japanese enterprises to increase the supply ratio of domestic industrial supporting products, creating a solid foundation for Japanese end-product enterprises when entering Vietnam’s market.

Besides, Japanese consumer goods enterprises have been spreading their presence through the Japanese retail distribution network, or by opening a series of stores. For instance, Aeonmall has changed its investment strategy and determined Vietnam as the most important market in Southeast Asia.

The representative of this corporation said that at first, it merely invested in Ho Chi Minh City and Hanoi. Fortunately, the business results were far beyond its expectations so it will invest in more shopping malls nationwide. Currently, Aeonmall has invested $200 million for each shopping mall in HCMC, Dong Nai Province, Hanoi, and Hai Phong City. This is a big turning point in the strategy of building 20 shopping centers of this corporation. Or lately, Japan’s Fast Retailing Co., Ltd opened and put into operations its Uniqlo stores in HCMC and Hanoi.

According to Mr. Nicolas Audie, Chairman of the EuroCham, by launching the national public service portal, the Vietnamese Government has created a close connection between the Government, people, and enterprises, accelerating the progress of administrative procedure reform. The country needs to quickly invest in modern devices for specialized inspection to improve the ability of automated inspection and shorten the time of customs clearance.

In the field of consumer goods and cosmetics manufacturing, it is essential to tighten control on counterfeit goods, especially goods counterfeiting luxury brands. Another important matter is to strictly carry out intellectual property rights. Vietnamese enterprises that want to increase export market share to Europe must improve the quality, design, and packing of the products. In case that trademarks are received intellectual property protection and certified by Europe, they will have advantages when exporting to the global market in general and the EU market in particular.

Regarding this matter, the Ministry of Industry and Trade said that authorities have been reviewing the Intellectual Property Law to revise in line with deeper commitments in the EVFTA and other new-generation free trade agreements (FTAs) to ensure the optimal benefits committed with investors and countries members in the FTAs. At the same time, they will also review other important laws, such as the Law on Investment, Law on Enterprises, Law on Land, and some laws on tax to accord with the regulations and comply with the principles of cooperation in the framework of the FTAs that Vietnam has signed.

Considering the general economic development strategy in Vietnam, the stability that the country is aiming at to integrate deeply into the global economy through bilateral and multilateral trade agreements will continue to create more opportunities for trade and investment in the future.

The industries that will enjoy benefits this year include online shopping, delivery service, automobile manufacturing, canned food, and more potential, home care when consumers spend more time at home than public places. These are positive highlights that are enough to confirm that Vietnam’s economy might maintain the growth at the same level as the growth achieved last year, said Mr. Frederick Burke, Senior Executive Manager of Baker Mckenzie.

By Minh Xuan – Translated by Bao Nghi

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