Foreign Direct Investment (FDI) in Vietnam is forecast to surge significantly in 2019 as many foreign investors, including big names, are showing their big interest in the country.
Reports from the Foreign Investment Agency under the Ministry of Planning and Investment showed that foreign firms registered to invest US$8.47 billion in Vietnam in the first two months of 2019, up 2.5 times against the same period of last year. The firms also disbursed US$2.58 billion in the period, marking a three-year record high for the January-February period.
The positive trend is continuing this month with many provinces and cities consecutively announcing licenses for foreign projects.
In the early days of March, the central city of Da Nang said it licensed two projects of large groups, leading global manufacturer of aircraft components American Universal Alloy Corporation and Hong Kong’s electronics manufacturer Alton International Enterprises, to construct plants at its hi-tech park while some others, such as US’s Key Tronic EMS, are also requesting licenses to invest in the park.
More FDI projects are also expected to be poured into production bases in the country next months. Lenovo Group from China, for example, expressed desire to develop a computer parts factory during a recent meeting with local authorities, while Swedish furniture giant IKEA also plans to invest US$450 million in a retail center and warehouse system in Hanoi.
There are also forecasts that Apple could move its facility to the Southeast Asian country in the future.
Many existing foreign investors are also planning to increase their investment in Vietnam. Among them, France’s Air Liquide Group plans to double its investment here in the wake of the country’s high gas demands for industrialization, modernization and clean energy development.
According to experts and investors, the surge of FDI in Vietnam has shown Vietnam is one of the leading attractive investment destinations globally.
Explaining the decision to expand operation in Vietnam, Philippe Christodoulou, vice president of Large Industries Business Development at Air Liquide Group, said that Vietnam’s business environment is favorable and attractive.
According to economist Vo Tri Thanh, a rise of high-tech FDI projects licensed to date this year partly showed the attractiveness of Vietnam’s investment climate.
Thanh attributed the appeal to the country’s free trade agreements, close proximity to major global supply chains, high economic growth potential and the government’s success in improving the investment environment.
According to experts, the inflows of high-quality investors will help Vietnam solidify its position as a manufacturing powerhouse besides appealing to many other components suppliers to the country.
As in the case of American Universal Alloy Corporation, for example, its Chief Operating Officer for Universal Alloy Corporation and President of Universal Alloy Corporation Europe Kevin Loebbaka said that the group will need a chain of suppliers to meet demands of its Vietnam-based plant.
However, to optimize the fresh FDI inflow, experts suggested the government continue removing obstacles to make the country’s business and investment environment more appealing to foreign investors.
According to Nguyen Van Toan, vice chairman of the Vietnam Association of Foreign Invested Enterprises, the government should continue to improve business and investment transparency and safeguard intellectual property rights because investors from developed countries often demand a transparent and consistent investment and legal environment.
It is also necessary to include investment protection provisions in the laws since this is the major concern of multinationals when investing in foreign markets. They must be assured that their legitimate rights will be protected, he suggested.
Besides, Toan also urged the government to enhance the vocational training as skills of the country’s workforce remain far from meeting the expectations.