Registered capital increased sharply but implementation only increased by 3.5%
Speaking at the 2023 FDI Annual Report Announcement Ceremony with the theme ” Facing new challenges and opportunities – Attracting high-quality FDI more effectively” recently held on March 26, Prof. Dr. Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises (VAFIE), announced new policies implemented by many developed countries to screen and limit FDI into several industries and fields related to national security, encourage shifting factories from China back home, to neighboring countries or to third countries
In addition, new generation FTAs also require the production and export of green products, using solar energy, wind power, and renewable electricity, ensuring workers’ rights in terms of wages corresponding to productivity, social responsibility towards the community, minimizing greenhouse gas emissions, limiting the earth’s temperature not above 1.5 degrees Celsius by 2050. Amid current difficulties, FDI capital flows from developing countries continue to increase faster than FDI from developed countries and currently account for 6% of total global FDI.
In particular, FDI capital in green growth fields in developing countries increased by up to 37% compared to 2022. US FDI capital flows have shifted significantly, especially in China market; In 2023, China accounted for only 1.8% of US overseas investment projects compared to 5.2% in 2019.
Notably, in 2023 registered FDI capital in Vietnam increased sharply, reaching 36.61 billion USD, an increase of 32.1% compared to 2022 while global FDI capital only witnessed the modest rise by 3%, showing the attractiveness of the environment. However, realized FDI capital only grew by 3.5%, reaching 23.18 billion USD. Specifically, investment capital in the processing and manufacturing industry plummeted to 23.5 billion USD, accounting for 64.2% of total newly registered capital compared to the corresponding figures of 16.8 billion USD and 60.6% in 2022.
Currently, the country has 56 provinces and cities that have FDI projects, of which Ho Chi Minh City lead in attracting FDI in 2023 with a total registered capital of 5.85 billion USD; followed by Hai Phong, Quang Ninh, Bac Giang, Thai Binh.
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| Vietnam’s investment environment maintains its strengths in attracting international organizations and foreign investors. Illustration photo: H.Diu |
The investment environment continues to be highly appreciated
In 2023, industrial parks and economic zones were still mounting to foreign investors with the total value of 27.7 billion USD of FDI capital. The number of new investment projects, adjusted investment capital and implemented FDI capital all increased compared to the previous year. Many localities have focused on converting traditional industrial parks into ecological industrial parks.
Regarding the investment environment, international organizations and foreign investors continued to look up to Vietnam’s investment environment. According to assessments of KOCHAM, JETRO, EuroCham and AmCham, investors’ confidence in Vietnam was likely to be raised and in optimistic trend. However, limitations in the investment environment were also pointed out, such as: unclear administrative procedures, prolonged investment procedures, increasing business investment costs and fees; shortcoming infrastructure especially stabilizing electricity supply; lack of high quality human resources; delayed green transition process.
Based on the analysis and assessment of new challenges and opportunities for Vietnam in attracting FDI in the new context, the 2023 FDI Annual Report also pointed out the need innovating thinking and action to attract FDI selectively, not only appreciating the scale but more importantly the quality and efficiency of FDI capital flows.
“It is necessary to direct FDI into high-tech industries, including the semiconductor industry, and strengthen the supply chain connection of Vietnamese enterprises with FDI enterprises, especially transactional corporations. Along with that, Vietnam should accelerate the process of modernizing infrastructure, especially energy, digital infrastructure, and transportation infrastructure, promote national administrative reform and strengthen the training of senior human resources “, VAFIE Chairman emphasized.