Although Vietnam has just experienced a crisis due to the Covid-19 pandemic, the economy has almost been pulled into negative territory, but foreign investors still continue to put their trust and invest in the Vietnamese market.
Confident, foreign investors continue to pour capital into Vietnam
The statistics just announced by the Foreign Investment Agency (Ministry of Planning and Investment) have once again shown that foreign investment capital in Vietnam continues to recover positively.
Specifically, in 3 months, total registered foreign investment capital in Vietnam reached 8.9 billion USD, while disbursed capital reached 4.42 billion USD, an increase of 7.81 TP3T over the same period in 2021.
The increase in disbursed capital, according to the World Bank (WB), shows the "strong recovery" of foreign investment capital in Vietnam. The Foreign Investment Agency said that thanks to the continuous and effective support of the Government and functional agencies, along with the efforts of the business community to overcome the pandemic and adapt to the new situation, businesses have gradually recovered, maintained and expanded production and business activities. That is the reason why disbursed capital has continuously increased compared to the same period in the first months of the year.
In contrast to the increase in disbursed capital, registered capital decreased. The figure of 8.9 billion USD is only 87.91 TP3T compared to the same period last year, but the trend is considered positive.
In fact, in the first quarter of the year, only newly registered investment capital decreased (down 55.5%), but in return, the number of newly registered projects still increased by 37.6%. Moreover, the decrease in newly registered capital was mainly due to the fact that in the first 3 months of last year, many large-scale projects were granted investment registration certificates, especially 2 billion-dollar projects (Long An LNG Power Plant I and II, 3.1 billion USD and O Mon Thermal Power Project II, over 1.3 billion USD). This year, only one billion-dollar project was granted an investment certificate (the 1.32 billion USD project of Lego Manufacturing Vietnam Co., Ltd., Denmark).
Meanwhile, adjusted investment capital in the past 3 months has increased by 93.31 TP3T compared to the same period, reaching over 4.06 billion USD. Investment capital through capital contribution and share purchase has also reached over 1.63 billion USD, more than double compared to the same period.
“This shows that, despite the adverse impacts of the Covid-19 pandemic, foreign investors still have confidence in Vietnam’s economy and investment environment in the new normal context and are making new investment decisions as well as expanding existing investments,” said Mr. Do Nhat Hoang, Director of the Foreign Investment Agency.
Sharing the same view, Savills Vietnam also believes that, in addition to favorable macro factors, timely support from the State plays a decisive role in strengthening the confidence of foreign enterprises when investing in Vietnam.
“Along with economic policies, the nationwide vaccination campaign has also been implemented rapidly. Thanks to the acceleration of the speed and scale of vaccination, Vietnam has become one of the six countries with the highest vaccination coverage rate in the world. This is the basis for foreign enterprises to place their trust in the recovery of the Vietnamese market,” said a Savills expert.
Looking forward to new things
According to information released by the Vietnam Industrial Park Business Chamber, as soon as there was official information about the opening of commercial flights from March 15, the number of requests to rent warehouses in Vietnam's industrial parks increased significantly compared to the first two weeks of February.
Meanwhile, Savills Vietnam has also continuously completed new "deals". In March 2022, Savills Vietnam supported Fuchs, Germany's leading lubricant group, to successfully lease a 20,000 m2 land plot in Ba Ria - Vung Tau to open a factory.
Previously, in February 2022, Savills Vietnam also successfully completed the deal to lease 20,000 m2 of factory space between Framas (Germany) and KTG Industrial (Dong Nai).
The 10-year lease, signed at the end of Vietnam’s most severe Covid-19 outbreak, demonstrates the continued strength of the Vietnamese economy and industrial real estate sector in the eyes of foreign investors.
Moreover, in recent times, there have been continuous investments worth billions of USD in industrial park infrastructure projects across the country. For example, Gaw NP Industrial has started a 16-hectare ready-built factory (RBF) project at GNP Yen Binh 2 Industrial Center. Vietnam Industrial Park has also started a factory and warehouse project at Phu An Thanh Industrial Park (Long An), with a scale of 13.4 hectares...
Meanwhile, Logos and Manulife Investment Management formed a joint venture in February 2022 to acquire a modern, custom-built logistics factory with a total area of 116,000 square meters with an investment value of up to USD 80 million. CapitaLand Development also signed a memorandum of understanding to invest USD 1 billion with Bac Giang province to develop industrial parks, logistics zones and urban areas.
The Foreign Investment Agency believes that the opening of tourism from March 15, along with the visa exemption policy for some countries; the trend of capital movement of European investors due to the impact of the war in Ukraine will also affect attracting foreign investment to Vietnam in the coming time.
“The wave of investment from foreign enterprises in industrial parks in 2022 is forecast to increase in the coming time, mainly from enterprises from Japan, Korea, Taiwan and the EU. In fact, in the first 3 months of the year, many large investors have invested in factories to expand production and business activities in Vietnam,” commented Mr. Do Nhat Hoang.
Meanwhile, from the perspective that Vietnam can benefit from the investment shift trend of European investors due to the impact of the Russia-Ukraine conflict, the Foreign Investment Agency said that in the past 2 years, many large Taiwanese technology and electronics corporations have built factories in Europe such as Poland, Hungary, Czech Republic, etc. These countries all share a border with Ukraine, so they are more or less affected by Russia - a major export market for these factories.
Accordingly, when the war is tense, there will likely be a positive impact on Vietnam in the direction of shifting orders from Europe to production in Vietnam (especially orders in the fields of electronics, technology, etc.), because in ASEAN, only Vietnam has an FTA with the EU.
