Annual report on FDI released for first time

The Vietnam Association of Foreign-Invested Enterprises (VAFIE) officially announced the first annual report on FDI in 2021 on May 10. Vietnam is the third-largest FDI recipient in the region.
Annual report on FDI released for first time ảnh 1 The scene of the announcement ceremony. (Photo: SGGP)

Built on the same approach as the annual report of the United Nations Conference on Trade and Development (UNCTAD) and the ASEAN FDI annual report by the ASEAN Secretariat and the UNCTAD, the report comprehensively assesses the results of attracting and using FDI capital, production, and business activities of FDI enterprises in the past year, and at the same time make recommendations to the State on orientations, policies, and laws.

At the announcement ceremony, Prof.- Dr. Nguyen Mai, Chairman of the VAFIE, stated that Vietnam is the third-largest FDI recipient in the region and is one of the ASEAN countries that still maintain growth in the FDI inflow over the years.

Mr. Nguyen Mai emphasized that US$31.15 billion of registered capital in Vietnam was achieved in 2021, up 9.2 percent compared to 2020. However, realized capital in 2021 reached $19.74 billion, down 1.2 percent compared to 2020.

According to the report, the localities attracting the highest FDI capital are Long An, Can Tho, Bac Ninh, and Quang Ninh.

Noticeably, new investment accounts for 99 percent in 2020 and 93.1 percent in 2021 of the total registered capital in the field of generating and distributing electricity, gas, water supply, and air-conditioning.

Meanwhile, the number of adjustments to increase capital decreased, but the volume of capital increased in both absolute value and proportion in the total registered capital over the three years. It was 15.3 percent in 2019, 22.5 percent in 2020, and 28.9 percent in 2021, proving that Vietnam's business and investment environment is increasingly improving, reinforcing the confidence of foreign investors.

However, Prof. - Dr. Nguyen Mai emphasized that the number of projects with modern technology and source technology from the US and Europe only accounted for 5 percent. FDI capital is mainly concentrated in a few industries with a low technology level to take advantage of cheap labor costs and enjoy investment incentives.

The number of FDI enterprises setting up research and development centers remains small. The economic efficiency of many FDI enterprises is not commensurate with the capital scale, capacity, and investment incentives. Transfer pricing and tax evasion still exist.

“The quantity target as stated in Resolution 50/NQ-TW of the Politburo is completely achievable, but the quality target is difficult to achieve, especially in attracting investment in the fields of high technology, source technology, Industry 4.0 technology, and green FDI," said Mr. Nguyen Mai.

Thereby, the FDI annual report in 2021 has proposed three important solutions, including improving institutions and laws related to FDI capital, improving the efficiency of FDI attraction and use, and improving the efficiency of State management of FDI.

Up to now, the FDI sector accounts for about 25 percent of the total investment capital of the whole society; 55 percent of total industrial production value; more than 70 percent of export turnover; creates direct jobs for 4.6 million people and millions of other indirect ones.