Linh Trung Export Processing Zone increases FDI attraction in the first three months of 2021. (Photo: SGGP)
Total investment capital does not decrease
Regarding foreign direct investment (FDI) activities in Vietnam, statistics in the first eight months of 2021 show that the number of newly- licensed FDI projects is 1,135, much lower than the same period last year. The total number of new FDI projects accounts for about 63.2 percent of that in the same period in 2020. However, there are still positive signs for the economy when the total value of FDI capital in Vietnam by August reaches US$19.12 billion, approximately that in the same period last year.
Besides, starting from March, the total value of new FDI capital each month has been higher than the same period last year. It shows that foreign investors still have high expectations for Vietnam's investment environment, although there are serious Covid-19 outbreaks at this time. In Ho Chi Minh City, new FDI projects continued to increase slightly in the last three months.
As for the registered capital of FDI projects, statistics show that in the first eight months of 2021, Long An took the lead, and HCMC ranked second with a total registered capital of nearly $2.2 billion, accounting for 11.4 percent of the total investment capital, followed by Binh Duong, Can Tho, Hai Phong, and Hanoi. Thus, the impact of the outbreak of the Covid-19 pandemic in Southern provinces does not change the tendency of choosing investment areas because of certain advantages in industrial and technical infrastructure. Regarding capital adjustment activities, by the end of August, the country had about 639 projects adjusted capital for a total of $4.98 billion. In HCMC, there were 117 times of capital adjustment with additional capital of $647.3 million, down 40.6 percent in the number of licenses, but increased by 54.4 percent in the value of registered capital compared to the same period last year.
However, it is necessary to acknowledge that the number of FDI projects with adjusted capital does not decrease, but the ratio of the capital increase is extremely low. For instance, although South Korea has the highest new FDI project among countries investing in Vietnam, the capital adjustment ratio started to slow down from March 2021. This trend is similar to the capital adjustment activities of FDI investors in HCMC in recent months. FDI investors continue to explore in the context that many provinces and cities have not returned to the new normal. With fierce competition in FDI attraction in the region and the world, if the new normal is slow, the opportunity to attract FDI for economic recovery and development will lose.
It is forecasted that in the last months of 2021 and early 2022, the ability to attract FDI capital of Vietnam will depend on the results of the Covid-19 pandemic prevention and control. The economy will be affected by the efficiency of FDI activities when domestic enterprises are still facing many difficulties.
Taking advantage of FTAs
To attract FDI capital, HCMC in particular and the country, in general, must have effective solutions in pandemic prevention, which is the foundation for rebuilding a stable and safe investment environment and is a prerequisite for maintaining and attracting FDI capital into Vietnam.
Production at a Japanese company in Quang Minh Industrial Park in Me Linh District in Hanoi. (Photo: SGGP)
