Vietnamese processing and manufacturing sector is increasingly attractive to foreign investors

Five-month FDI of US$11.07 billion

Data of the Ministry of Planning and Investment’s Foreign Investment Agency show that in the first five months of this year, Vietnam attracted US$11.07 billion worth of FDI, up two percent year-on-year.

Vice Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) Nguyen Van Toan told the Vietnam Economic News that the highlight of FDI flows into Vietnam in the first five months is that new FDI investment was increasing year-on-year in terms of both number of projects and registered investment capital.

“Specifically, Vietnam attracted 1,227 new projects totaling US$7.94 billion in registered capital, up 27.5 and 50.8 percent year-on-year, respectively. This proves that foreign investors are still highly interested in Vietnam,” Toan said.

Meanwhile, the increased capital of FDI projects and foreign investors’ capital contributions and share purchases declined, the latter of which dropped 68.2 percent year-on-year to US$1.05 billion. However, Toan assessed this is only a temporary decrease, as Vietnam remains an attractive destination for foreign investors, with FDI capital already invested in the first five months of the year reaching US$8.25 billion, up 7.8 year-on-year.

Processing, manufacturing sector attractive to investors

FDI in the processing and manufacturing sector has continued to improve. In the first five months, foreign investors poured capital into 17 out of Vietnam’s 21 national economic sectors. The processing and manufacturing sector took the lead, attracting a total FDI capital of more than US$7.43 billion, accounting for 67.1 percent of the total FDI registered in Vietnam in the first five months, and up 11.9 percent year-on-year.

Vietnam has so far attracted USS$481.33 billion in FDI, US$290.9 billion or 60.4 percent of which was found in the processing and manufacturing sector.

VAFIE’s Nguyen Van Toan said this sector has attracted large FDI projects, which augurs a brighter future for the country’s industrial development and is expected to help Vietnam reach its goal of becoming a country with modern industry and a high per capita income by 2030, and a developed, high-income country, a leading industrial country in Asia by 2045, as stated in Resolution 29-NQ/TW of the 13th Party Central Committee.

Increasing FDI in the industrial sector also helps Vietnam develop a high-quality labor force in the field.

According to Toan, previously, the processing and manufacturing sector attracted growing FDI due to Vietnam’s reasonable land rental and investment promotion policies, including good import-export policies, the low labor cost, and the lax environmental management.

The situation has changed, as FDI projects in the field are required to create more added values in order to benefit domestic enterprises.