Manufacturing, processing industries an FDI magnet

Processing and manufacturing industries are top FDI attractors

The Ministry of Planning and Investment has recently released a report on the FDI attraction situation in the first two months of 2024. Accordingly, the capital of newly registered projects, capital increases of ongoing projects and stock purchases by foreign investors totaled more than US$4.29 billion, a 38.6 percent increase compared to the same period last year. FDI disbursement was estimated at around US$2.8 billion, up 9.8 percent.

Specifically, in the first two months, Vietnam attracted 405 new FDI projects, a 55.2 percent increase compared to the same period last year, with the total registered capital of nearly US$3.6 billion, more than double that of the same period in 2023. FDI in Vietnam in the first two months of 2024 came from 48 countries and territories. Singapore topped the list with over US$2.08 billion, accounting for 48.5 percent of the total investment capital. Hong Kong (China) ranked the second with nearly US$525.7 million, accounting for 12.2 percent.

Foreign investors invested in 38 out of 63 provinces and cities nationwide in the first two months of 2024. Hanoi took the lead with nearly US$914.4 million, accounting for 21.3 percent of the total registered capital, a 24.4-fold increase compared to the same period in 2023. Quang Ninh ranked the second with over US$471.1 million, accounting for nearly 11 percent of the total.

Notably, the processing and manufacturing industries topped the list of FDI attractors in terms of registered capital and the number of new projects in the first two months. By February 2024, Vietnam had attracted 39,553 FDI projects with total registered capital of over US$473 billion. The processing and manufacturing industries attracted 17,046 projects with the total registered capital of US$285.4 billion, accounting for 43 percent of the total number of projects and 60.3 percent of the total registered capital.

Le Huu Quang Huy, Vice Chairman of the Board of Members at the Institute for International Investment Studies (ISC), stated that many global enterprises have strengths in the processing and manufacturing industries, and to generate profits, they often choose to invest in the areas of their expertise. Meanwhile, Vietnam has policies to encourage FDI projects in the manufacturing sector without compromising the environment. With the industrialization policy in place, Vietnam prioritizes attracting investment in the industrial sector. Le Huu Quang Huy added that FDI projects focusing on the processing and manufacturing industries not only create favorable conditions for the development of Vietnam’s industrial sector but also indirectly contribute to the training of high-quality labor in this field.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, new FDI projects registered in the first two months significantly increased both in terms of the number of projects and the total registered capital. Notably, they included large projects worth hundreds of millions of US dollars. This reflects foreign investors’ trust and willingness to expand their operations in Vietnam.

Although Vietnam has recently achieved positive FDI attraction results, Dr. Phan Huu Thang, former Director General of the Foreign Investment Agency, believes there are still unresolved issues regarding the FDI flow in the past.

To address these issues, economists suggest that Vietnam needs to actively implement Politburo Resolution 50-NQ/TW and attract foreign investment in a selective manner, focusing on quality, efficiency, technology, and environmental protection. Priority should be given to projects with advanced, new, high and clean technology, using modern management methods and creating high added value with significant spillover effects, which help connect Vietnamese businesses with global production and supply chains.