Foreign Direct Investment (FDI) plays a critical role in Vietnam's economic landscape. As we delve into the FDI trends and government policies for 2023-2024, it's crucial to understand the significance of FDI in Vietnam. FDI not only drives economic growth but also transforms industries, creates jobs, and fosters innovation. In this article, we'll analyze FDI capital flows, assess investment opportunities, and explore Vietnamese government policies, providing valuable insights for investors eyeing the dynamic Vietnamese market. Let's embark on this journey to uncover the potential and opportunities within Vietnam's FDI landscape.

FDI Capital Flows in Vietnam in 2023

Analyzing FDI in Vietnam

As of December 20, 2023, foreign investors injected fresh vitality into Vietnam's economy, with the total newly registered capital, adjusted capital, and capital contributions reaching an impressive $36.6 billion USD. This marks a robust 32.1% increase year-on-year, and while adjusted capital experienced a decline, the overall figure witnessed a slight 0.6% increase compared to the first eleven months of the year.

In this dynamic landscape, 3,188 projects, amounting to $20.19 billion USD, received licenses in 2023. These figures represent a significant upswing, with project numbers surging by 56.5%, and the value rising by 62.2% year-on-year. Additionally, 1,262 projects adjusted their investments, contributing over $7.88 billion USD (a 22.1% decrease year-on-year). Moreover, foreign investors engaged in 3,451 capital contribution and share purchase activities, amounting to nearly $8.5 billion USD (a 65.7% year-on-year increase).

By December 20, 2023, FDI project disbursements reached approximately $23.18 billion USD, reflecting a 3.5% year-on-year increase. On the trade front, exports totaled an estimated $258.8 billion USD, constituting 73.1% of the country's export turnover. Imports by the foreign-invested sector stood at over $210 billion USD, representing 64.2% of Vietnam's total import turnover. Despite a decrease in overall export turnover, the FDI sector boasted a trade surplus of $48.8 billion USD, including crude oil, and nearly $46.9 billion USD excluding crude oil, while the domestic sector achieved a trade deficit of more than $21.9 billion USD.

Key Sectors and Industries for FDI

Foreign investors displayed a diverse investment pattern, with funds flowing into 18 out of 21 sectors within Vietnam's national economic classification system. Notably, the processing and manufacturing industry led the way with investments exceeding $23.5 billion USD, accounting for an impressive 64.2% of the total and marking a 39.9% year-on-year increase. Real estate secured the second position, attracting over $4.67 billion USD, equivalent to 12.7% of the total, with a 4.8% increase compared to the previous year.

Major Countries Contributing to FDI in Vietnam

The global reach of FDI in Vietnam was apparent, with investors from 111 countries and territories participating in 2023. Singapore retained its status as the top source of foreign investment, contributing approximately $6.8 billion USD, constituting 18.6% of the total FDI in the country. Japan followed closely with over $6.57 billion USD, accounting for 17.9% of the total. Hong Kong (China) came third with a registered capital exceeding $4.68 billion USD, making up 12.8% of the total and experiencing a remarkable 2.1-fold year-on-year increase. Additional major investors included China, The Republic of Korea, Taiwan (China), and others.

Investment Distribution in Cities and Provinces

Newly invested projects continued to gravitate towards cities and provinces known for their advantages in infrastructure, stable human resources, administrative reforms, and proactive investment promotion. Ho Chi Minh City and Hai Phong accounted for a substantial 24.9% of the country's newly registered projects in 2023, further reinforcing their status as preferred investment destinations.

Investment Opportunities in Vietnam in 2024

Prospects for FDI in Vietnam in 2024

In the upcoming year, Vietnam's FDI landscape is poised for continued growth. The nation's stable political environment, strategic geographic location, and a growing middle class present a compelling case for investors. Moreover, Vietnam's participation in various free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA), further enhances its attractiveness. The diversification of sectors and industries open to foreign investment is expected to remain robust, with a focus on technology, manufacturing, and renewable energy.

Emerging Investment Opportunities in Vietnam

2024 brings forth exciting opportunities across multiple sectors. Vietnam's technology sector is witnessing a surge in innovation and digital transformation, offering investors a chance to participate in the nation's digital evolution. The renewable energy sector is another area of interest, with a growing emphasis on clean energy sources such as solar and wind power. Additionally, healthcare and pharmaceuticals are expected to flourish, driven by increasing healthcare demands and government incentives.

Vietnam's Position in Global Investment

Vietnam's reputation as an attractive investment destination continues to grow on the global stage. Its strategic location within Southeast Asia, coupled with its favorable investment climate, positions Vietnam as a gateway to regional markets. Investors are increasingly looking to diversify their portfolios by tapping into Vietnam's potential, recognizing the nation as an essential player in the global supply chain.

Infrastructure Developments and Government Initiatives

Vietnam's commitment to infrastructure development is unwavering. The government is actively investing in transport, logistics, and energy projects, fostering a conducive environment for businesses to thrive. Initiatives such as the North-South Expressway, expansion of airports, and the development of industrial zones further solidify Vietnam's infrastructure advantage. Additionally, the government's efforts to streamline administrative procedures and improve the ease of doing business are set to make investing in Vietnam even more appealing in 2024.

Vietnamese Government Policies for FDI

Global Anti-Base Erosion Rules

Vietnam is a participant in the Global Anti-Base Erosion Rules, which establish global minimum tax standards. A resolution has been enacted to impose supplementary Corporate Income Tax (CIT) on qualifying taxpayers. Taking effect from January 1, 2024, this resolution ensures Vietnam's alignment with international tax norms. As per the decision of the National Assembly, Vietnam will utilize the generated revenue to establish an investment support fund aimed at attracting strategic investors and providing assistance to domestic businesses in specific sectors.

Resolution 103/2023/QH15: The Economic and Social Development Plan for 2024 

Effective from November 9, 2023, this resolution focuses on administrative reform, public-private cooperation, and selectively attracting foreign investments in emerging sectors closely linked to the domestic market. The aim is to stimulate growth and enhance economic positioning.

Decision No. 667/QD-TTg: Foreign Investment Cooperation Strategy 2021 - 2030

This strategy outlines nine (09) solutions to improve foreign investment cooperation, including enhancing the business environment, promoting innovation, and modernizing investment promotion efforts. Effective from June 2, 2022, it seeks to attract high-quality foreign investments.

Circular 02/2023/TT-NHNN: Debt Restructuring

The circular allows credit institutions to restructure debt repayment terms to support customers facing financial difficulties. Effective from April 24, 2023, until June 30, 2024, it aligns with government efforts to assist distressed customers and promote financial stability.

Final Thoughts

In conclusion, the dynamic landscape of Vietnam offers a wealth of opportunities for foreign direct investment (FDI). Analyzing FDI capital flows in 2023, we've observed consistent growth and a trade surplus, showcasing Vietnam's resilience as an attractive destination for foreign investment. As we look ahead to 2024, emerging prospects, especially in high-tech sectors, hold promise for those considering direct investing. Vietnam's government policies, as exemplified in Resolution 103/2023/QH15, contribute to the favorable investment climate. These policies emphasize administrative reform, public-private cooperation, and selective attraction of foreign capital. Click here to access the infographic and make data-driven decisions for your business success.

To navigate this thriving landscape successfully, consider Viettonkin as your partner. With nearly a decade of experience and a comprehensive understanding of foreign investment, we offer expert guidance to facilitate your investment journey. Contact Viettonkin today for invaluable assistance and insights that will lead you toward your investment goals.

The rapid growth of European Foreign Direct Investment (FDI) in Vietnam over the years has marked a compelling story of economic cooperation and opportunity. This article delves into the history, trends, and the dynamic landscape of European FDI in Vietnam. We will explore the three distinctive periods of European investment in Vietnam, examining the pivotal role played by key agreements and partnerships in shaping this significant economic relationship.

European FDI in Vietnam: 1988-2010

Early European Investment (1988-2000s)

The initiation of Vietnam's Doi Moi (Innovation) policy in the late 1980s opened the doors to foreign investors, with the first European capital trickling into the country. However, in the first years from 1988 to 1994, the registered capital of European countries in Vietnam remained rather modest. As reported by the Foreign Investment Agency (FIA), a substantial surge was witnessed in 1995, with European investments experiencing remarkable growth. Investments from Europe skyrocketed from a modest $15 million in 1988 to an impressive $707 million in 1995. This period saw the Netherlands and France taking the lead with the highest number of investment projects, primarily focusing on the processing and manufacturing industry. Notably, in 1999, direct investment capital from the UK saw a remarkable increase, spiking from 0.99% in 1995-1997 to 8.43% in 1998-1999, further solidifying the EU's foothold in the Vietnamese market.

Growth and Challenges (2000s-2010)

The 2000s witnessed a transformative phase in European FDI in Vietnam. The country's accession to the World Trade Organization (WTO) in 2007 further heightened its appeal to European investors. As per the FIA's records, during the early 2000s, from 2000 to 2005, Dutch FDI saw substantial growth, increasing its share to 20% of total direct investment capital. Simultaneously, investment from the UK continued its upward trajectory. Collectively, the European Union (EU) became a prominent investor in Vietnam, contributing approximately 38% of the total registered FDI capital.

However, there were notable fluctuations in European FDI. From 2002 to 2004, the European FDI share dropped significantly from over 40% of total registered FDI in Vietnam in the 1998-1999 period to just 16.8% in the 2002-2004 period.

The year 2005 marked a resurgence for EU FDI capital flows into Vietnam, with investments totaling $1.7 billion. European investors showed a particular focus on the manufacturing and processing industry, accounting for 32% of their investments with 573 projects and $6.29 billion in capital. Manufacture and distribution of electricity came next with 19 projects and $3.5 billion in capital, constituting 17.8% of the EU's investments. Real estate activities also gained traction during this period.

In the face of the worldwide economic downturn in 2008, which left its mark on European investments, Vietnam's registered FDI managed to surge by $2.3 billion. Although the subsequent year witnessed a notable decline, 2010 marked a remarkable resurgence, with European FDI reaching $2.6 billion. These fluctuating patterns during the early 2000s highlight the remarkable resilience and flexibility displayed by European investors in Vietnam's dynamic market.

European Investment in Vietnam: 2011-2019 (PCA Vietnam - EU)

The Partnership and Cooperation Agreement (PCA)

The Partnership and Cooperation Agreement (PCA) brought forth a multitude of opportunities for Vietnam, enhancing its access to the lucrative European Union (EU) market. The agreement paved the way for closer consultation, more effective utilization of Generalized System of Preferences (GSP) incentives, and provided Vietnam with unique treatment. The EU's endorsement of the PCA marked the inception of a comprehensive, substantive, and fruitful collaborative partnership between Vietnam and the EU.

Expanding Trade and Investment (2011-2019)

Based on research conducted by the Vietnam Academy of Social Sciences (VASS), during the period spanning 2011 to 2019, bilateral trade between Vietnam and the EU experienced remarkable growth, surging from 24.4 billion USD in 2011 to an impressive 56.44 billion USD in 2019, reflecting an increase of 2.3 times. By the end of December 2019, the EU had initiated a total of 2,375 projects in Vietnam, representing an increase of 182 projects compared to 2018. These investments originated from 27 out of 28 EU member states and amassed a combined registered investment capital of $25.49 billion. This accounted for 7.70% of the projects in Vietnam and constituted 7.03% of the nation's overall registered investment capital.

As indicated by VASS, data on the capital's source highlights the Netherlands as the primary contributor, boasting 344 projects and a substantial investment of 10.05 billion USD. This accounts for a significant share of 39.43% of the total EU investment capital in Vietnam. Following closely was the UK, with 380 projects and an investment of 3.72 billion USD, making up 14.48% of the total. France secured the third position with 563 projects and an investment of 3.60 billion USD, contributing 14.13% to the EU's total investments in Vietnam.

These investments extended across a wide spectrum of industries, spanning 18 out of 21 sectors. The processing and manufacturing industry was at the forefront, absorbing 36.3% of the total investment capital. Notably, it included subsectors such as coke and refined petroleum products (11%), textiles (6.94%), electronics (6.4%), food products (5.6%), and motor vehicles (5.2%). Additionally, the EU demonstrated interest in other fields like manufacture and distribution of electricity and gas (20.7%), real estate (11%), and information and communication (6.6%), underscoring the diversity and significance of EU investment in Vietnam during this period.

European Capital Flows in Vietnam: 2020-2022 (EVFTA & EVIPA)

The EVFTA and EVIPA's Impact on European FDI

The European Union (EU)-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA) have emerged as pivotal drivers of European Foreign Direct Investment (FDI) in Vietnam. Since they took effect in August 2020, these groundbreaking accords have not only reshaped the business landscape but also fortified the economic bonds between the EU and Vietnam.

One of the most significant outcomes of the EVFTA has been the removal of approximately 99% of tariffs on Vietnamese exports to the EU. This historic trade pact has fueled heightened commerce between the two parties and granted European companies a competitive edge in accessing Vietnam's thriving consumer market and robust supply chains. These advantageous trade provisions have not only stimulated exports but have also catalyzed a surge in European investments within Vietnam, diversifying their scope from high-tech industries to encompass service sectors, clean energy, supporting industries, food processing, and high-tech agriculture.

On the other hand, the EVIPA has equipped European investors with essential safeguards and legal assurances while operating in Vietnam. This agreement establishes a comprehensive framework for safeguarding investments and expeditiously resolving investment disputes. These provisions have instilled a heightened level of confidence among European investors in Vietnam's business environment, fostering an environment of trust and reliability.

Recent Trends and Opportunities (2020-2022)

Per statistics provided by the Ministry of Planning and Investment (MPI), the year 2020 witnessed European Foreign Direct Investment (FDI) in Vietnam reaching a total registered capital of $1.38 billion USD, representing a marginal decrease of 8.6% compared to 2019. Although experiencing a slight dip, it still accounted for a noteworthy 4.8% of the total FDI capital influx into Vietnam during the year.

The year 2021 saw a reversal in this trend, with the total FDI capital attracted surging to $1.41 billion USD, an impressive growth rate of 2.15%. As of the end of 2021, the European Union (EU) solidified its position as Vietnam's 6th largest investment partner, ranking just behind prominent players like Korea, Japan, Singapore, Taiwan-China, and Hong Kong-China. The cumulative registered capital from the EU reached $22.47 billion USD, corresponding to 5.51% of Vietnam's total FDI capital.

By August 2022, the EU had made substantial investments in Vietnam, with a total of 2384 projects and a registered capital of $27.6 billion USD. This sum accounted for 6.42% of the overall registered capital in Vietnam, affirming the EU's growing presence and engagement in the Vietnamese business landscape.

When analyzing the source of capital, we observe the participation of 25 out of 27 EU member countries, each contributing to 2274 FDI projects in Vietnam in 2021. Notably, the Netherlands stands at the forefront with a total registered capital of $10.47 billion USD, constituting 46.6% of the EU's investment in Vietnam. Following closely are France with $3.61 billion USD and Germany with $2.29 billion USD.

In terms of the investment landscape, European capital flows have permeated a multitude of economic sectors, spanning 18 out of 21 sectors. While the manufacturing and processing industry retains a significant share, other industries including manufacture and distribution of electricity and gas, real estate, information and communication have all become focal points. There's also a notable shift towards service industries such as telecommunications, finance, office rental, and retail. Furthermore, the focus has expanded into supporting industries, food products, agriculture, high-tech, and pharmaceuticals. This diversification underscores the versatility of EU investments, contributing to Vietnam's development across various sectors.

Final Thoughts

Throughout the historical progression of European FDI in Vietnam, the impact of EU capital flows has been significant, shaping the trajectory of foreign investment in Vietnam. From the early stages to the landmark EVFTA and EVIPA agreements, the evolution of European investment has been instrumental in Vietnam's economic growth. As the landscape continues to evolve, staying informed about the intricacies of EU capital flows becomes crucial. Partnering with Viettonkin offers tailored expertise, enabling seamless navigation of the dynamic Vietnamese market. Discover how EU FDI can thrive with Viettonkin's dedicated support and comprehensive resources, ensuring a successful investment journey in Vietnam.

Foreign Direct Investment (FDI), as a critical driver of global economic growth, often presents a myriad of challenges for investors venturing into new markets. Understanding the significance of FDI and the complexities it entails, particularly the need for reliable investment advisory services and knowledgeable consultants, is essential. Successfully navigating the intricate landscape of FDI requires a comprehensive understanding of market nuances, regulatory compliance, and risk mitigation strategies.

Exploring FDI Advisory Services

Unveiling the Scope of Foreign Direct Investment (FDI) Advisory Services

Foreign Direct Investment (FDI) Advisory Services encompass a wide array of strategic offerings designed to guide foreign investors through the complexities of entering and succeeding in a new market. These services provide a comprehensive understanding of local market nuances, regulatory requirements, and risk assessments. FDI Advisory Services are a beacon of clarity in the often murky waters of international investments.

These services offer thorough market research and analysis, providing investors with essential insights into local economic conditions, consumer behavior, and industry trends. By unraveling the intricacies of the target market, advisory services enable investors to make well-informed decisions that are tailored to the unique demands of their chosen destination.

Key Components of FDI Advisory Services

The key elements of FDI Advisory Services serve as the foundational pillars of a prosperous investment strategy.

• Market Research and Analysis: Thorough market research is the bedrock of sound investment decisions. FDI Advisory Services conduct in-depth market analysis to identify emerging trends, consumer preferences, and potential competitors. Armed with this information, investors can tailor their strategies to capture market opportunities effectively.
• Financial Planning: Investment decisions often hinge on financial considerations. Advisory services assist investors in financial planning, including budgeting, risk assessment, and investment modeling. These services ensure that investors are well-prepared for the financial aspects of their market entry.
• Market Entry Strategies: The choice of the right market entry strategy can significantly impact an investment's success. FDI Advisory Services help investors identify the most suitable strategy, whether it's through joint ventures, mergers and acquisitions, or setting up new ventures. Selecting the right strategy ensures that investors enter the market with a strong competitive edge.

The Benefits of Collaborating with an FDI Consultant

Collaborating with an FDI consultant is akin to having a seasoned guide in an uncharted territory. These professionals bring extensive experience and knowledge to the table, offering valuable insights and strategic direction to investors. By partnering with an FDI consultant, investors can navigate the complexities of foreign investments with confidence and precision.

One of the most significant benefits is risk mitigation. FDI consultants have encountered various market scenarios and are adept at identifying potential risks. Their guidance helps investors anticipate and mitigate challenges effectively, reducing the chances of costly mistakes.

Moreover, FDI consultants offer a nuanced understanding of the local business culture, which is often critical to building successful relationships and partnerships in a foreign market. Their local knowledge facilitates smoother negotiations, partnerships, and collaborations.

The Importance of FDI Advisory Services

Leveraging FDI Advisory Services for Successful Investments

In the intricate world of foreign investments, leveraging FDI Advisory Services becomes increasingly vital, especially when we consider specific examples. For instance, an investor looking to enter the vibrant market of Vietnam may face a maze of regulatory requirements, cultural differences, and competitive challenges. FDI Advisory Services can provide essential insights into the nuances of the Vietnamese market, helping the investor not only meet legal obligations but also establish strong local partnerships. Similar challenges arise when investing in highly regulated industries like healthcare or finance. Advisors well-versed in these sectors can guide investors through the intricacies, ensuring compliance and sustainable growth.

Realizing Success with FDI Advisor Guidance

Success in foreign investments is often intricately linked to the ability to adapt and innovate within a specific market. Let's consider the case of an investor seeking opportunities in the renewable energy sector. FDI Advisors with expertise in renewable energy can offer tailored strategies, considering factors like local energy policies, competition, and environmental concerns. By providing guidance on navigating these complex aspects, FDI Advisors facilitate the identification of lucrative projects and the execution of sustainable business plans.

Risks of Overlooking Professional Foreign Direct Investment Advisory Services

The risks of overlooking the professional guidance of FDI Advisory Services are significant. For instance, a company aiming to expand its tech-related investments into a foreign market may encounter difficulties without a deep understanding of local regulations and the competitive landscape. These challenges can result in delayed market entry and lost opportunities.

Moreover, in the pharmaceutical industry, a failure to adhere to intricate drug approval processes or regulatory compliance can result in substantial financial losses and damage to a company's reputation. Such risks can be mitigated with the support of FDI Advisors who specialize in these areas, ensuring a smoother and more profitable investment journey.

Viettonkin's FDI Advisory Services

Viettonkin's Vision and Commitment

Viettonkin, founded in 2009 with deep roots in the ASEAN region, has set an ambitious vision. By 2025, it aspires to become one of the top five leading FDI-focused consulting firms and business consultants in Southeast Asia. Looking ahead to 2040, the goal is to establish a global presence as a one-stop solution hub, catering to the diverse professional and corporate needs of multinational businesses worldwide. Viettonkin's unwavering commitment to this vision positions it as the trusted partner for foreign investors seeking to expand their reach.

A Closer Look at Viettonkin's Expert FDI Advisory Services

Viettonkin's FDI advisory services play a significant role in realizing its vision. This service equips clients with the knowledge and support needed to venture into new markets, whether locally or internationally. The secret to every successful expansion lies in careful planning, calculated risks, and in-depth research. Viettonkin proudly offers a comprehensive suite of services, including pre-feasibility studies, feasibility studies, market research, business matching, business travel support, and business development consulting. These services are meticulously designed to address clients' specific needs and challenges, ensuring that their expansion efforts are guided by expert insights and strategic direction.

Final Thoughts

In summary, Foreign Direct Investment (FDI) Advisory Services emerge as the central driving force behind successful foreign investments. The professional guidance of FDI advisors is the compass that helps investors navigate the complexities of foreign markets, minimize risks, and maximize opportunities. Unlock new investment possibilities with Viettonkin's FDI Advisory Services. Visit our website or reach out to our expert advisors to explore our comprehensive investment solutions. Let Viettonkin be your guide through a seamless and profitable FDI journey, transforming your global investment aspirations into a reality.

In recent years, investing in Southeast Asia has gained remarkable significance for businesses and investors worldwide. The region's dynamic economies, strategic location, and abundant opportunities have positioned it as a central destination for international investment. This article delves into the factors fueling Southeast Asia's ascendancy on the global investment landscape, shedding light on the sectors that beckon and the potential for future growth. As the ASEAN investment landscape evolves, understanding its key components is essential for any investor seeking to capitalize on the region's economic promise. Join us in exploring the significance of investment in Southeast Asia and uncover the strategies for successful endeavors in this flourishing market.

The Rising Trend of Investing in Southeast Asia

Key Factors Driving the Region's Attractiveness to Investors

Southeast Asia has undergone a remarkable transformation in its investment landscape, solidifying its status as a compelling destination for global investors. The region's economic metamorphosis, combined with its strategic advantages, has drawn a surge of interest from businesses worldwide.

This transformation can be attributed to several essential factors:

• Economic Growth and Stability: Southeast Asia exhibits consistent economic growth and stability. Despite the global economic slowdown observed in the second quarter of 2023, countries like Indonesia, Singapore, and Vietnam sustained moderate but stable GDP growth from the previous quarter, underscoring the region's economic strength.
• Strategic Location: The region's strategic geographical positioning makes it a natural bridge between the East and the West. Its proximity to major markets, including China and India, establishes Southeast Asia as a critical crossroads for trade and commerce.
• Demographic Dividend: A young and dynamic population contributes to an expanding consumer market, while a growing labor force drives industrial expansion. The demographic dividend presents a unique opportunity for businesses to access a vibrant workforce and consumer base.
• ASEAN Integration: The Association of Southeast Asian Nations (ASEAN) plays a central role in enhancing regional cooperation and reducing trade barriers. The establishment of the ASEAN Economic Community (AEC) in 2015 has streamlined trade and investment, creating a more investor-friendly environment.
• Infrastructure Development: Investments in infrastructure projects, such as transportation and logistics, have significantly improved connectivity within the region. These developments have enhanced trade flows, reduced operational costs, and created an inviting setting for investors.

FDI Landscape in Southeast Asia: Key Insights and Trends

The investment landscape in Southeast Asia is marked by dynamic shifts, with the region steadily gaining recognition as a favored destination for foreign direct investment (FDI). Investors from across the globe are increasingly drawn to this vibrant part of the world, and for good reason.

• Foreign Direct Investment (FDI) Inflows: Southeast Asia has witnessed a substantial influx of FDI over the years, reflecting its appeal to global investors. In recent years, FDI inflows have displayed remarkable growth, driven by the region's economic stability and investment-friendly policies. These inflows encompass a wide range of sectors, from manufacturing to technology and renewable energy, making it a diverse investment landscape.
• Leading Recipients of FDI: According to Statista, several countries within the region have emerged as leading recipients of FDI. Vietnam, with its robust economic performance and business-friendly environment, has seen a surge in FDI inflows. It is considered one of the primary investment destinations within Southeast Asia. Other nations like Singapore and Indonesia have also secured substantial FDI, largely due to their strategic locations and market potential.
• Leading Investors: Southeast Asia's appeal isn't limited to domestic or regional investors. It has become a magnet for leading investors from around the world. Notably, the United States, China, Japan, and the European Union (EU) countries have consistently been at the forefront of FDI contributions to the region. Their investments encompass various sectors, contributing to Southeast Asia's economic vibrancy.

Key Sectors and Industries for Investment in Southeast Asia

Investing in Southeast Asia has gained substantial momentum, driven by a dynamic economic landscape. In 2022, the region witnessed a significant surge in Foreign Direct Investment (FDI) inflows, notably in the manufacturing, services, and technology sectors. Several key industry drivers contributed to the growth of FDI, underlining the region's prominence in the global investment arena.

Strong Investment in Key Industries in Southeast Asia

Manufacturing took the lead as the star performer, recording a remarkable 134% growth, amounting to $44.7 billion. The rapidly developing manufacturing sector, particularly in fields such as electric vehicles (EVs), electronics, biomedical, and pharmaceuticals, attracted substantial investments. Investors recognized the robust potential for growth within these industries.

Finance and banking remained a critical recipient of FDI, experiencing a significant 22% rise to reach $56.9 billion. The financial sector's resilience and growth prospects continued to entice investors, reaffirming its importance in the region's economic landscape.

Megaprojects Redefining Investment in Southeast Asia

As stated in the ASEAN Investment Report for 2022, the year 2021 witnessed a significant surge in megaprojects in Southeast Asia, with 17 projects surpassing the $1 billion mark in value. This marked an increase compared to the 13 such projects in the previous year. The cumulative value of these megaprojects surpassed $89.4 billion, representing over 90% of the total international project finance value in 2021. This remarkable figure marked a substantial 170% growth from 2020, signifying the region's growing appeal for large-scale investments.

The majority of these megaprojects were concentrated in the energy and industrial sectors, with a primary focus on semiconductors and EV-related activities. The upswing in such projects reflects the strategic shift of companies seeking diversified supply chains and growth opportunities within Southeast Asia.

Hai Phong Offshore Wind Power Plant (Vietnam): This project, with a colossal total cost of $11.9 billion, is a testament to the region's commitment to renewable energy. Sponsored by Orsted A/S and T&T Group, it signifies Vietnam's emphasis on the power and renewables sector.

Bayan Lepas Intel Semiconductor Packaging Facility (Malaysia): With a total project cost of $7.1 billion, this investment led by Intel exemplifies the thriving industry sector in Malaysia. The project contributes to the growth of the industrial landscape.

DITO Telecommunity Corp Telecom Towers (Philippines): An investment valued at $5.4 billion, this project led by China Telecommunications is reshaping the telecommunications industry in the Philippines. It showcases the significant role of telecommunication in the region's economic growth.

Future Prospects and Strategies for Investing in Southeast Asia

Future Investment Trends in Southeast Asia

The future of investing in Southeast Asia holds immense promise. As the region continues to evolve and flourish, several key trends are expected to shape the investment landscape. Notable among these trends is the growing focus on sustainable and green investments. Southeast Asian countries are making significant strides towards a more sustainable future, aligning with global initiatives and environmental targets. Investors looking to capitalize on the region's potential should consider opportunities in renewable energy, sustainable infrastructure, and environmentally friendly technologies.

Another prominent trend is the rapid digital transformation across Southeast Asia. With a thriving tech-savvy population and increasing digital adoption, the technology sector is poised for substantial growth. E-commerce, fintech, and digital services are areas that investors should closely monitor.

Strategies and Considerations for Investors

Investors seeking to invest in Southeast Asia should approach the region with a well-defined strategy. Market research and due diligence are essential. Understanding the regulatory environment, local business practices, and cultural nuances is crucial for successful investments. Collaborating with local experts and established partners, like Viettonkin, can provide invaluable insights and support throughout the investment journey.

Furthermore, diversification is a key strategy for mitigating risks. Southeast Asia offers a range of investment options, and spreading investments across different sectors and countries can help safeguard against market fluctuations.

Final Thoughts

In essence, the landscape of investment in Southeast Asia is teeming with unprecedented opportunities, solidifying its position as a prominent hub for foreign investment. With a dynamic economy and a diverse range of investment opportunities, the region presents a promising prospect for investors worldwide. From the rapid growth in FDI to ASEAN to the thriving tech sector, Southeast Asia offers a fertile ground for ventures. To tap into the full potential of investing in Southeast Asia, it is crucial to adopt a strategic and well-informed approach. Connect with Viettonkin today to embark on your journey into the realm of investment in Southeast Asia and capitalize on the region's robust economic prospects.

In the realm of global business, making the decision to invest in Singapore or opt for investment opportunities in China is a pivotal choice that necessitates careful evaluation. This article serves as a comprehensive guide, illuminating the significance of geographical location, human resources, economic background, economic policy, and investment incentives in shaping the environment for foreign direct investment. By comparing these crucial factors, we aim to provide investors with valuable insights, allowing them to make informed decisions that align with their investment goals and strategies.

Investing in Singapore: Geographical Location and Human Resources

Strategic Location for Investment Opportunities

Singapore's strategic location at the intersection of major shipping routes and air corridors is not just a logistical win; it is the golden ticket to emerging markets as well as developed economies. Located at the southern tip of the Malay Peninsula, this global hub offers direct access to the booming economies of Southeast Asia, China, and even as far away as China East and Australia. For investors, this means unparalleled global exposure and diversification opportunities.

In comparison, China has a favorable geographical location, near emerging Asian markets, Japan, and adjacent to the sea. This positioning has allowed China to develop a robust transportation network and engage in global import and export through extensive export networks. While China's location is advantageous, Singapore's focused accessibility to diverse markets remains a unique selling point for businesses aiming to expand their international footprint.

Workforce Quality for Investment Environment

Singapore's status as a melting pot of many cultures not only enriches its cultural fabric but also provides fertile ground for global networks and cross-cultural partnerships. With a predominantly highly skilled workforce, Singapore ensures a competitive labor market and brings significant benefits to businesses. The quality of human resources in Singapore aligns with the nation's commitment to education and skill development.

China, as the fourth-largest country globally with a population exceeding a billion, offers enormous supply and demand potential. Despite disruptions from the Covid-19 pandemic, China's gradual return to economic recovery is attracting foreign investment. However, it's essential to acknowledge that skilled workers account for only 26% of the total workforce in China. The sheer size of China's labor market offers both opportunities and challenges for investors.

Understanding the Economic Background for Investments in Singapore

Singapore's Thriving Economy

Singapore's economic landscape is a diverse and dynamic arena, characterized by its highly developed and successful market economy. A cornerstone of this success lies in the country's prominent exports, which encompass electronics, chemicals, and an array of services. These export-oriented industries continue to drive Singapore's economic growth and global relevance.

One of Singapore's outstanding strengths lies in its financial sector, often dubbed the "Switzerland of Asia" due to its reputation for stability, transparency, and innovation. The financial industry in Singapore provides a robust and dynamic environment for various financial activities. Fintech, in particular, has flourished in this thriving financial hub, attracting investors and financial businesses seeking to harness its potential. In the "IMD 2022 World Competitiveness Ranking," Singapore secured an impressive third place among the most competitive countries globally. Sectors notably supported by the government, such as IT technology and services, renewable energy, and the pharmaceutical and biotechnology industry, have thrived, further solidifying Singapore's position as a center for biomedical science on the world stage.

China's Post-Pandemic Economic Landscape

As China emerged from the challenging times of the Covid-19 pandemic, its economic focus in recent years has remained largely centered on the promotion of manufacturing and heavy industry. State-owned enterprises and prominent domestic companies have received protection and encouragement from the government to invest in high technology, new equipment and materials production, the service sector, renewable energy, and environmental protection. China's approach aims to foster technological advancement and reduce environmental impact.

China's investment landscape exhibits a strategic shift, with a deliberate emphasis on discouraging foreign investment in key sectors where the government seeks to transform domestic companies into globally competitive multinational corporations. This approach may pose challenges for foreign investors aiming to penetrate markets previously supported by state or traditional state monopolies. In alignment with the government's agenda, speculative investments in areas like real estate and property are discouraged, underlining China's commitment to long-term economic development and stability.

Economic Policy and Law for Investment in Singapore

Legal Framework for Investing in Singapore

The investment landscape in Singapore is underpinned by an exceptionally inviting legal framework. The city-state has mastered the art of attracting venture capital, private equity, and foreign direct investment through pro-business policies. Singapore offers a seamless journey for investors, from its transparent legal structure and robust intellectual property protection to its investor-friendly tax regime, all supported by a robust digital infrastructure. These investor-friendly conditions are a boon to entrepreneurs, startups, and multinational corporations. Some of the positive aspects include non-discrimination against foreign investment, a harmonious blend of financial and labor policies, expeditious administrative procedures, and an uncomplicated, investor-friendly tax system with one of the world's lowest corporate tax rates at just 17%. Singapore's legal system is characterized by transparency, fairness, and objectivity, further instilling investor confidence. Notably, Singapore boasts one of the world's most extensive networks of Double Taxation Agreements (DTAs) and Free Trade Agreements (FTAs), with 27 FTAs worldwide. This approach promotes international trade and business, providing investors and companies based in Singapore unrivaled access to pivotal global markets.

The Complex Legal Landscape in China

While China presents a wealth of opportunities for investors, its legal environment can be described as multifaceted, constantly evolving, and intricate in terms of administrative procedures. One of the notable drawbacks is the perceived lack of transparency and inadequate protection of intellectual property rights, issues that investors should approach with caution. The Chinese government's stance on foreign investment remains more restrictive than other major economies, with several sectors closed to Foreign Direct Investment (FDI). Investors in China must navigate through a regulatory framework known as the Negative List for Foreign Direct Investment. While post-Covid-19, China has hinted at expanding opportunities for foreign investment, substantial changes are yet to materialize. FDI appears to be more welcome in three key areas: high-end manufacturing, production-oriented service industries, and China's Central, Western, and Northeastern provinces. Understanding the intricate and ever-evolving legal environment is crucial for investors eyeing China, ensuring informed and prudent decision-making.

Detailed Investment Incentives in Singapore

Investing in Singapore comes with a suite of enticing incentives, ranging from tax exemptions to support for international expansion:

• Start-Up Tax Exemption Scheme (SUTE): For eligible companies, SUTE provides a substantial tax benefit. Starting in 2020, businesses can enjoy a 75 percent tax exemption on the first S$100,000 (US$73,770) of chargeable income for the initial consecutive three years. The subsequent S$100,000 of chargeable income qualifies for a 50 percent tax exemption. Note that SUTE applies exclusively to the first three-year assessments. Beyond this period, firms can transition to the Partial Tax Exemption (PTE) scheme.
• Partial Tax Exemptions: In cases where companies do not meet the SUTE criteria, they can still benefit from the Partial Tax Exemption (PTE) scheme. Introduced in 2020, the PTE allows businesses to receive a 75 percent exemption on the first S$10,000 (US$7,400) of chargeable income. An additional 50 percent exemption can be applied to the next S$190,000 (US$140,000).
• Double Tax Deduction for Internationalization (DTDi): Singapore has a vast network of Avoidance of Double Taxation Agreements (DTAs) and Exchange of Information Arrangements (EOI Arrangements), covering 106 countries. Notably, Singapore has signed DTAs with 96 jurisdictions. Under the DTDi, businesses can claim a 200% tax deduction on eligible expenses related to international market expansion and investment development operations. This tax advantage is particularly attractive for enterprises seeking to expand their international footprint.

These incentives, combined with Singapore's pro-business environment, make it an attractive destination for foreign investors.

Final Thoughts

In this comparative exploration of investment opportunities, we've uncovered the unique advantages that set Singapore apart as a prime destination for investors. From its strategic geographical location at the crossroads of global trade to its world-class workforce and favorable economic policies, Singapore offers a compelling investment environment for businesses to thrive. As you contemplate your investment decisions, it's crucial to recognize how these factors can shape your success in the competitive world of business.To delve deeper into the wealth of investment opportunities that Singapore presents, we invite you to explore our comprehensive guidebook, "Doing Business in Singapore." Unlock the potential of your investment in Singapore and gain invaluable insights into establishing and growing your business in Singapore with the support of Viettonkin. Your journey to success begins here.

Large foreign corporations and investment funds take advantage of pouring money into large enterprises, especially in the consumer, retail, pharmaceutical, and financial industries. The current period is regarded as the "golden time" for Vietnamese consumption.

More foreign giants pour money

The world's top private investment fund Bain Capital has agreed to invest at least 200 million USD in equity capital into Masan Group, with a value of 85,000 VND per share, according to an announcement made by the billionaire Nguyen Dang Quang's Masan Group Corporation (MSN). This costs substantially more than the market rate of 77,400 VND per share.

In this transaction, equity will be invested in the form of preferred dividend shares, which will convert into common shares at a 1:1 ratio. For the first five years, the dividend is set at 0%, and starting in the sixth year, it rises to 10% annually. Furthermore, foreign investors will continue to receive dividend payments at a rate equal to the dividend received on each common share (if any). After 10 years from the date of issuance, this capital will be required to convert into common shares of Masan Group.

Masan will use the funding from Bain Capital to strengthen its financial position and enhance its balance sheet. Other investors are negotiating with Masan as well. Masan has the ability to expand investor attractiveness by up to $500 million USD depending on the group's capital requirements and the state of the market

Recent foreign capital flows into Vietnam through direct (FDI) and indirect channels (buying shares in Vietnamese firms) have shown confidence despite many ups and downs in the global economy and unpredictable USD swings.

Through indirect investment routes, the retail, banking, and pharmaceutical sectors have attracted significant interest from international investors.

The national investment fund of Singapore, GIC, and other Thai investors are reportedly interested in buying 20% of Bach Hoa Xanh's shares on September 29. Bach Hoa Xanh is the third-largest retail chain in Vietnam and is estimated to be worth between 1.5 and 1.7 billion USD. The deal is almost done, and it's expected to finalize soon, maybe in the first quarter of 2024.

Several large Korean companies are investing heavily in the potential retail pharmaceutical market. According to Business Korea, Trung Son Pharma, a company that owns the biggest drugstore chain in Western Vietnam, has just signed a deal to purchase 51% of the company's shares for more than 391 billion won (almost 30 million USD, or over 720 billion VND). The transaction is anticipated to close in October of this year.

In 2022, Trung Son Pharma expects to generate more than 1,300 billion VND in sales from its chain of 140 pharmacies. This company has an extremely rapid rate of growth. Since 2019, this business has expanded by an average of 46% yearly, which is significantly quicker than the An Khang pharmacy chain run by Mr. Nguyen Duc Tai and on par with the Long Chau chain run by FPT.

According to Bloomberg, Thomson Medical Group's agreement to pay 381.4 million USD for the majority ownership of the FV International Hospital (France-Vietnam International Hospital) marked the largest transaction in the history of the Vietnamese healthcare industry. According to Reuters, SHB is negotiating to sell 20% of its shares to investors from Korea and Japan for a valuation of 2.2 billion USD in the banking and finance sector.

Benefit from the "golden time"

Over time, businesses from Japan, Thailand, and Korea have promoted the purchase of shares in well-known Vietnamese companies, focusing on retail, consumption, banking and finance, pharmaceuticals, food, beverage, plastics, and other industries

The largest transaction saw the Thai powerhouse investing $5 billion USD to purchase Vinamilk or a sizable portion of Sabeco, the beer company with the largest market share in Vietnam

Recently, significant Vietnamese firms have seen an increase in interest from Singaporean, American, and European corporations

An American private investment company with its main office in Boston is called Bain Capital. The corporation's initial investing venture in Vietnam was this transaction

Investors have previously observed American fund Warburg regularly investing in Vietnamese firms. A well-known fund that focuses on closing acquisitions for several hundred million dollars at a time is Warburg Pincus. It has made enormous investments in numerous well-known Vietnamese companies, including VinaCapital, Vincom Retail, and Novaland (NVL), totaling billions of US dollars.

It is evident that the majority of share purchases are concentrated on well-known businesses in the sector in order to tap into Vietnam's 100 million-person consumer and retail market. Others are export-oriented businesses that benefit from exporting to markets in Europe, the US, and Japan, such as the seafood sector.

Like investments in Sabeco, The Gioi Di Dong, or a number of pharmaceutical firms, Bain Capital's deal with Masan indicates investors' confidence in the expansion of the Vietnamese consumer market as well as the potential of Masan's retail consumer sector. The "golden time" of spending in Vietnam, according to Danny Le, general director of Masan Group, will allow Masan to increase profits by a factor of several. The deal with Bain Capital is a recognition of Mason's prior accomplishments.

According to Bain Capital executive Barnaby Lyons, working with Masan is a strategic investment undertaking in Vietnam. Vietnam's consumer market is attractive and expanding quickly.

With an anticipated annual growth rate of 7.7% from 2022 to 2040, Vietnam is expected to be Southeast Asia's consumer market with the quickest rate of expansion.

An impressive growth rate has been achieved as a result of the faster urbanization process. The consumer class is growing as a result of rising wages and a greater variety of requirements, including those for lifestyle and financial experiences in addition to bare necessities.

Foreign investment in Vietnam has reached unprecedented levels, making it a red-hot destination for global investors. This Southeast Asian gem boasts a thriving investment climate, driven by robust FDI statistics and a strategic position for investing. With the government's investor-friendly policies and a booming economy, FDI in Vietnam is surging, creating significant opportunities for those seeking to capitalize on the country's growth story. In this article, we'll explore the factors underpinning the foreign investment boom and delve into the statistics, industries, and incentives that are attracting investment to Vietnam. Join us as we unravel the reasons behind this surge and why investing in Vietnam is becoming increasingly attractive for global players.

The Surge in Foreign Investment

Surging Foreign Direct Investment (FDI)

Foreign investment in Vietnam has experienced an extraordinary surge in recent years, firmly establishing the country as a magnet for global capital. The statistics tell a compelling story: In the first nine months of 2023, FDI in Vietnam reached an impressive $20.21 billion, reflecting a remarkable 7.7% increase compared to the same period in the previous year. This surge is not an isolated event; it's part of a broader trend of increasing investor confidence in Vietnam.

Notably, the records for foreign investment have been consistently broken in Vietnam. In 2022, the country achieved an all-time high in terms of FDI disbursement, eclipsing the previous record by a substantial margin. This attests to the mounting confidence international investors place in Vietnam's economic potential.

Diverse Industry Involvement in Foreign Investment

The surge in foreign investment is distributed across various industries and sectors. Processing and manufacturing, in particular, has emerged as a magnet for foreign capital. For instance, as of September 20, 2023 this sector saw a 15.5% increase in foreign investment year-on-year. Additionally, real estate, banking and finance, wholesale and retail have all experienced substantial inflows, contributing significantly to Vietnam's economic growth.

Global Investors' Foothold in Vietnam

It's important to note that these investments originate from a range of countries, including but not limited to Singapore, Japan, South Korea, China, and the United States. For example, Singapore-based companies have poured substantial investments into Vietnamese manufacturing facilities, while Japanese firms have shown great interest in research and development centers, highlighting Vietnam's appeal as a technology hub.

To illustrate the tangible impact of this surge in foreign investment, consider the case of the Samsung Electronics Complex in Thai Nguyen province. This mammoth project, with an impressive investment of $7.5 billion, has become a symbol of Vietnam's attractiveness to investors. It's not only a substantial source of employment, providing jobs to over 38,500 workers, but also a crucial contributor to Vietnam's export growth.

Factors Driving Foreign Investment Growth

Proactive Government Policies

The remarkable surge in foreign investment in Vietnam can be attributed to a confluence of factors that make the country a magnet for global investors. One key driver is the Vietnamese government's proactive stance in facilitating foreign investment. Over the years, Vietnam has consistently improved its business environment through a series of legislative and policy reforms. These efforts have simplified administrative procedures, reduced bureaucracy, and enhanced transparency, providing a friendlier ecosystem for investors.

Government initiatives such as key economic zones (KEZs) have also played a pivotal role. These designated zones offer tax incentives, streamlined regulatory processes, and superior infrastructure, luring foreign investors seeking favorable conditions for their businesses.

Strategic Location and Gateway to ASEAN

Vietnam's strategic location in Southeast Asia further bolsters its appeal. Situated at the crossroads of key trade routes, the country serves as a gateway to the ASEAN market of over 600 million consumers. This strategic advantage has made Vietnam a preferred destination for companies looking to establish regional hubs, access regional markets, and participate in global value chains.

Skilled Workforce and Vocational Training

Vietnam's abundant, skilled labor force is another significant factor. The country boasts a youthful and tech-savvy population, making it an ideal destination for companies seeking a well-educated workforce. Moreover, the government has continually invested in vocational training programs to ensure a steady supply of skilled workers.

Robust Infrastructure and Efficient Supply Chains

The robust infrastructure in Vietnam, including modern ports, highways, and logistics facilities, has been a critical driver of investment. This infrastructure supports efficient supply chain management and reduces operational costs for businesses, further enhancing the country's attractiveness.

Global Economic Trends and Supply Chain Diversification

Global economic trends have played a role in the surge of foreign investment in Vietnam. The reconfiguration of supply chains due to factors like the US-China trade tensions and the COVID-19 pandemic has prompted companies to diversify their production bases. Vietnam, with its stable political climate and growth prospects, has emerged as a preferred alternative for many companies.

The Impact of Foreign Investment on Vietnam's Economy

Robust GDP Growth and Economic Resilience

The surge in foreign investment in Vietnam has left an indelible mark on the country's economy. A primary indicator of this impact is the robust growth in Vietnam's GDP. The influx of foreign capital, coupled with an expansion of industries, has contributed significantly to Vietnam's economic development. In recent years, Vietnam has consistently maintained impressive GDP growth rates, making it one of the fastest-growing economies in Southeast Asia. According to a report by the Singapore-based United Overseas Bank (UOB), Vietnam's GDP growth rate is anticipated to reach 6.6% in 2023, and it is expected to remain above 6% in the coming years, largely driven by foreign investment.

Diversification of Investment across Industries

One notable effect of increased foreign investment is the diversification of industries and regions that benefit from it. Traditionally, foreign investment was concentrated in processing and manufacturing and export-oriented sectors. However, as Vietnam's economy matures, investors are now exploring a broader range of industries. This diversification has led to increased economic resilience, as the country is less dependent on a single sector. For instance, the service sector has seen a significant uptick in foreign investment, with the retail and e-commerce industries witnessing substantial growth.

Foreign-invested enterprises (FIEs) have made significant contributions to Vietnam's export landscape, utilizing the country's favorable conditions to excel on the global stage. Take the case of Nestlé, the Swiss multinational food and beverage company, which expanded its operations in Vietnam. By establishing production facilities in the country, Nestlé not only met the surging demand for its renowned products but also bolstered Vietnam's reputation as an export hub for top-quality food and beverages. This strategic investment has substantially added to Vietnam's export earnings and highlighted its capacity to serve as a trusted and efficient source for consumer goods.

Embracing Sustainable and Responsible Investment

The surge in foreign investment is aligned with the principles of sustainable development and environmental, social, and governance (ESG) criteria. Foreign investors are increasingly mindful of ESG factors, and they are integrating sustainable practices into their operations in Vietnam. The LEGO factory in Vietnam, for instance, is committed to sustainability by using renewable energy sources and implementing waste reduction initiatives. This not only benefits the environment but also aligns with Vietnam's goals for a greener future.

Beyond short-term gains, the surge in foreign investment is expected to bring long-term economic benefits and sustainability. As the business environment in Vietnam continues to improve and investors expand their presence, the country is likely to witness further economic transformation. This includes the transfer of technology, knowledge, and expertise to the local workforce, which can enhance productivity and competitiveness while promoting sustainable development.

The remarkable surge in foreign investment in Vietnam signifies the nation's position as a highly attractive destination for global investors. Foreign direct investment (FDI) in Vietnam has reached unprecedented levels, propelling economic growth and development. Our exploration of investing in Vietnam has revealed that factors such as strategic location, government initiatives, and a skilled workforce have fueled this investment boom. As we've seen through examples, Vietnam's allure as an investment hub is evident. With a strong commitment to sustainable development, Vietnam's partnership with foreign investors is poised to foster long-term economic prosperity. For expert guidance and support in seizing the wealth of investment opportunities in Vietnam, look no further than Viettonkin. Connect with us today to embark on your investment journey in Vietnam.

Vietnam's economic growth has long been intertwined with the contributions of Foreign Direct Investment (FDI). In the ever-evolving landscape of global commerce, FDI plays a pivotal role in shaping Vietnam's economic trajectory. This article sheds light on the vital statistics and trends surrounding FDI in Vietnam for the Q3 of 2023, providing a comprehensive view of the investments pouring into the country. Join us as we delve into the numbers, sectors, and locations that define Vietnam's FDI landscape, aiming to illuminate the opportunities it presents.

FDI Performance in Q3 2023

The third quarter of 2023 marked a significant chapter in Vietnam's foreign direct investment (FDI) landscape. According to the Foreign Investment Agency (FIA), with a total capital generation of 6.78 billion USD, it showcased the nation's enduring appeal to international investors. Although this number experienced a modest 15% decline compared to the preceding quarter, it continued to demonstrate resilience, emphasizing the enduring appeal of Vietnam's dynamic market.

Data from FIA also showed that newly registered capital in Q3 2023 reached 3.74 billion USD, demonstrating the confidence of new investors in Vietnam's growth potential. This figure, although slightly lower than Q2's 3.47 billion USD, reaffirms the allure of the Vietnamese market for fresh ventures. Furthermore, during Q3 2023, adjusted capital for existing projects witnessed a substantial surge, reaching 2.22 billion USD. This marked a noteworthy increase of approximately 30% when compared to the previous quarter, underscoring a significant uptick in investments allocated to ongoing projects.

In the context of economic development, FDI continued to be a potent driver, spurring innovation, job creation, and sectoral diversification. The 0.82 billion USD contributed by foreign investors for share purchases and capital contributions in Q3 2023 underscores their active participation in the Vietnamese business landscape.

Notably, FIA data indicates that total disbursements in Q3 2023, estimated at 5.89 billion USD, remained robust and comparable to the 5.72 billion USD recorded in the previous quarter. These disbursements demonstrate the effectiveness of investment utilization and contribute to Vietnam's economic development.

Furthermore, the third quarter witnessed the initiation of 961 new FDI projects, a substantial increase compared to the 771 and 522 new projects in Q2 and Q1 2023, respectively. This surge in new projects signals the evolving investment landscape in Vietnam.

The FDI performance in Q3 2023 reaffirms Vietnam's status as a favored investment destination, showcasing its resilience and continued appeal in the global market. These statistics not only reflect the present but also lay the foundation for a promising future in Vietnam's investment landscape.

Investment Sectors, Locations and Partners

In the third quarter of 2023, Vietnam's FDI landscape continued to exhibit vibrant diversity in both sectors and geographic locations. Processing and manufacturing maintained their allure, emerging as key sectors that attracted substantial FDI inflows. Notably, Hanoi stood out as the leading destination for FDI, while Singapore retained its status as a top contributor to Vietnam's economic development.

Diverse Sector Allure

Across the spectrum of Vietnam's national economic sectors, foreign investors have explored opportunities in 18 out of 21 sectors in the first nine months of 2023. Within this landscape, the processing and manufacturing sector took the lead with a staggering total investment capital of over 14 billion USD, constituting nearly 69.3% of the total registered investment capital. This impressive figure reflected a remarkable increase of 15.5% compared to the same period last year. The robust performance of this sector underscores its pivotal role in Vietnam's economic growth.

According to the Ministry of Planning and Investment (MPI), in the realm of real estate, despite a 45% decrease in total investment capital compared to the same period in 2022, it secured the second position with nearly 1.94 billion USD in investments. The banking and finance sector, along with wholesale and retail, secured the third and fourth spots, with total registered capital of nearly 1.54 billion USD (a remarkable 63.8-fold increase) and approximately 734 million USD (an 18.7% surge), respectively.

Leading Investment Destinations

Turning our attention to investment locations, as indicated in the report from MPI, Hanoi emerged as the frontrunner with a total registered investment capital of nearly 2.53 billion USD, capturing almost 12.5% of the nation's total. Impressively, this marked a substantial 2.46-fold increase compared to the same period in 2022. Following closely, Hai Phong secured the second spot with an investment capital of nearly 2.21 billion USD, constituting 10.9% of the country's total investment, and witnessing an impressive 82.4% growth rate compared to the previous year.

Other prominent locations that garnered substantial FDI inflows included Ho Chi Minh City, Bac Giang, and Binh Duong, reaffirming their appeal to international investors. These regions serve as hubs of economic activity and provide favorable conditions for business development.

Key Investment Partners

In terms of investment counterparts, traditional partners such as Singapore, China, Japan, Korea, Hong Kong, and Taiwan (China) remained steadfast contributors to Vietnam's economic growth, collectively accounting for 78.8% of the nation's total investment capital. Singapore led the pack with an investment capital exceeding 3.98 billion USD, representing over 19.7% of the total investment in Vietnam. China secured the second spot with 2.92 billion USD, constituting 14.5% of the total investment capital, while Japan ranked third with a total registered investment capital of nearly 2.9 billion USD, accounting for more than 14.3% of the nation's total. These steadfast investment partners continue to play a crucial role in shaping Vietnam's economic landscape, reflecting the nation's appeal as a prime destination for international investors.

FDI Evaluation and Outlook

FDI Performance and Trends

As we delve deeper into the FDI landscape of Vietnam during the third quarter of 2023, it becomes evident that FDI continues to play a pivotal role in the nation's economic development. To comprehensively evaluate this performance, it's imperative to consider not only the figures but also the broader trends and their implications.

In evaluating the overall FDI performance during this quarter, it's noteworthy that while the total capital generated by FDI projects in Q3 2023 stood at 6.78 billion USD, as previously mentioned, it experienced a modest decline compared to the preceding quarter. However, when assessed in the context of the year's overall FDI trends, Q3 still contributed significantly to the nation's economic growth. The first 9 months of 2023 witnessed consistent growth, with FDI reaching new heights.

Examining shifts in the FDI landscape reveals a nuanced narrative. While certain sectors like processing and manufacturing maintained their allure throughout the first 9 months of 2023, others such as real estate, banking and finance sector, and wholesale and retail industries underwent adjustments, underlining the diversification of investment interests. The geographical spread of FDI also demonstrated remarkable changes, with locations like Hanoi and Hai Phong taking center stage, signaling a dispersion of investment throughout the country.

FDI's Impact and Future Outlook

Analyzing the impact of FDI on Vietnam's economy, it's evident that the inflow of foreign capital has not only contributed to economic growth but also job creation. These investments have played a vital role in driving technological advancements, boosting productivity, and enhancing the nation's competitiveness on a global scale. The ripple effect extends beyond economic metrics, fostering social development and improving living standards for Vietnamese citizens.

In terms of the outlook for FDI in Vietnam, numerous factors come into play. Government policies that promote a favorable business environment and incentivize foreign investment will remain a key driver. Additionally, global economic conditions and geopolitical stability will influence investment decisions. Vietnam's commitment to trade agreements and its strategic position in the global supply chain are factors that bode well for its continued attractiveness to foreign investors.

In conclusion, the third quarter of 2023 showcases Vietnam's resilience and attractiveness in the global investment landscape. While slight fluctuations may occur, the nation's steady growth and diversified sectors make it a promising destination for FDI. As Vietnam continues to navigate a dynamic economic landscape, FDI remains an integral driver of its development, reinforcing its position as an emerging economic powerhouse in the region.

Final Thoughts

In summary, the FDI statistics for Q3 2023 in Vietnam underscore the pivotal role that foreign direct investment plays in the nation's economic growth and development. The quarter witnessed robust capital inflows, reflecting Vietnam's resilience and appeal as an investment destination. FDI continues to drive innovation, job creation, and sectoral diversification, contributing to the country's competitive edge in the global market.

At Viettonkin, we understand the complexities and opportunities that FDI presents in Vietnam. As a trusted partner with deep expertise in navigating the Vietnamese business landscape, we are committed to supporting your investment journey. Connect with us today for expert guidance and tailored solutions to explore FDI opportunities in Vietnam. For expert guidance and support in exploring FDI opportunities in Vietnam, connect with Viettonkin. Contact us to unlock the potential of FDI and investments in Vietnam.

(BDT) In the report "ASEAN Perspectives - FDI capital flows: Persistent in the face of challenges", HSBC said that, while the global trade outlook is gloomy, foreign direct investment (FDI) is still being poured into ASEAN. The region's share of global FDI soared after the 2008 global financial crisis and accelerated in recent US-China trade tensions. In 2022, ASEAN will attract a record high of nearly 17% of global FDI capital, nearly double from 4 years ago.

FDI boom – A long story

Since the Covid-19 pandemic, global trade has suffered many obstacles. A structural shift with consumers increasingly using services instead of goods and rising inflation has put pressure on Western countries’ consumption on the wallets of Western countries, which caused a severe impact on ASEAN exporters. However, FDI - which reflected investors' confidence in the long-term prospects of an economy – was still one of the few bright spots in the region. Despite the short-term trade downturn, a consistent increase in FDI was critical for ASEAN to enhance its value chain and consolidate its importance in global trade.

Over the past 30 years, ASEAN has seen a bounty of FDI, thanks to the region's enormous growth potential, rising cost effectiveness, countless trade agreements and ongoing structural transformation, and many other activities. While the Asian Financial Crisis (AFC) dampened ASEAN's investment climate, the Global Financial Crisis (GFC) in 2008-2009 was a significant catalyst to the region's FDI boom, as multinational companies searched for investment opportunities in fast-growing and cost-competitive economies.

FDI inflows into ASEAN hit a record high

Total FDI to ASEAN-6 has averaged nearly USD 128 billion per year during 2010-19, approximately three times more than the average over the previous decade. Similarly, net FDI averaged nearly USD 53 billion per annum in the same period, almost four times higher than the average from the previous decade. In particular, the trend has intensified in the post-COVID-19 era. Total FDI surprisingly rose 45 percent to around USD 185 billion on average, with net FDI doubling to USD 105 billion in the period of 2020-2022.

The share of FDI into ASEAN-6 clearly reflected this trend. While ASEAN-6 attracted no more than 6% of the world's FDI capital after AFC, this inflow returned to the region more significant to a more significant extent after GFC, increasing to approximately 8% (except in 2011 and 2015 - 2016). In particular, FDI has reached a new record high since the global pandemic began. In 2022, ASEAN-6 attracted nearly 17% of the world's FDI, a historic high that shows ASEAN's growing importance to investors.

"After all, US-China trade tensions have pushed investors to accelerate the relocation of supply chains to elsewhere, in which ASEAN, thanks to its neighboring geography and improved basic standards, has clearly emerged as an alternative destination," HSBC's report commented.

Where do investors come from?

ASEAN has seen a very diverse group of investors from the US, EU and Asia in different sectors. "Northeast Asian countries have long accounted for 1/3 of FDI inflows into ASEAN, but intra-ASEAN investment has long become the leading source of FDI if we intend to invest from Northeast Asia by economy," HSBC’s report said. This strongly reflected the growing economic integration among ASEAN member countries over the past years, as many previously industrialized countries (Singapore, Malaysia and Thailand) invest in the latecomer countries with growth potential, including Vietnam and Indonesia.

The shares of FDI inflows into ASEAN by year (average)

According to HSBC, in the past 3 years, the US (17% market share) has replaced the intra-ASEAN region (14% market share) to become the largest FDI investing country in the region. This change reflected the supply chain shift of US investors since the US-China trade tensions, and although temporarily disrupted by the pandemic, it has quickly returned and increased to a record high.

The US is the leading investor in ASEAN's manufacturing and financial sectors, with each sector accounting for nearly 30% of FDI. The advantages of this investment were more evident in the manufacturing sector, which was also the "backbone" of attracting foreign investment in ASEAN. The US has poured an average of USD 12 billion in the past 5 years, equivalent to the total FDI inflows from EU and ASEAN. That showed, a large share of US FDI has flowed into advanced manufacturing, such as high-end semiconductor production in Singapore and Malaysia. Meanwhile, Singapore also captured the largest FDI market share in the region for financial activities.

Besides the US, intra-ASEAN investors also kept an eye on these two key pillars. Meanwhile, FDI inflow from Europe was directed towards "wholesale, retail and motorbike repair", while Japanese investors focused more on "transportation and warehousing". Manufacturing ranked second in terms of FDI for each of these markets.

The importance of Chinese investors

China, a country focused on investing in ASEAN real estate, is now trying to boost investment in the region's manufacturing sector. In which, Indonesia, Vietnam and Thailand have seen a sharp increase in the share of Chinese FDI.

In Indonesia, Chinese investment including leading EV battery manufacturer, CATL, and stainless steel manufacturer Tsingshan has been a key in facilitating the boom in nickel smelters, a key input material to produce EV batteries. However, Indonesia was not the only candidate to attract Chinese FDI in the electric vehicle supply chain. China's leading electric vehicle manufacturers, BYD, Great Wall Motor (GWM) and SAIC, have all set up production lines in Thailand, due to their strategic location in the automotive supply chain and generous subsidies of this country.

On the other hand, Malaysia was also competing in the field of electric vehicle manufacturing. Not only did it attract three Chinese investors, BYD, Great Wall Motor and Chery in this year, Tesla also recently chose Malaysia as a destination to expand production. Meanwhile, Chinese investment also expanded into Malaysia's growing solar sector, with Risen Energy announcing its first initial grassroots investment in Southeast Asia worth more than $10 billion in the 15 coming years.

"In the case of Vietnam, mainland Chinese investors also kept an eye on the consumer electronics industry, with two of Apple's three major suppliers pouring investment into Vietnam to expand their capacity, "HSBC’s report said.

While China was not a major FDI investor in Singapore, Chinese investors have also made moves in the strategic high-value-added pharmaceutical sector. The only exception was the Philippines, where Chinese FDI is almost negligible.

"Overall, the race to attract FDI has begun. Although the near-term trade outlook remains muted, stable FDI inflows will help ASEAN continue to enhance the value chain and reinforce their crucial positions of importance in global trade," HSBC’s report stated.

Final Thoughts

The commencement of the competition to attract Foreign Direct Investment (FDI) within the ASEAN region is unmistakably underway, marked by the various incentives and optimistic developments put forth by governments across the region. It is evident that investors stand to reap substantial advantages from this ongoing initiative. Explore Vietnam’s promising market right now to gain yourself significant advantages in the investing race! Reach out to us if you need support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don't miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.

Source: Baodauthau

Many large US corporations invest billions of dollars in Vietnam as the Vietnamese economy develops rapidly and becomes a destination for investors.

Data from the Foreign Investment Agency (Ministry of Planning and Investment) shows that by the end of 2022, US businesses have invested in 1,216 projects in Vietnam, with a total investment capital of 11.4 billion USD. The United States ranks 11th among the countries and territories investing the most in Vietnam.

Billions of dollars invested in real estate and tourism companies

Warburg Pincus is not an unfamiliar name to Vietnamese investors. This is the US investment fund that Prime Minister Pham Minh Chinh worked with during his visit to the US in May 2022. 

Warburg Pincus is a fund recognized for making investments worth hundreds of millions of dollars each time. Billions of dollars have been invested overall in a number of Vietnam's top companies.

With its headquarters in New York, this private investment fund is among the oldest and biggest in the world. After China and India, Vietnam is Warburg Pincus' third largest investment destination in Asia.

In June 2022, the investment fund group led by Warburg Pincus completed a deal worth 250 million USD into Novaland. This investment affirms Warburg Pincus's long-term investment strategy in Vietnam as the largest private investment fund with more than 1.5 billion USD disbursed and expands the list of leading enterprises in Vietnam that Warburg Pincus has been accompanying.

This sum of money assists Novaland build out its strategic land fund and finish developing ongoing important projects. 

The transaction with Novaland marks Warburg Pincus's 6th investment in Vietnam. 

2013 saw the completion of Warburg Pincus' first significant business transaction in Vietnam when this corporation invested 200 million USD to acquire 20% of Vincom Retail (VRE) shares from billionaire Pham Nhat Vuong.

Following that, Warburg Pincus also invested 300 million USD with VinaCapital in 2016. Warburg Pincus and VinaCapital reached an agreement to establish a joint venture specializing in hotel investment and management in Vietnam, with plans to progressively expand throughout Southeast Asia.

Later, this joint venture made investments, including buying all the shares in Serenity Holding, a hotel management company that oversees the brands namely Fusion Resorts, Fusion Suites, Alma Resorts, and À La Carte Living.

Many American corporations promote investment in Vietnam.

This joint venture also bought 50% of the shares of Metropole Hanoi Hotel and 100% of Ho Tram Project Company's capital, the owner of The Grand Ho Tram project in Ba Ria Vung Tau. At the same time, industrial real estate worth up to hundreds of millions of dollars has been built through the joint venture with Becamex IDC.

Early in 2018, Warburg Pincus reported two independent legal investors managed by this firm had invested more than 370 million USD (about 8,400 billion VND) in billionaire Ho Hung Anh's Techcombank.

After that, the fund continued to invest in MoMo, a financial technology platform through two capital calls, Series C and Series D, with an undisclosed amount of capital. MoMo recently revealed that its value has surpassed $2 billion, making it one of Vietnam's tech unicorns.

The CEO and Head of Real Estate for the Asia Pacific Region at Warburg Pincus, Jeffrey Perlman, stated during the capital investment in Novaland that Warburg Pincus strongly believes in the long-term growth trajectory of the Vietnamese economy and continues to actively pursue new opportunities to invest in leading platforms in Vietnam.

With the investment deal in Techcombank, representatives of Warburg Pincus also set expectations for Vietnam's long-term growth. Accordingly, Vietnam is one of the countries with the fastest growing banking market in Southeast Asia.

Many Vietnamese companies are anticipated by Warburg Pincus to rise to prominence in the region.

Technology and retail 

The US investment fund management company KKR also had a very early presence in Vietnam. With up to 370 billion USD in managed assets, this is one of the biggest investment firms in the world.

Since 2011, KKR has invested 159 million USD as a major shareholder in Masan Consumer, a division of the Masan Group owned by billionaire Nguyen Dang Quang. KKR continued to invest an additional $200 million in 2013, bringing its ownership percentage to 18.04%. 

In the field of technology, Mr. Truong Gia Binh's FPT Group and Synnex Technology International Corporation (Synnex), the third-largest company in the world for distributing technology products, telecommunications, and electronic components with its headquarters in California, USA, entered into an investment cooperation agreement in 2017.

Midway through 2015, US giant Mondelez International spent approximately 8,000 billion VND to acquire 80% of Kinh Do Group's (KDC) holdings in the confectionery industry. Mondelez International is regarded as the top snack food company in the world, with about $30 billion in revenue and more than 107,000 employees worldwide in 2015. 

In terms of FDI, US investment capital in Vietnam has increased over the past few years. With 91 new projects, the US invested 748 million USD in Vietnam in 2022. Cumulative US investment capital in Vietnam has reached more than 11 billion USD. On the list of nations investing the most in Vietnam, the US is now ranked eleventh.

A historically sizable American corporate delegation arrived in Vietnam at the end of March 2023.

Many familiar corporations are doing business or manufacturing in Vietnam and have expansion plans such as Apple, Coca-Cola and PepsiCo, Netflix... SpaceX is also looking for the satellite Internet service market in Vietnam and countries in the region.

The quest for commercial prospects in Vietnam is intensified by Pfizer and Johnson & Johnson, medical device producer Abbott, Visa Finance Company, Citibank, cloud computing technology companies Meta, and Amazon Web Services.

Recently, certain US companies  have shown an interest in the energy industry in Vietnam. A spokesman of the top US energy company AES stated in March 2023 that energy remains a crucial strategic area of cooperation between the US and Vietnam. Progress in large-scale energy projects by AES and other member companies will contribute to promoting Vietnam's development.

Before, at the end of 2020, the US company GE proposed to Lang Son province authority to approve research and survey for the projects for the Chi Lang Wind Power Plant, with a total expected capacity of 165 MW, and the Ai Quoc Wind Power Plant, with a total expected capacity of 253 MW, and a total investment of more than 710 million USD.

Conclusion

There is no doubt that Vietnam-US relations are at the best stage since the end of the Vietnam War. Vietnam is the only Southeast Asian country in the top 10 of U.S. trading partners, and American manufacturers increasingly consider Vietnam as an alternative destination to China. Many US corporations have eyed Vietnam as one of the most attractive investment destinations.

Thus, it is an ideal time for the US investors to seize the opportunities! Reach out to us if you need support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don't miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.  

Source: Vietnam.net