Wednesday, 17 Jan 2018

2018: New expectation for Vietnam’s FDI attraction prospects

Updated at Tuesday, 02 Jan 2018, 16:49
The Hanoitimes - 2018 is expected to be a breakthrough year for Vietnam’s effort in attracting foreign direct investment (FDI).
Vietnam has been a successful story in attracting huge FDI in 2017, with total registered capital of 36 billion USD and disbursement rate of 17.5 billion USD. This is a big achievement and far exceeded expectation in the beginning of 2017, considering the FDI to Vietnam in the last few months of 2016 was slowing down. Many experts considered this as a consequence of a potential breakdown of the Trans Pacific Partnership (TPP). 
In 2018, Vietnam will put priority on high quality projects with spillover effects to socio-economic development.
In 2018, Vietnam will put priority on high quality projects, with an aim to make positive impact to the economic development
In the first two months of 2017, FDI to Vietnam was 1,588 billion USD and 1,769 billion USD respectively, a slight increased compared to the same period of last year. However, things changed in March 2017 with the first billion-dollar project getting approved, namely the Samsung Display project with additional capital of 2.5 billion USD. Within this month, total registered capital, including newly approved, added and shares purchase with an increase of 4.3 billion USD, taking the total registered capital in Quarter I 2017 to 7.71 billion USD, up 91.5% compared to the same period of last year.

Since then, FDI to Vietnam has been on the growing trend and reached the peak in June, with over 7 billion USD from foreign investors. In November, at the APEC Economic Leaders’ Week in Danang, foreign investors have committed an additional investment fund of 4.8 billion USD for projects in Vietnam, including a billion-dollar project being Van Phong 1 Thermal Power Plant with total investment of 2.58 billion USD. As such, total investment fund to Vietnam has reached new record with 5 billion – dollar – projects and nearly 6.2 billion USD of additional capital through contribution and share purchase. 

Another impressive result is the disbursement rate. In the beginning of 2017, the growth rate of FDI disbursement has slowed down at an increasing rate of 3-4% compared to the same period of last year, while GDP growth rate in Quarter I was 5.1%. Under this circumstance, the government has implemented a series of measures to accelerate disbursement rate, resulting a disbursement rate of 2.2 billion USD in September alone. At the end of 2017, this number has increased to an all time high of 17.5 billion USD, up 10.8% compared to the last year’s figure. 

The success of Vietnam in FDI attraction in 2017 marked an important milestone for the country effort in 30 years attracting FDI. The Foreign Investment Agency under the Ministry of Planning & Investment has been positive over the bright prospect of the FDI to Vietnam. As such, the 36 billion USD of FDI to Vietnam in 2017 has not only laid the foundation, but  also putting the pressure on how to improve this number in 2018. 

However, the importance of FDI attraction is not only about the total registered capital, but also on the quality of projects, for which the government should have a clear policy in attracting FDI. With this being said, it is essential to optimize the benefits from FDI, with an aim to serve the purpose of Vietnam’s socio-economic development. 
Nguyen Tung
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