There has been a significant surge in foreign direct investment (FDI) inflows in recent months, primarily driven by traditional partners, with limited breakthrough from European and US investors.
Following the approval of several large-scale projects in February, such as the $454-million Trina Solar Cell venture in Thai Nguyen province and a $275-million project from Gokin Solar Hai Ha Vietnam in Quang Ninh province, FDI in Vietnam has experienced robust growth.
According to a recent report from the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), as of February 20, total FDI inflows reached $4.29 billion, marking a 38.6% increase compared to the same period last year. This contrasts with the downward trend observed in the first two months of the previous year, which saw a 38% decrease year-on-year. The number of newly registered projects also surged by 55.2% to 405 projects during this period.
“There’s an increase in both the number of projects and their capital,” noted Do Nhat Hoang, director general of the FIA. “This sharp rise is not just due to the sheer number of projects, but also the substantial contribution of large-scale investments, ranging from $400-600 million.”
However, despite the notable increase in newly registered FDI, adjusted investment, capital contributions, and share purchases experienced declines, amounting to $442.1 million (down by 17.4% year-on-year) and $255.4 million (a 68% decrease), respectively.
Nonetheless, the agency remains optimistic, noting that the rate of decline in adjusted capital has improved year-on-year, with adjusted capital in the first two months of 2024 increasing by 5.7% compared to an 85.1% reduction during the same period last year.
Despite the positive performance, the majority of FDI inflows still originate from Asian markets such as Singapore, Hong Kong, Japan, China, and South Korea, accounting for 77% of the number of new projects and nearly 85.5% of the country’s total registered investment.
Meanwhile, investments from European and US partners remain minimal. Total US registered investment in Vietnam over the past two months stands at only $5.6 million. US investors, expected to be among the top contributors, currently rank 18th.
From Europe, the United Kingdom registered investments totaling $36.2 million, the Netherlands $29.24 million, Germany $5.86 million, and France $7.7 million.
As of the end of February, the United States ranks 11th in terms of foreign investors in Vietnam with $11.83 billion invested across 1,347 projects, while European nations like the UK, France, Germany, and Luxembourg rank 15th to 18th.