Vietnam Envisions Increased Foreign Direct Investment with Large-Scale Projects
Hanoi – Vietnam’s foreign direct investment (FDI) inflows are gradually rebounding, with a surge in large-scale investment projects following the impact of the COVID-19 pandemic and global political and economic uncertainties. Recently, the province of Binh Thuan granted an investment license for several gas and electricity projects utilizing liquefied natural gas (LNG), paving the way for the implementation of four significant projects led by Vietnamese and foreign businesses.
Among these projects is the Son My electricity center, comprising Son My 1 and Son My 2 power plants, with a total investment of $4 billion. Additionally, the Son My LNG Terminal project will be executed at a cost of nearly $1.34 billion. In another development, the Secretary of the Party Committee of Bac Ninh, Nguyen Anh Tuan, held discussions with Chen Tao, Chairman of China’s Victory Giant Technology Group, regarding the construction of a factory in the northern province. Chen revealed plans for a $400 million factory in Vietnam-Singapore Industrial Park (VSIP) Bac Ninh, projected to yield approximately $1 billion worth of products annually.
Bac Ninh, which is already set to launch a project worth over $1.6 billion by Amkor Group later this year, is now welcoming another large-scale semiconductor project. Similarly, other regions across Vietnam are actively seeking FDI. For instance, the central province of Nghe An recently granted an investment license to Innovation Precision Vietnam Ltd., a Chinese company, to implement a $165 million project focused on aluminum alloys for consumer electronics manufacturing and green energy. The project is expected to commence operations in November 2024.
During a recent government meeting, Minister of Planning and Investment, Nguyen Chi Dung, reported that FDI inflows into Vietnam have been gradually recovering. In July alone, Vietnam received over $2.8 billion of FDI, a 9% increase compared to the previous year, bringing the total for the first seven months of the year to $16.24 billion, a rise of 4.5%. Out of this total, $11.58 billion has been disbursed, representing a 0.8% increase from the same period last year. Director of the Foreign Investment Agency, Do Nhat Hoang, expressed optimism that the situation will further improve in the near future.
While FDI continues to flow into Asia, including Vietnam, a report by HSBC in mid-July highlighted challenges faced by European investors in Vietnam, such as infrastructure systems and administrative procedures. Concerns were also raised regarding the implementation of the global minimum tax rate. The report emphasized that the transition of production activities from China to Vietnam is slowing down, necessitating Vietnam’s timely response. Minister Dung affirmed Vietnam’s commitment to refining mechanisms and policies that provide non-tax support and incentives to foreign investors, particularly in the context of the global minimum tax rate, to attract more large-scale projects utilizing advanced technologies.