'FDI into Vietnam may exceed last year'

KB Securities Vietnam (KBSV) forecasts that FDI capital into Vietnam this year may exceed 2022 as foreign enterprises in Vietnam are gradually recovering.

Assessing the economic outlook for the fourth quarter, KBSV said that foreign direct investment (FDI) flows into Vietnam are maintaining stability. In the past 9 months, total registered FDI capital reached more than 20.2 billion USD, up 7.7% over the same period last year. Disbursed FDI capital also increased by 2.2%, reaching more than 15.9 billion USD, the highest level compared to the same period in the 2017-2023 period.

"The continued increase in the number of projects shows that FDI enterprises in Vietnam are gradually recovering and expanding production and business," KBSV said.

With this positive trend, KBSV forecasts that this year's FDI capital flow may exceed last year's results. In 2022, total registered FDI capital will be recorded at nearly 27.7 billion USD, with disbursed capital reaching 22.4 USD.

The Foreign Investment Agency (Ministry of Planning and Investment) also predicted at the beginning of the year that FDI attraction this year could reach 36-38 billion USD, of which disbursed capital would reach about 22-23 billion USD.

Previously, the World Bank made a similar assessment in its latest Vietnam economic update report. In it, the organization said that manufacturing and processing industry is still the main sector attracting FDI commitments to Vietnam. In addition to investors' confidence in long-term growth potential (despite short-term global uncertainties), Vietnam also seems to benefit from an investment diversification strategy.

Considering the internal causes, Vietnam is still proactively promoting foreign investment attraction by issuing attractive support packages and creating a favorable business environment. Vietnam is also making good use of its available competitive advantages including stable economic and political situation, favorable location for investment activities, a large number of signed free trade agreements, and abundant labor force.

Externally, Vietnam continues to benefit from the trend of production shifting away from China. The stability of the VND compared to the CNY also gives Vietnam an advantage in building confidence in the business environment.

In addition, the upgrading of the Vietnam-US strategic partnership also creates expectations of indirectly attracting a large amount of FDI capital from this country. Some comments are suggesting that President Biden's recent visit could create an opportunity to form a fourth wave of FDI in Vietnam.

In a meeting with Prime Minister Pham Minh Chinh earlier this week, the FDI business community expressed that Vietnam is one of the potential markets, in the priority investment group with long-term commitments.

Duc Minh

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