09:42 | 30/07/2019 Economy
(VEN) - According to the Ministry of Planning and Investment’s Foreign Investment Agency, as of June 20, Vietnam attracted US$18.47 billion in foreign direct investment (FDI), equivalent to 90.9 percent of the amount in the corresponding period last year.
Doubling of share buys
Over 1,723 new projects were granted licenses with total registered investment capital of US$7.41 billion in the first half of the year, equivalent to 62.8 percent of the level in the corresponding period last year. At the same time, 628 existing projects were injected with an additional US$2.94 billion, equivalent to 66.2 percent of the level during the corresponding period last year. Overseas players spent US$8.12 billion to acquire shares in Vietnamese companies in the first half of the year, almost double compared to a year ago and accounting for 44 percent of total FDI commitments. The strong increase in the value of capital contributions and share purchases by foreign investors was due to Hong Kong (China)’s BeerCo Limited’s acquisition of a US$3.85 billion stake in the Vietnam Beverage Co., Ltd.
Although the value of capital contributions and share purchases by foreign investors increased sharply, there was a sharp drop in newly registered and additional capital compared to the boom registered in 2018. According to the Ministry of Planning and Investment, many major FDI projects were granted licenses in June 2018, such as Japan’s US$4.14-billion smart city project in Hai Boi Commune in Hanoi’s Dong Anh District, and the Republic of Korea’s US$1.2-billion construction of a polypropylene (PP) plant and liquefied petroleum gas (LPG) storage tank in Ba Ria-Vung Tau Province. This resulted in the strong increase in newly registered capital in the first half of 2018. The performance for the first half of the year was dragged down only by the numbers for June.
Hong Kong (China) takes the lead
Among 19 fields and sectors receiving capital from foreign investors, manufacturing and processing led with US$13.15 billion, accounting for 71.1 percent of the nation’s total FDI. Real estate business came next with US$1.32 billion (7.2 percent), followed by retail and wholesale with US$1.05 billion (5.7 percent).
Hong Kong (China) took the lead among the 95 countries and territories investing in Vietnam in the first half of the year, with US$5.3 billion, thanks in large part to BeerCo Limited’s acquisition of a stake in the Vietnam Beverage Co., Ltd. The Republic of Korea ranked second with US$2.73 billion (14.8 percent of all FDI), followed by China with US$2.29 billion (12.4 percent), Singapore with US$2.2 billion and Japan with US$1.95 billion.
The capital city remained the most attractive destination for foreign investors, luring more than US$4.87 billion, equivalent to 26.4 percent of all FDI pledged in the country. Ho Chi Minh City came next with US$3.09 billion (16.7 percent) and the southern province of Binh Duong claimed third position with US$1.37 billion (7.4 percent).
According to domestic and foreign economists, foreign investors still believe in the Vietnamese investment environment as reflected in a rise of eight percent in FDI disbursement to US$9.1 billion from January to June.
Vietnam’s deeper and wider integration into the global economy through the signing and implementation of bilateral and multilateral free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), has opened up opportunities for the country in attracting foreign capital.
Trade tensions between the US and China have also provided a great opportunity for Vietnam to receive FDI inflows from investors seeking to shift their production from China to the Southeast Asian region in order to limit risks, with Vietnam featuring prominently on their radar.
As of June 2019, there were 28,954 valid FDI projects with total registered capital of US$351.66 billion in Vietnam.
Disbursement reached an estimated US$200.5 billion, equivalent to 57 percent of total registered capital.