FDI capital: Breakthrough expectation in 2018

By Ngoc Minh - Feb 21, 2018 | 05:17 PM GMT+7

TheLEADERMany experts expect that this year will have many big turning points in attracting FDI with new directions from the Government.

FDI capital: Breakthrough expectation in 2018

2017 is a year of success in attracting foreign direct investment (FDI) in Vietnam both in registration capital and disbursement capital set in the context of 30 years since the Law on Foreign Investment in Vietnam was born. Nearly US$36 billion of registered FDI last year contributed to the total FDI attraction in the past three decades to nearly US$319 billion.

Imprint of 2017

At the Government meeting with localities held at the end of December 2017, Prime Minister Nguyen Xuan Phuc repeatedly emphasized the record that Vietnam has achieved in attracting FDI when the registration capital reached nearly US$36 billion.

This is an encouraging achievement as the most optimistic economists and state management agencies have not thought of it from the beginning of 2017 because by the end of 2016, the flow of FDI into Vietnam is slowing down because "the system The threat of the Trans-Pacific Partnership (TPP) is likely to be "broken". Economic report in February 2017 announced by the National Financial Supervisory Commission shows that FDI capital over the same period is growing slowly. "This shows that the US withdrawal from the TPP has had a certain impact on FDI registered in Vietnam," said the National Financial Supervisory Commission.

Mr. Do Nhat Hoang, head of the Foreign Investment Department, said FDI in 2017 reached the highest level in 10 years, disbursed capital also reached the highest level ever.

According to statistics of the Foreign Investment Department, up to December 20th, 2017, the total FDI investing into Vietnam was USD$35.88 billion including newly registration capital, increased capital and contributed capital to buy shares of foreign investors, increased up 44.4% over the same period in 2016.

Of which, 2,591 new projects were granted investment registration certificates with a total registration capital of 21.27 billion USD, increased up 42.3% over the same period. In addition, there were 1,188 projects registered to adjust investment capital with the total registration capital increased to approximately 8.41 billion USD, increased up 49.2% over the same period. In addition, there are 5.002 times of capital contribution, share purchase of foreign investors with a total capital contribution of 6.19 billion USD, increased up 45.1% over the same period.

Therefore, according to the Foreign Investment Department, in terms of FDI and investment capital through capital contribution and share purchase, foreign investment attraction in 2017 has set a record. If FDI alone, the figure is over US$29.68 billion. The indirect investment, through capital transactions, shares purchased without the stock exchange, is US$ 6.19 billion. The M&A market in Vietnam has continued to boom, as predicted by the Vietnam M&A Forum.

2017 also marked the new achievement of FDI when the disbursed capital was established with US$ 17.5 billion. Since the beginning of FDI attraction in the past 30 years, this is the first time that FDI disbursement has been so high as in the past 10 years, FDI disbursed only around US$ 11-12 billion. Economic experts expressed doubts about the capital absorption capacity of the Vietnamese economy.

Previously, in 2012, disbursed capital attracting FDI was of only US$10.46 billion, the disbursement in consecutive years increased by 11.5 billion USD, 12.5 billion USD, 14.5 billion USD and 15.8 billion USD for 2013, 2014, 2015 and 2016. Actually, this is just implemented FDI and the investment capital through capital contribution and share purchase is not yet calculated. By the end of October, 2017, when reporting to the National Assembly, the Foreign Investment Agency calculated that disbursements for this investment method in 2017 could amount to US$ 3 billion, which means that there are more than US$ 20 billion higher of foreign capital being disbursed, meaning it contributes significantly to boosting economic growth.

Billion dollar Project: real projects, real implementation

In addition to the boom of investment capital through capital contribution and share purchase, the impressive return of billion-dollar projects has contributed significantly to boosting FDI into Vietnam in 2017 with spectacular growth.

In March, Vietnam welcomed the first billion dollar project in 2017, Samsung Display project increased investment capital of 2.5 billion dollars. Since then, FDI inflows to Vietnam have been steadily rising, with the peak in June at more than US$7 billion. By November 2017, when the APEC Summit held in Da Nang, there were more than US$4.8 billion in registered FDI and within the framework of this week another US$1 billion project was awarded. The investment is BOT Van Phong 1 thermal power project with US$ 2.58 billion.

There are five billion dollar projects licensed for investment this year, including three BOT power projects is the investment project construction of Nghi Son 2 BOT thermal power plant with a total investment of US$2.79 billion due to Japanese investors invest in Thanh Hoa, with capacity of 1,200 MW; BOT Van Phong 1 thermal power plant project with total registered capital of US$2.58 billion invested by Japanese investors in Khanh Hoa with a capacity of 1,320 MW and Nam Dinh 1 BOT thermal power plant project. Total investment capital is US$2.07 billion invested by Singaporean investors in Thai Binh, with a net capacity of 1,109.4 MW.

In addition, there are Samsung Display project that increased capital of 2.5 billion dollars in Bac Ninh and gas project Block B - O Mon with a total investment capital of 1.27 billion dollars in Kien Giang. That is not counting on "approximately billion USD" project that is the intelligent complex project in functional area 2A in Thu Thiem new urban area, Ho Chi Minh City with the registered capital of US$885.85 million.

These six large-scale projects have contributed more than US$12 billion, accounting for more than 40% of total FDI registered in Vietnam in 2017.

According to many economists, 2008 was the peak year for attracting FDI with a record 72 billion dollars in investment, but later, there were many projects deemed virtual and the certificate was withdrawn investment certificate. Thus, the billion dollar FDI in Vietnam in recent years is considered as "real" - real investment, real implementation.

In addition to attracting FDI, 2017 is also accelerating economic growth on a stronger macroeconomic basis, reflecting that many macroeconomic policies are moving in the right direction but the penetration pace of good policy on life is still slow.

After the difficulties reaching the bottom in 2012, Vietnam's economy is gradually growing stably when the growth rate of the subsequent years is always higher than the average growth rate in the 2011 period. In 2017, Vietnam's economy increased. 6.81% in the context of the variables reflecting improved economic stability such as declining inflation rate (2017 under 5% compared to the 6.5% average in the 2011-2017 period) The public debt / GDP ratio from 63.6% in 2016 to 62%, the rate of public debt tends to decrease, budget deficit decreases; Trade balance improves from trade deficit in 2015, 2016 surplus and 2017 surplus of trade balance.

Three decades is long enough to summarize and evaluate the effectiveness of attracting foreign investment so that there is direction and appropriate policies to focus more on quality, optimize the benefits of this capital flow, push to strengthen links between domestic enterprises and foreign enterprises to serve the socio-economic development of Vietnam.