Report on foreign direct investment in the first 10 months of 2021

As of October 20^th, 2021, the total newly registered, adjusted, and paid-in capital for share purchase by foreign investors reached USD 23.74 billion, 1.1% higher than the same period last year. The capital generated by FDI projects was estimated at USD 15.15 billion, down by 4.1% over the same period last year.

Accumulated as of October 20^th, 2021, the whole country had 34,266 valid projects with total registered capital of over USD 404 billion. The accumulated realized capital of foreign direct investment projects was estimated at USD 247 billion, equivalent to 61.1% of total valid registered investment capital.

Details are as follows:

1. FDI INFLOWS OF VIETNAM
2. FDI attraction in the 10 months of 2021

1.1. FDI performance:

Realized capital:

As of October 2021, FDI projects were estimated to disburse USD 15.15 billion, a decrease of 4.1% compared with the same period in 2020 and 0.6 percentage points over the first 9 months of 2021.

Import and export performance:

Export: Export turnover of the foreign investment sector continued to increase in the first 10 months of 2021, but the rate was slightly decreased over the first 9 months. Export (including crude oil) reached more than USD 198 billion, up by 20.1% compared with the same period last year, accounting for 74.1% of export turnover. Export (excluding crude oil) was USD 196.7 billion, a rise of 20.3% over the same period last year, accounting for 73.6% of the country’s export turnover.

Import: Imports of foreign investment sector attained nearly USD 176.9 billion, up by 31.3% over the same period last year and accounting for 65.7% of the country’s import turnover.

In the first 10 months of 2021, the FDI sector saw a trade surplus of around USD 21.2 billion including crude oil and USD 19.8 billion excluding crude oil, while the domestic sector had a trade surplus about USD 23.2 billion.

1.2. Investment registration

As of October 20^th, 2021, total newly registered, adjusted, and paid-in capital for share purchase by foreign investors reached about USD 23.74 billion, 1.1% higher compared to the same period last year. The newly registered and adjusted capital continued to increase while paid-in capital for share purchase continued to decrease.

Of which:

Newly registered capital: There were 1,375 new projects granted with investment registration certificates (a year-on-year decrease of 34.5%). Total registered capital reached over USD 13 billion (a year-on-year increase of 11.6%).

Adjusted capital: There were 776 projects registered for adjustment of investment capital (a year-on-year decrease of 14.4%). Total additional registered capital reached over USD 7.09 billion (a year-on-year increase of 24.2%).

Paid-in capital for share purchase: There were 3,063 paid-in capital for share purchase by foreign investors (a year-on-year decline of 43.8%). The total value of paid-in capital was worth USD 3.63 billion (a year-on-year decline of 40.6%).

(Detailed data in Appendix I attached).

By sector:

Foreign investors had invested in 18/21 sectors in the national economic classification system, of which the processing and manufacturing led with total investment capital of USD 12.74 billion, accounting for 53.7% of total registered investment capital. Although electricity production and distribution attracted a small number of new and adjusted projects, and paid-in capital for share purchase but with large-scale projects, it ranked the second with investment capital of USD 5.54 billion, accounting for 23.3% of total registered investment capital. It was followed by the real estate business, wholesale and retail with the total registered capital of about USD 2.12 billion and USD 803 million, respectively. The rest were other sectors.

Regarding the number of new projects, the processing and manufacturing; wholesale and retail; professional activities, science and technology led, accounting for 33.2%, 28.2% and 14.9% of total projects, respectively.

By counterpart:

There were 97 countries and territories investing in Vietnam in the first 10 months of 2021. Singapore led the list with total investment capital of USD 6.77 billion, accounting for 28.5% of total investment capital in Vietnam, down by 9.9% compared with the same period in 2020; Republic of Korea ranked the second with USD 4.15 billion, accounting for 17.5% of total investment capital, up by 21.3% compared with the same period last year. Japan ranked the third with registered investment capital of nearly USD 3.4 billion, accounting for 1.43% of total investment capital, increased 89.9% over the same period last year. Next were China, Hong Kong, Taiwan, and so on.

In the first 10 months of 2021, Singapore’s investment capital was 1.63 times more than that of South Korea and double than the investment capital of Japan because Singapore had a project worth USD 3.1 billion. This project accounted for 45.8% of Singapore’s total investment capital. Although South Korea only ranked the third in the investment capital, it was the leading partner in the number of new investment projects, adjusted capital projects and paid-in capital for share purchase. Thus, regarding the number of projects, RoK was the partner with more investors interested in, making new investment decisions as well as expanding investment projects in the 10 months.

By location:

The foreign investors had invested in 58 provinces and cities nationwide in the first 10 of 2021. Long An led the list with total registered investment capital of USD 3.68 billion, accounting for 15.5% of total investment capital, in which a large Power Projects with approximately USD 3.1 billion (accounting for 84.2% of total investment capital of Long An), Ho Chi Minh City has returned the second with total registered capital of USD 2.72 billion, accounting for 11.5% of total investment capital. Hai Phong ranked the third with total registered capital of USD 2.72 billion, accounting for 11.5% of total investment capital. Next were Binh Duong, Can Tho, Quang Ninh and so on.

Regarding the number of projects, foreign investors still focused on investing in big cities with convenient infrastructure such as Ho Chi Minh City, Hanoi and Bac Ninh. In which, Ho Chi Minh City led both in number of new projects (33.3%), number of adjusted projects (17.4%) and paid-in capital for share purchase (59.5%). Although Hanoi wasn’t in the top 5 cities attracting foreign investment in the first 10 months, it ranked the second in number of new projects (21.1%), number of adjusted projects (14%) and paid-in capital for share purchase (11.9%).

(Detailed data in Appendix II attached).

Some major projects in the first 10 months of 2021:

(1) Long An I and II LNG Power Plant Project (invested by Singaporean investors) having total registered capital of more than USD 3.1 billion, with the goal of transmitting, distributing, and producing electricity in Long An (granted with a certificate of investment on March 19th, 2021).

(2) LG Display Project (invested by Korean investors) in Hai Phong with investment capital adjusted to increase by about USD 2.15 billion (in which, adjusted to increase USD 1.4 billion on August 30th, 2021 and an increase of USD 750 million on February 4th, 2021).

(3) O Mon II Thermal Power Plant Factory (invested by Japanese investors) in Can Tho, with total investment capital of USD 1.31 billion, aimed to create a thermal power factory for electricity supply for the regional and national power system (granted with a certificate of investment on January 22nd, 2021)

(4) Kraft Vina Paper Factory (invested by Japanese investor) in Vinh Phuc, with the capacity of 800,000 tons per yearand total investment capital of USD 611.4 million, aimed to produce kraft paper, lined paper and packaging paper (granted with a certificate of investment on July 23rd, 2021).

(5) Polytex Far Eastern Vietnam Co., Ltd Factory Project (invested by Taiwanese investors) with investment capital adjusted to increase by 610 million USD (granted with an amended investment certificate on May 13th, 2021).

2. Evaluation of the FDI performance in the first 10 months of 2021

– The number of realized capital of foreign investment projects in the first 10 months continued to decrease 4.1% over the same period last year and 0.6 percentage points over the first 9 months. The Government and authorities timely took action and promulgated many solutions, policies to remove difficulties and obstacles for businesses, as well as regulations and guidelines to adapt to new situation of the global economy. Businesses have gradually restored production and business activities, the realized investment capital is expected to improve in the last months of the year.

– Newly registered and adjusted investment capital continued to increase, but the increase was lower compared to the first 9 months. The number of newly registered and adjusted projects still decreased over the same period (34.5% and 14.4% respectively), but the reduction level was gradually improved compared with the first 9 months. The decline in the number of projects was mainly in small-scale projects (under USD 5 million) while the number of large-scale projects (over USD 50 million) maintained to increase in the 10 months of 2021.

– Import and export of the FDI sector continued to grow in the first 10 months of 2021. The FDI sector had a trade surplus of about USD 21.2 billion (including crude oil). But the trade surplus of the FDI sector was not enough to offset the trade deficit of USD 23.2 billion of domestic business sector, so the country had a trade deficit of USD 2 billion in the first 10 months.

Some reasons in decreasing the number of newly registered, adjusted projects and paid-in capital for share purchase

* Objective:

– Global FDI inflows in the first half of 2021 recovered faster than expected, but investor confidence remained shaky in the industry and global value chains. The number of new projects in industries intensive in global value chains (such as electronics, automobiles and chemicals) has decreased.

– The competition in attracting foreign investment between countries is increasing.

– Global M&A activity is declined.

* Subjective:

-The selective investment attraction policies of Vietnam (reducing the quantity and increasing the quality) eliminate small-scale projects with small value added.

– The entry restriction and long-term quarantine policy have slowed the delegations of experts and project development teams into Vietnam to do surveys and perform investment procedures. Furthermore, the blockade of factories and limitation on the mobility of workers in industrial zones have stagnated production, reduced capacity, quantity and disrupted the supply chain. These also contribute to affecting new investors’ decision who are planning to invest in Vietnam.

– Due to factory closures and labor shortage for production, many orders had to be moved to other areas in the supply chain.

3. Accumulated foreign investment as of October 20^th, 2021

Accumulated as of October 20^th, 2021, the whole country had 34,266 valid projects with total registered capital of USD 404 billion. The accumulated realized capital of FDI projects was estimated at USD 247.16 billion, equaling 61.2% of total valid registered capital.

– By sector: Foreign investors have invested in 19/21 sectors in the national economic classification system, in which the processing and manufacturing sector accounted for the highest proportion with USD 239 billion, accounting for 59.2% of total investment capital. Followed is real estate business with USD 61.3 billion (or 15.2% of total investment capital); electricity production and distribution with USD 33.7 billion (or 8.3% of total investment capital).

– By counterpart: There are 141 countries and territories having valid investment projects in Vietnam. In which, RoK ranked first with a total registered capital of USD 73.9 billion (accounting for 18.3% of total investment capital). Japan ranked the second with USD 63.9 billion (or 15.8% of total investment capital). Next were Singapore, Taiwan, and Hong Kong.

– By location: FDI has been present in all 63 provinces and cities nationwide, of which Ho Chi Minh City remains the leading province in attracting foreign investment with over almost USD 49 billion (accounting for 12.1% of total investment), followed by Binh Duong with USD 37 billion (or 9.1% of total investment capital), Hanoi with USD 36.7 billion (or 9.1% of total investment capital).

(Detailed data in Appendix III attached).

Attach Files: : FDI_10.2021.xlsx