Foreign direct investment - an economic highlight in first half of 2016

FDI continued to be a highlight for Vietnam’s economy in the first half of the year, with 907 new FDI projects licensed as of late May, totalling nearly US$7.6 billion, up 53.2% in the number of projects, and 155.9% in registered capital compared to the same period of 2015.

If counting the 425 projects registering to increase supplementary capital, the total registered FDI capital exceeded the US$10 billion threshold, a year-on-year increase of 136.4%.

FDI disbursement in the first five months reached about US$5.8 billion, representing a surge of 17.2% against the previous year.

Thus, the FDI sector continued to lead the pace of increasing investment capital in comparison with the State economic sector and the non-State sector, accounting for a record 28% of the total investment in the entire society, which is equivalent to over 32% of gross domestic product (GDP).

As the investment sources from both the State and non-State economic sectors remain limited and difficult, the investment resources from the FDI division have contributed significantly to realising the economic growth target as well as shifting the economic structure towards modernisation.

The manufacturing industry remained the largest FDI recipient in the five months with registered capital of over US$6.6 billion, making up 65.1% of the total registered figure.

Notably, the information and communication industry climbed to second place attracting US$1.3 billion, while the real estate sector dropped to third position with US$542.8 million, representing 5.4% of the total registered FDI capital.

Big cities and provinces, which lead the industrialisation pace, continued to be the major attractors of FDI capital in the period.

Hanoi occupied the top place receiving registered FDI capital of over US$1.86 billion, equal to 24.6% of the total newly-registered capital, followed by Haiphong with over US$1.6 billion (21.3%), Binh Duong with US$570.2 million (7.5%), Ho Chi Minh City with US$488.6 million (6.5%), Bac Ninh with US$330.1 million (4.4%), Dong Nai with US$289.7 million (3.8%) and Tien Giang with US$259.7 million (3.4%).

There were few changes on the list of leading FDI investors in Vietnam. The Republic of Korea remained the largest investor from January to May at nearly US$2.9 billion, accounting for 38.2% of the total newly-registered capital, followed by Luxemburg, Singapore, Chinese Taipei and Japan.

The trend of opening the door, promoting international integration and improving the business environment continues to make Vietnam an attractive investment destination to foreign investors.

The number of projects as well as the FDI capital scale continue to rise sharply, showing the increasingly significant role and contributions made by the FDI sector to Vietnam’s economy.

However, there has yet to be many changes in the quality of FDI attraction and use as the FDI capital structure has yet to see remarkable shifts in terms of sectors, fields, attraction localities and investors.

The FDI sector’s contributions to Vietnam’s economic growth and economic structural shift will be much higher if the surge in quantity is associated with the improvements in quality.

Nhan Dan