Vietnam attracts less FDI in first half of the year

Illustrative image (Photo: VNA)

Experts have said the decline is due mainly to a number of large-scale projects that received licences in June last year.

Statistics from the Ministry of Planning and Investment’s Foreign Investment Agency show performance was strong in the first five months of the year, with FDI pledged to the country hitting a four-year high for the period of 16.74 billion USD, up 61 percent year on year. The performance for the first half of the year was dragged down only by the numbers for June.

More than 1,720 new projects, valued at 7.41 billion USD, were granted investment licences in the first half of this year, marking a year-on-year decline of 37 percent. Meanwhile, 628 existing projects were allowed to raise their capital by 2.96 billion USD, equivalent to just 66 percent of the same period last year.

On a more positive note, overseas players spent 8.2 billion USD to acquire shares in Vietnamese companies in the first quarter of the year, a yearly increase of 98 percent and accounting for 44 percent of all registered capital.

FDI disbursement also saw a rise of 8 percent to 9.1 billion USD from January to June.

Among 19 fields and sectors receiving capital from foreign investors, manufacturing and processing led with 13.15 billion USD, accounting for 71 percent of the nation’s total FDI. Real estate came next with 1.32 billion USD (7.2 percent) followed by retail and wholesale with 1.05 billion USD (6 percent).

Hong Kong retained its position as Vietnam’s leading source of FDI in the six-month period with 5.3 billion USD, making up 29 percent of total investment, thanks in large part to Beerco Limited spending 3.85 billion USD on a stake in Vietnam Beverage Co Ltd.

The Republic of Korea ranked second with 2.73 billion USD (15 percent of all FDI), followed by mainland China with 2.29 billion USD (13 percent). Singapore and Japan were the runners-up with 2.2 billion USD and 1.95 billion USD, respectively.

The capital city remained the most attractive destination for foreign investors as it lured more than 4.87 billion USD, equivalent to 26.4 percent of all FDI pledged in the country. The southern economic hub of Ho Chi Minh City came next with 3.1 billion USD (17 percent) and the southern province of Binh Duong claimed third position with 1.37 billion USD (7.5 percent).

The foreign-invested sector recorded a trade surplus of 15.7 billion USD in the January-June period as it exported 85.9 billion USD worth of goods, up 6 percent year on year, while its imports topped 70 billion USD, surging 8 percent over the same period last year.

During a meeting on June 23 with Thailand’s major corporations on the sidelines of the ASEAN Summit in Bangkok, Prime Minister Nguyen Xuan Phuc said the Vietnamese Government was continuing to work on creating favourable conditions for foreign companies to do business in the country.

However, Vietnam would not accept all FDI projects, but instead would focus on projects that apply modern and environmentally friendly technologies and are energy efficient, the PM said.

Earlier, Bao Viet Securities Company (BVSC) predicted that FDI into Vietnam would likely hit 22 billion USD in 2019, up 13 to 15 percent year on year.

The main sources for FDI growth in the near future would come from the Republic of Korea, mainland China, Taiwan and Hong Kong, said BVSC in its latest report.

VNA