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FDI enterprises: steady in production and leading in exports

11:24 | 06/02/2022

VCN - 2021 was full of difficulties, but foreign direct investment (FDI) into Vietnam still increased, showing investors' confidence in the business investment environment and Vietnam remained an attractive destination.

Total trade of FDI enterprises records over US$463 billion Total trade of FDI enterprises records over US$463 billion
Ministry of Industry and Trade works with Samsung and Toyota to produce domestic components and accessories Ministry of Industry and Trade works with Samsung and Toyota to produce domestic components and accessories
Vietnam remains a strong investment destination for FDI inflows amid challenging times Vietnam remains a strong investment destination for FDI inflows amid challenging times
FDI enterprises: steady in production and leading in exports
Vietnam has been an attractive destination for FDI investors. Photo: Huong Chi

Attractive destination

In 2021, along with the efforts and drastic solutions of the Government, Prime Minister, and central ministries and branches, amid the pandemic, many localities across the country have actively listened to, grasped, and removed difficulties and obstacles for businesses, including FDI units.

Many FDI enterprises showed great determination to operate and stay in Vietnam for a long time.

Thanks to that, despite the difficulties caused by the Covid-19 pandemic, as of December 20, 2021, total newly registered, adjusted, and contributed capital to buy shares, capital contribution from foreign investors (FDI) reached US$31.15 billion, up 9.2% over the same period in 2020.

Realized capital of FDI projects was estimated at US$19.74 billion. FDI enterprises have invested in 19 of 21 sectors in the national economic sub-sector system. In which, the processing and manufacturing industry accounted for the highest proportion with more than US$241.9 billion, accounting for 59.3% of total investment capital. Followed by the real estate business with nearly US$61.8 billion (accounting for 15.1% of total investment capital); electricity production and distribution with nearly US$33.9 billion (accounting for 8.3% of total investment capital).

Additionally, the adjusted registered capital had 985 projects, with the total additional registered capital of more than US$9 billion, up 40.5% compared to 2020. This was considered a sharp increase and a bright spot in the picture of attracting FDI for the whole year, showing that foreign investors’ confidence in Vietnam’s investment environment was still positive.

Along with that, FDI enterprises have been playing an important role and contributing to the country’s socio-economic development, especially in the field of manufacturing, exporting goods, and creating jobs for workers.

Notably, 59 provinces and cities across the country have attracted FDI in 2021. In which, the southern region, despite being heavily affected by the pandemic, still remained an attractive destination for investors. Typically, Long An ranked second in the country in terms of FDI attraction in 2021 with more than US$3.84 billion, accounting for 12.3% of the total investment capital of the country. Ho Chi Minh City ranked third with nearly US$3.74 billion, accounting for nearly 12% of total investment capital, down 14.2% over the same period last year, and fourth place belonged to Binh Duong.

Recently, on December 8, LEGO Group (Denmark) and the investor of Vietnam - Singapore Industrial Park (VSIP) signed a memorandum of cooperation of a project with a scale of more than US$1 billion in the witness of Permanent Deputy Prime Minister Pham Binh Minh and leaders of ministries and branches.

It is expected that the LEGO Group's factory in Binh Duong would be built on an area of ​​44ha, providing 4,000 job opportunities within the next 15 years; or the project of a factory for manufacturing, assembling and testing semiconductor materials in Yen Phong II-C Industrial Park with total investment capital of US$1.6 billion by 2035; the Long An I and II LNG Power Plant projects (Singapore) with total registered capital of more than US$3.1 billion; the LG Display Hai Phong project (Korea) adjusted to increase investment capital by US$2.15 billion; and the O Mon II Thermal Power Plant Project (Japan) had a total registered capital of more than US$1.31 billion.

Moreover, the export and import of goods cleared through customs departments in 19 southern provinces and cities increased by 16% over the same period last year, accounting for about 41% of the total turnover of the country. In which, Ho Chi Minh City Customs Department reached US$117.76 billion, up 7%; Binh Duong Customs Department reached US$47.61 billion, up 17%; Dong Nai Customs Department gained US$35.31 billion, up 25%; and Ba Ria - Vung Tau Customs Department gained US$21.29 billion, up 45% over the same period last year.

Continue to thrive

In addition to affirming Vietnam as a destination in the near future, FDI enterprises highly appreciated the Government's efforts in providing vaccines. They said that it was necessary to continue the vaccine strategy, as well as build a strong and effective supply chain. The prospect of attracting FDI in Vietnam is bright in the context that many investors from developed countries gradually move to Vietnam. Investors from the US and EU believed that accelerating the improvement of the business environment, legal and institutional reforms would help Vietnam recover quickly from the pandemic and receive large investments.

Talking about the investment expansion plan, making the factory in Vinh Phuc the largest production "base" of Piaggio in the world, Gianluca Fiume, President and General Director of Piaggio Vietnam, said that in addition to the advantage of geographical location such as being adjacent to Hanoi, no floods and earthquakes, convenient for construction and industrial development, Vinh Phuc is also attractive to Piaggio thanks to its "soft" advantages.

“We have built a strong bond with hardworking employees, long-time associates, trusted partners, and the government in supporting business development. These are the 'soft' factors that attract investors,” said Fiume.

According to Guru Mallikarjuna, Managing Director of Bosch Vietnam, despite being heavily affected by the outbreak at the end of April 2021, Bosch still identified Vietnam as its long-term investment market in the region. With the ambition of making Vietnam a leading development center of Bosch Group in the world, they have a roadmap to expand over the next five years through doubling the capacity of the Software Center, along with the establishment of a new branch in Hanoi, expansion of production scale in Dong Nai, and the establishment of an office in Ho Chi Minh City.

Similarly, Lionel Adenot, country director of Decathlon Company, said that Vietnam was currently the second largest manufacturing market globally. Therefore, Vietnam has always been an important and priority manufacturing country for Decathlon. However, to expand business presence in Vietnam, according to Lionel, Vietnam must firmly step through the pandemic from the people to businesses and the government. "In the short term, the top priority is to support the full vaccination for workers in all supply factories, thereby facilitating production and business activities," said Adenot.

According to the data of the General Department of Customs, from the beginning of the year to the end of December 15, 2021, the total export turnover of goods of FDI enterprises reached US$232.2 billion, an increase of 21.2%, equivalent to an increase of US$40.68 billion over the same period last year, accounting for 73.1% of the total export turnover of the country.

By Ha Thanh/ Thu Diu – Xuan Thao