FDI in Vietnam – Where is the Investment Going?
Fueled by continuous growth, Vietnam continues to attract record foreign direct investment (FDI). The latest data from the Foreign Investment Agency (FIA) shows that FDI in Vietnam in the first five months of the year reached a four year high of US$16.74 billion.
This inflow represents a year-on-year increase of 69.1 per cent.
Around 1,363 new projects were licensed with a total registered capital of US$6.46 billion in the January – May period, up 38.7 per cent against the same period last year.
Out of 19 sectors receiving capital, manufacturing and processing came on top with US$10.5 billion, accounting for 72 per cent of total FDI. This was followed by real estate at US$1.1 billion and then by retail and wholesale with US$742.7 million.
Investment has been mainly driven by the US-China trade war.
Aside from this, Vietnam is committed to an ambitious investment plan to develop overall infrastructure in major industrial poles in the country, which will ease doing business and improve logistics.
This, coupled with the recent entry into force of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU and Vietnam FTA (EVFTA) (expected to be officially approved in June) will provide significant opportunities for both inbound and outbound investment for the next few years.
Furthermore, it is likely that Vietnam will continue improving its legal framework to adhere to transparency requirements imposed by the aforementioned agreements, especially in relation to Intellectual Property Rights (IPR) protection.
This is an excerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.