FDI attraction and disbursement set up a new “peak”

A bright spot of the economy in 2019, is that both attracting and disbursing foreign investment are very positive. Registered capital peaked in the past 10 years – reaching 38 billion USD, while disbursement capital set a new record, with 20.38 billion USD.

A new “peak” is set

One thing is for sure, attracting foreign investment is a bright spot of the economy in 2019. The report has just been released by the Foreign Investment Agency (Ministry of Planning and Investment), in 2019, investment capital Foreigners registered in Vietnam to reach US $ 38.02 billion, an increase of 7.2% compared to last year. In which, new registered capital is 16.75 billion USD, additional capital is 5.8 billion USD, and investment capital through capital contribution, share purchase is 15.47 billion USD.

Looking back at the situation of attracting foreign investment over the past time, it can be said that the figure of over 38 billion USD is very remarkable. In 2008, after 1 year of Vietnam joining the World Trade Organization (WTO), foreign investment capital in Vietnam soared, reaching 72 billion USD. This is a very difficult record to “rush”.

That year, many billion-dollar projects were granted investment certificates. For example, the Vinashin – Lion Steel Project (Malaysia), $ 9.8 billion; Formosa Steel Complex, 7.9 billion USD; Nghi Son oil refinery, 6.2 billion USD; New City project $ 4.3 billion … But many of these projects are virtual projects, then shortly after they “broke the burden in the middle of the road”. Therefore, later, even the management agency on foreign investment hardly mentioned the record of 2008 as a remarkable achievement.

If you leave the record of 72 billion USD in 2008 aside, then the figure of 38 billion USD is the new “peak”. This is the highest figure in the past 10 years. Moreover, investment trends in recent years show that these are all “real” projects, there is less story of “virtual” projects registration as in previous years.

But most importantly, according to the Foreign Investment Agency, the total foreign direct investment (FDI) disbursed in 2019 reached 20.38 billion USD, up 6.7% compared to 2018. This is the number of continent, which more than 30 years of attracting foreign investment, Vietnam can have. If about 10 years ago, FDI disbursement was only around 10 billion USD, now, for the first time, has reached the threshold of 20 billion USD.

“This is a real money in the economy, so it makes sense,” said Mr. Do Nhat Hoang, Director of the Foreign Investment Department, and confirmed, this is a bright spot of attracting foreign investment. in this year.

“In the context of the general downturn of global FDI inflows, the fact that Vietnam maintains its realized capital growth is an encouraging achievement,” affirmed the Foreign Investment Agency.

Shaping new trends

Looking back at the situation of attracting foreign investment in 2019, it can be seen that the new investment trend is quite clearly shaped. It is the investment through capital contribution and share purchase that is growing sharply.

In 2019, of the total investment capital of over US $ 38 billion, FDI capital was only US $ 22.55 billion. The rest of the capital is invested through capital contributions, share purchases, mergers and acquisitions (M&A). In fact, in addition to investment capital through capital contribution and share purchase, an increase of 56.4% compared to 2018, both newly and additionally licensed capital were lower than the previous year. The strong increase of investment through capital contribution and share purchase has “pulled” foreign investment up 7.2% over the previous year.

Recognizing this trend, the Foreign Investment Agency said that investment in the form of capital contribution and share purchase has increased sharply in recent years and accounts for an increasingly large proportion of the total foreign investment. Specifically, in 2017, investment in the form of capital contribution, share purchase accounted for 17.2% of the total registered capital; in 2018, accounting for 27.9% of the total registered capital; This year, it has increased to 40.7%.

The trend is so great, Mr. Phan Huu Thang, former director of the Foreign Investment Agency, said that it was time to have a policy of “diversifying” foreign capital, in the form of FDI or M&A.

“It is necessary to comprehensively assess the results of foreign investment attraction in 2019, especially through the form of capital contribution, share purchase, review of major M&A deals to see clearly what is and has not been done, from which draws the article learning about state management in the field of foreign investment in the coming period, ”said Mr. Phan Huu Thang.

Attracting and disbursing foreign investment capital is very positive in 2019. However, the report of the Foreign Investment Department also shows that there are still many remarkable things. For example, the scale of newly registered FDI projects has tended to decrease, to only 4.3 million USD, compared with 5.9 million USD of last year.

In 2019, the capital adjustment scale of projects is quite small, an average of only 4.2 million USD / turn, smaller than the average of 2018 of 6.5 million USD / turn.

And another point, although FDI disbursement is a record, according to the Foreign Investment Agency, a downward trend has appeared. In 2017, realized FDI increased by 10.7% compared to 2016, in 2018 increased by 9.1% compared to 2017, but this year only increased by 6.7% compared to last year. This is a very noticeable trend.

A number of large-scale FDI projects are granted investment certificates and adjustments in 2019

• 1) The project of contributing capital and buying shares of Beerco Limited (Hong Kong) into Vietnam Beverage Co., Ltd., with the value of capital contribution of US $ 3.85 billion.
• 2) Techtronic Tools Co., Ltd. (Hong Kong) Co., Ltd., total registered investment capital of 650 million USD, in Ho Chi Minh City.
• 3) Multipurpose entertainment and entertainment project – Horse racecourse (Korea), with total registered investment capital of 420 million USD in Hanoi.
• 4) LG Display Hai Phong project (Korea) adjusted to increase investment capital by 410 million USD.
• 5) Wanna Explore Travel Co., Ltd. (Egypt), with a total registered capital of US $ 300 million in Ho Chi Minh City, to perform travel services.