Report on Foreign Direct Investment (FDI) in Vietnam first 8 months 2021

Report on Foreign Direct Investment (FDI) in Vietnam first 8 months 2021. As of August 20^th, 2021, the total newly registered capital, adjusted and contributed capital to purchase shares and stock (GVMCP) of foreign investors (foreign investors) reached 19.12 billion USD, equal to 97. 9% over the same period in 2020. Realized capital of foreign investment projects is estimated at 11.58 billion USD, up 2% over the same period in 2020.

Accumulated to August 20^th, 2021, whole country has 34,072 projects with a total registered capital of 400.6 billion USD. The realized accumulated capital of foreign investment projects is estimated at 243.44 billion USD, equal to 60.8% of the total valid registered investment capital.

1. Foreign direct investment attracted to Vietnam first 8 months 2021

1.1. Operational status

a. Realized capital:

As of August 20, 2021, it is estimated that foreign investment projects have disbursed USD 11.58 billion, an increase of 2% over the same period in 2020. The complicated situation of the covid epidemic in the month leading to factory shutdown. The realized capital in August decreased by 12.2%, compared to August 2020. It decreased by 14.3% over the previous month. However, including the first 8 months of 2021, realized capital still increased slightly.

b. Import and export context:

+ Export: The export turnover of the FDI sector continued to increase in the first 8 months, but the increase seemed down slightly compared to previous 7 months. Exports including crude oil were estimated at 156.9 billion USD, up 25.5% over the same period, accounting for 73.8% of export turnover. Exports excluding crude oil were estimated at 155.9 billion USD, up 25.9% over the same period, accounting for 73.3% of export turnover of the whole country.

+ Import: Import of the foreign investment sector was estimated at 140.2 billion USD, up 36.4% over the same period. It was accounting for 64.8% of import turnover of the whole country.

Generally in the first 8 months of 2021, the foreign investment sector has a trade surplus of nearly 16.7 billion USD including crude oil and a trade surplus of 15.6 billion USD excluding crude oil. Meanwhile, the domestic business sector had a trade deficit of 20.4 billion USD.

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1.2. Investment registration status

As of August 20^th, 2021, the total newly registered capital, adjusted capital and contributed capital to buy shares of foreign investors reached 19.1 billion USD, equal to 97.9% over the same period in 2020. Along with the registered capital increasing, adjusted capital also increased slightly after decreasing for 7 months. Only GVMCP continues to decrease, but the reduction is also gradually improving. In details:

+ Newly registered capital: There were 1,135 new projects granted Investment Registration Certificates (down 36.8%), the total registered capital reached nearly 11.33 billion USD (up 16.3% over the same period).

+ Adjusted capital: There were 639 times of projects registered to adjust their investment capital (down 11%), the total registered capital increased by nearly 5 billion USD (up 2.3% over the same period).

+ Capital contribution and shares buying: There were 2,720 times of stock brokerage by foreign investors (down 43.4%), the total value of contributed capital reached nearly 2.81 billion USD (down 43.4% over the same period).

a. By field of investment:

Foreign investors have invested in 18 sectors, in which the processing and manufacturing industry leads with a total investment of nearly 9.3 billion USD, accounting for 48.4% of total registered investment capital. The field of electricity production and distribution ranked second with a total investment of nearly 5.5 billion USD, accounting for 28.7% of the total registered investment capital. Followed by real estate, wholesale and retail business with a total registered capital of nearly 1.6 billion USD and over 734 million USD. The rest are other areas.

b. By investment partners:

There were 92 countries and territories investing in Vietnam in the first 8 months of the year. Of which, Singapore leads with a total investment of over 6.2 billion USD, accounting for nearly 32.5% of total investment capital in Vietnam, down 5% over the same period in 2020. Japan ranked second with total investment capital of over 3.2 billion USD, accounting for 16.8% of total investment capital, up 94.9% over the same period.

Investment capital of Singapore and Japan is mainly in the form of new investment, accounting for 79.4% and 73.9% of the total registered capital of these two countries respectively. Korea ranked third with a total registered investment capital of over 2.4 billion USD, accounting for 12.7% of total investment capital, down 17.8% over the same period. Next ranking is followed by China, Hong Kong, Taiwan, etc.

In 8 months of 2021, Singapore's investment capital is 1.9 times higher than Japan's and nearly 2.6 times higher than South Korea's investment capital because Singapore has a large project of 3.1 billion USD. This project alone accounts for 50% of Singapore's total investment capital. Although Korea is only ranked third in terms of investment capital, it is the leading partner in terms of the number of new investment projects as well as the number of capital adjustment projects. Thus, in terms of the number of projects, Korea is the partner with the most investors interested and making new investment decisions as well as expanding investment projects in 8 months.

c. By investment area:

Foreign investors have invested in 58 provinces and cities across the country in the first 8 months of the year. Long An leads the way with a total registered investment capital of over 3.6 billion USD, accounting for 18.9% of total registered investment capital. They are large power projects up to 3.1 billion USD (accounting for 85.8 USD) of total investment capital of Long An).

Ho Chi Minh City ranked second with a total registered capital of nearly 2.2 billion USD, accounting for 11.4% of total investment capital. Binh Duong ranked third with nearly 1.7 billion USD, accounting for 8.7% of total investment capital. Followed by Can Tho, Hai Phong, Hanoi.

In terms of the number of projects, foreign investors still focus on investing in big cities with convenient infrastructure such as Ho Chi Minh City. Ho Chi Minh, Hanoi, Bac Ninh. Of which, Ho Chi Minh City leads both in number of new projects (34%), number of adjusted projects (18.3%) and GVMCP (59.8%). Although Hanoi is not in the top 5 localities attracting foreign investment in 8 months, it ranks second in number of new projects (21.5%), number of adjusted projects (14.2%) and GVMCP (12.1) %).

Some major projects in the first 8 months of 2021:

(1) Long An LNG Power Plant Project I and II (Singapore), with a total registered capital of more than 3.1 billion USD with the aim of electricity transmission and distribution power in Long An (Investment Certificate dated on March 2021).

(2) O Mon II Thermal Power Plant Project (Japan), with a total registered capital of over 1.31 billion USD with the goal of building a thermal power plant. This plan is expected to meet the electricity supply demand for the regional power grid and the national electricity system in Can Tho.

(3) LG Display Hai Phong (Korea) project, adjusted to increase investment capital by 750 million USD (adjusted investment certificate issued on February 4^th, 2021).

(4) Project of Kraft Vina paper factory with capacity of 800,000 tons/year (Japan), total investment capital of 611.4 million USD with the goal of producing kraft paper, lining paper and packaging paper in Vinh Phuc (Japan).

(5) Project of Polytex Far Eastern Vietnam Co., Ltd. (Taiwan), adjusted to increase investment capital by 610 million USD (adjusted investment certificate issued on May 13, 2021).

2. Review on foreign direct investment (FDI) situation in Vietnam in 8 months of 2021

Now, we will come to the part: Review on foreign direct investment (FDI) situation in Vietnam in 8 months of 2021. The conclusion for FDI in 8 months is as below:

- Realized capital of foreign investment projects in the first 8 months increased by 2% over the same period. The complicated context of the covid-19 pandemic continues to have a significant impact on the production and business activities of many businesses, especially those in the southern region.

- Adjusted capital increased again after a slight decrease in 7 months (up 2.3%). Newly registered investment capital continued to increase over the same period in 2020 and achieved a stronger increase compared to the first 7 months of the year (up 16.3%). Although the number of newly granted and adjusted projects still decreased compared to the same period last year (36.8% and 11% respectively), the reduction level is also gradually improving. This decline in the number of projects mainly focused on small-scale projects (under 5 million USD), while the number of large-scale projects (over 50 million USD) maintained a strong increase in the 8 months of 2021.

- Investment in the form of GVMCP in the first 8 months of 2021 decreased in both the number of GVMCPs and the value of contributed capital, but the reduction level was also improved.

- Import and export of the FDI sector continued to increase in the first 8 months of 2021. The foreign investment sector had a trade surplus of 16.7 billion USD, including crude oil. However, the trade surplus of the foreign investment sector is not enough to offset the deficit of 20.4 billion VND of the domestic sector. Therefore, Vietnam had a trade deficit of 3.7 billion USD in 8 months. The level of trade deficit of the whole country is increasing gradually compared to previous months.

Source: Ministry of Planning and Investment