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Vietnam’s top 5 FDI attracting industries

Vietnam’s top 5 FDI attracting industries

Tuesday 06, 12 2022
The accumulated total investment capital of Vietnam’s manufacturing and processing industry reached 257.45 billion USD by October 2022, making it the sector attracting the most FDI in Vietnam.

5 industries that are attracting the most FDI

According to data from the Ministry of Planning and Investment, foreign investors have invested in 19 out of 21 sectors in Vietnam. The manufacturing and processing industry maintains its leading position as the highest-invested industry, with accumulated total investment capital of 257.45 billion USD as of October 20, 2022.

Vietnamcredit Real estate

Real estate ranked second with accumulated total investment capital of over 65.76 billion USD. Next is the production and distribution of electricity, gas, water, and air conditioning; accommodation and food services with accumulated total investment capital of 38.37 billion USD and 12.68 billion USD, respectively. The rest are other industries.

In terms of the number of new projects, the manufacturing and processing industry; wholesale and retail, repair of automobiles and motorcycles; Information and communication are the sectors that have attracted the most projects, accounting for 44.16%, 16.75%, and 7.38%, respectively, of the total number of projects as of October 20, 2022.

In terms of the percentage of accumulated total investment capital as of October 20, 2022, the manufacturing and processing industry leads the way, accounting for nearly 60% of accumulated total investment capital. The second place is the real estate business, accounting for 15.11% of total investment capital.

The manufacturing and processing and real estate industries have accounted for more than 75% of total investment capital in Vietnam as of October 20, 2022. The remaining sectors accounted for 25% of the accumulated total investment capital as of October 20, 2022.

In the first 10 months of 2022, FDI poured into Vietnam reached about 24.46 billion USD, equaling 94.6% compared to the same period in 2021.

By industry, foreign investors have invested in 18 sectors out of 21 national economic sectors. Specifically, the manufacturing and processing industry continued to lead with a total investment of more than 12.9 billion USD, accounting for 57.5% of the total registered investment capital.

Vietnamcredit FDI poured into Vietnam

The real estate business ranked second with a total investment of more than 3.87 billion USD, accounting for 17.2% of the total registered investment capital. Next are the electricity production and distribution industries, and scientific and technological activities with registered capital of more than 928 million USD and more than 853 million USD, respectively. The rest are other industries.

Difficulties in the race for FDI

Vietnam is an attractive destination for foreign companies pursuing the “China +1” diversification strategy, thanks to competitive labor costs, favorable geographical location, and political stability.

In addition, Vietnam signed several FTAs such as CPTPP, EVFTA, and RCEP, creating favorable conditions when trading with major partners and regions worldwide.

Many large technology corporations worldwide aim to invest or expand production in Vietnam in the coming time, such as Apple's iPhone and iPad production lines, and Google's phone production lines. Xiaomi and Oppo also expressed their intention to establish production facilities in Vietnam.

According to VNDirect, it is forecasted that registered FDI in Vietnam will increase by 10-12% and disbursed FDI by 6-8% in 2023.

VNDirect realizes that the competition to attract FDI among countries in the ASEAN region is getting fiercer. Vietnam seems to be behind when they are not making a remarkable presence in the semiconductor and electric vehicle industries.

In 2021, Vietnam and Indonesia were the two countries in the region that attracted the most FDI. While Vietnam is trying to become an electronics manufacturing hub, Indonesia focuses on developing the electric vehicle supply chain.

However, in 2022, Malaysia recorded a spike in FDI to 32 billion USD, higher than Indonesia (31 billion USD) and Vietnam (16 billion USD).

Vietnamcredit FDI

Analysts believe the electric vehicle and semiconductor industries are shaping FDI flows into ASEAN. Major changes in these two industries include the emergence of new types of investments, the addition of new segments in the value chain, capacity expansion, and the strengthening of distribution networks.

Because of the great potential of the two industries in the future, countries in the region have actively implemented many policies to attract FDI in this production chain, and at the same time, encourage people to use electric vehicles.

However, VNDirect said that Vietnam seems to be slower than other countries due to the lack of distinguishing attraction policies. That may reduce Vietnam's appeal in attracting FDI in the future.

 

Source: The Ministry of Industry and Trade, Vietnambiz

Compiled by VietnamCredit

 

Categories
Vietnam Economy

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