Which Sectors Attracting Foreign Direct Investment in Vietnam?

The latest report of the Foreign Investment Agency (FIA) showed Vietnam attracted US$11.18 billion in foreign direct investments (FDI) in the first nine months of year 2014, or 74.5% of FDI in the same period last year.

The manufacturing and processing sector absorbed the largest share of FDI, reaching $7.7 billion or 98.3 per cent of the nation’s total registered capital. This was followed by estate trading industries, which attracted $1.2 billion, and construction industries, lured $612.1 million. FDI inflows into the processing and manufacturing industry has been increasing in recent years which stems from several causes.

First, the Government of Vietnam has issued many policies to support and prioritize the development of information technology and supporting industry, to create favorable conditions for foreign investors to set-up business venture in Vietnam.

Second, “factory” of the world is shifting from China to Southeast Asia (including Vietnam) which also is a great advantage for the processing and manufacturing industry.

Third, the emergence of modern technology factories in Vietnam such as Samsung, LG, Nokia as proven the attractiveness of Vietnam market for investors in the technology, processing and manufacturing sector.

Besides, among 50 localities, northern Bac Ninh Province, Ho Chi Minh City, and the southern provinces of Dong Nai and Binh Duong, as well as Ha Noi and the northern port city of Hai Phong, were the most attractive areas for foreign investors. The northern province of Bac Ninh has attracted the biggest foreign direct investment (FDI) commitment of $1.36 billion in the first nine months of 2014, followed by Ho Chi Minh City with $1.28 billion and Dong Nai Province with $1.17 billion. This was followed by Hanoi, Hai Phong, Quang Ninh with registered capital of $924 million, respectively, $698 million and $597 million.

The proportion of foreign invested capital in Bac Ninh soaring stems from the following reasons: there is a favorable geographical position of being located adjacent to Hanoi city, the capital and that the leader of Bac Ninh has always prioritized policies to attract investment in high-tech industries, technological resources, exports, and development of supporting industries; Most foreign investors assess highly potential and investment environment in Bac Ninh.  According to statistics, Bac Ninh is fertile land which attracted many prestigious corporations in the world in high-tech field such as Canon, Sumitomo (Japan), Samsung (South Korea), Foxconn, Mictac (Taiwan), Tyco Electronics (USA), ABB (Sweden) and Nokia from Finland (now Microsoft, US).

Along with Bac Ninh, HCM City has also many policies to attract investment and promising growth potentiality in the near future.

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