HCM city lures $3.63 billion of FDI in first seven months

Tuesday, Aug 20, 2019 14:30

A production line of Jasan Vietnam Dyeing and Textiles, which is funded by a Chinese business, in the northern province of Hung Yen's Pho Noi B Textiles and Garment Industrial Park. — VNA/VNS Photo Danh Lam

HCM City attracted about US$3.63 billion of foreign direct investment (FDI) in the first seven months of this year, marking a year-on-year increase of 15.2 per cent, according to the municipal Peoples Committee.

Nearly $688.8 million came from 678 newly registered projects, up 26.9 per cent in value and 18.3 per cent in the number of projects from the same period last year.

In the period, 2,668 foreign investors bought shares and acquired stakes of domestic enterprises with total registered capital of $2.6 billion, 28.3 per cent and 16.7 per cent higher respectively than in the same period last year.

Meanwhile, HCM City granted business licences to 24,529 new domestic enterprises worth more than VND396 trillion ($17 billion), up 0.9 per cent and 25.7 per cent, respectively.

Up to 71,874 existing enterprises were allowed to add a combined total of more than VND160.4 trillion to their investment, up 2.2 per cent in number and 63 per cent in value.

The committee said trade and investment promotion activities have contributed to accelerating the economic restructuring of the city and promoting exports of high value-added processed products. They have also helped increase the confidence of investors in the citys business environment.

To further develop both domestic and FDI enterprises, municipal authorities will continue to simplify administrative procedures and remove investment barriers. Trade promotion activities and conferences will be arranged to promote co-operation between domestic and foreign investors.

According to Emerging Market Views, a news website based in New York, in the absence of clear evidence that the US-China trade dispute will soon end, it witnesses a new wave of investment from multinational companies shifting production from China to Viet Nam to avoid US taxes and seek new suppliers, allowing Viet Nam to reach an increase of 7.8 per cent in FDI in the first five months of this year, with a total value of about $7.3 billion.

Kevin Snowball, founder and CEO of PXP Vietnam Asset Management, told Emerging Market Views that as Viet Nam has opened door to integrate into the world economy deeply, expanding export markets through free trade agreements including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP) and the European Union-Viet Nam Free Trade Agreement (EVFTA), these moves are expected to increase the country's FDI by 10 per cent from $20 billion invested in this year.

CEO of VAM Vietnam Fund Management JSC Thieu Thi Nhat Le said these FTAs will help Viet Nam's FDI grow when FDI contributes about 70 per cent of its export revenue. Viet Nam's FDI value increased to 38.7 per cent in the January-May period of this year, mostly come from Chinese firms and the manufacturing and processing sectors.

“Given favourable conditions for investment in Vietnam including political stability, the skilled workforce at competitive labour cost, young population, strong domestic demand, being in several FTAs with large trade partners, I believe the FDI flow into the country will continue to be resilient in coming years,” Le told Emerging Market Views.

"We have also seen foreign/multinational companies shifting their manufacturing from China to Viet Nam amidst escalating trade war between the US and China,” she added. — VNS

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