Viet Nam remained an attractive destination for foreign investment last year with FDI flow pouring into the country uninterrupted despite a global economic slowdown, according to the Ministry of Finance.
In a recent report by the ministry, the total asset value of foreign firms in the country has increased to over VND8,857 trillion (US$377 billion), a 13.1 per cent increase from the previous year. During the same period of time, the FDI sector reported an after-tax profit of nearly VND9,455 trillion, an 8.8 per increase year-to-year.
The sector’s net income in 2021 was reported at over VND8,567 trillion, a 19.3 per cent increase over the previous year with an after-tax profit of over VND8,358 trillion or a 29.6 per cent increase over 2020.
FDI’s contribution to the state’s budget continued to grow in size from VND164 trillion in 2020 to VND180 trillion in 2021.
Major growth drivers in the sector included manufacturing, processing (VND621.5 trillion), finance, banking and insurance (VND133.3 trillion), energy (VND68.3 trillion), wholesales and retails (VND58.1 trillion) and logistics (VND35.8 trillion).
Notably, according to the ministry’s report, FDI assets in manufacturing and processing have increased at a pace 4.5 times faster than finance, banking and insurance and 9 times faster than other industries.
Logistics led the pack in growth with an annual rate of 34.9 per cent, followed by financial services at 30.6 per cent and energy at 23.8 per cent.
On the other hand, there were still a number of FDI-dominated industries that reported losses.
By the end of last year, nearly 14,300, or 55 per cent of all FDI firms operating in Viet Nam, still reported losses, 11 per cent higher than the same figure in 2020 with a total amount of VND168.3 trillion. Cumulative losses were even higher with more than 16,250 FDI firms reporting losses up to VND706.1 trillion.
“Higher losses and cumulative losses among FDI firms showed a large number of FDI firms have not been able to fully realise their potential and effectively utilise their investment,” said the ministry in a statement, “It has also called for a more selective process to choose FDI investors in the future.”.
Another issue pointed out by the ministry was the vast majority of FDI firms chose to locate in or near major cities and provinces in the Red River Delta and the Mekong Delta to take advantage of existing infrastructure and logistics, which has resulted in an uneven pace of industrial development among localities.
Southern economic hub HCM City remained the country’s top destination with VND1,739 trillion in FDI flow, followed by capital city Ha Noi with VND916.8 trillion, southern Binh Duong Province with VND687.6 trillion and northern port city Hai Phong with VND533.6 trillion last year.
The Ministry of Finance called for measures to be taken to increase the pace of localisation and the development of high-tech industries as well as to improve linkage among economic centres and domestic production capacity. — VNS