The northern province of Bac Giang attracted over US$824 million worth of foreign investment in the first two months of this year, making it the country’s largest foreign investment recipient during the period.

Foreign flows into Bac Giang accounted for 26.6 per cent of the country’s total and was 8.4 times that of the same period last year, a report from the Ministry of Planning and Investment’s Foreign Investment Agency (FIA) revealed.

The southern economic hub of HCM City came next with over $369 million while southern Binh Duong Province ranked third with over $342 million.

Notably, the northern province of Quang Ninh jumped nine places to become one of five localities that attracted the highest foreign investment in the country thanks to $332 million investment registered here in the period.

As per the report, 39 localities in the country attracted a total foreign investment capital of nearly $3.1 billion in the first two months, down 38 per cent year-on-year due to a substantial decline in capital added to operating projects. Only 133 existing projects registered to increase their investment by $535 million, down 6.3 per cent in the number of projects and 85 per cent in the level of capital.

At the same time, disbursed capital also witnessed a modest decline of 5 per cent to an estimated $2.55 billion.

Two bright spots in the period were that 261 new foreign-invested projects, valued at over $1.76 billion, were granted licences, up 42.6 per cent in number and 2.8 times in value and capital contributions and share purchases made by foreign investors also increased 4 per cent year-on-year to nearly $798 million.

That was a signal to confirm the confidence of foreign investors in the investment environment of Viet Nam, the FIA said in the report.

The processing and manufacturing industry accounted for the lion’s share of the total registered sum, at 70 per cent or $2.17 billion. It was followed by real estate with $397 million, equivalent to 12.8 per cent of the total. Wholesale and retail industries, transportation and warehousing were the runners-up with $202 million and $142 million, respectively.

Among 51 countries and territories investing in Viet Nam, Singapore took the lead with over $978 million, accounting for 31.6 per cent of the country's total foreign investment. However, its investment pledged 42.7 per cent over the same period last year.

Taiwan came second with $407 million, 3.85 times higher than the last year's same period or making up 13.2 per cent of the total. The Netherlands ranked third with $369 million or equivalent to 11.9 per cent.

Other sources of Viet Nam's foreign investment were mainland China, South Korea and Sweden.

However, China led in terms of the number of projects in the period, accounting for nearly 17.2 per cent of the total. Meanwhile, South Korea ranked top in the number of capital adjustments and capital contributions and share purchases, making up 21.1 per cent and 30.5 per cent of the total, respectively.

Viet Nam needed to make more significant efforts to improve the investment climate as several foreign investors are eyeing the country for opportunities, experts have said.

Many enterprises from countries such as the UK, South Korea and Japan said Viet Nam was an attractive investment destination, given the country’s stable macro-economy, rapid growth and large market with a rising middle class, they said.

According to the European Chamber of Commerce in Viet Nam (Eurocham), Viet Nam was an attractive foreign investment destination thanks to the country’s stable macro-economic environment and controlled inflation, which consolidated investors' confidence in the trade and investment environment.

The low cost of doing business, strong economic growth, rising middle class and a favourable business environment have made Viet Nam an attractive destination for foreign investment, EuroCham said in its 2022-23 Whitebook.

At the same time, a survey by the Japan External Trade Organisation (JETRO) published recently showed that about 60 per cent of Japanese firms planned to expand their operations in Viet Nam, the highest rate in Southeast Asia.

Foreign companies were expecting improvements in the quality of human resources, land fees, infrastructure quality, logistics costs and quality together with policies on science and technology, said Dau Anh Tuan, deputy general secretary of the Viet Nam Chamber of Commerce and Industry.

Those were prioritised in reform plans, but the room to create breakthroughs is not much, Tuan said, adding that it was time Viet Nam prepares for the global minimum tax. — VNS