Foreign direct investment 'poured' into the manufacturing sector

DNHN - In the first quarter, realized foreign direct investment (FDI) in Vietnam was estimated at US$4.42 billion, up 7.8% over the same period last year. This is the highest level of the first quarter in the past 5 years.

However, overall registered FDI capital into Vietnam in the first quarter (including freshly registered capital, adjusted registered capital, and the value of capital contribution and share purchase by foreign investors) was just $891 billion, down more than 13% from the same period last year. 

FDI registered capital declined by more than 12% as a result of a more than 54% decline in newly registered capital. This statistic is surprising in light of Vietnam's aspiration to become the world's high-tech factory. However, it should be noted that during the same period last year, there were two billion dollars worth of newly registered projects, accounting for 4.41 billion dollars worth of the 7.2 billion dollars worth of newly registered projects. 

Meanwhile, with the number of projects adjusted to raise capital by 41.6 percent and extra capital by 93.3 percent , it shows that foreign investors' business confidence in Vietnam is maintained and solidify. In reality, Vietnam's industrial production is also rising fairly strongly. 

In the first quarter, the processing and manufacturing industry continued to play a driving role, leading the growth with an increase of 7.79 percent , displaying a recovery momentum after 2 years of being significantly damaged by the pandemic.

Foreign capital has now "flowed" into 18 of Vietnam's 21 economic sectors. Manufacturing led the way with over 18.1 billion USD in investment capital, or 58.2 percent of overall investment capital. One advantage is that the North and South are attracted to distinct manufacturing sectors. 

If the North is renowned as a center for heavy manufacturing, oil and gas, electronics, and high-tech industries, the region also attracts the majority of traditional manufacturing industries such as garment and textile. southern. The project distribution "map" demonstrates that foreign investors continue to prioritize large cities with adequate infrastructure.

Besides the "traditional" advantages such as competitive labor costs; Having signed many Free Trade Agreements (FTAs)…, investors in Vietnam can also benefit from incentives. For example, in Decree No. 57/2021/ND-CP, the Government has supported industries to supply raw materials, spare parts and components for the manufacturing sector.

For corporate income tax, Vietnam is applying many incentives (tax reduction and exemption for large production projects with a capital scale of over 6,000 billion VND, incentives in high-tech zones, some industrial zones, etc.). industries and difficult socio-economic areas). 

Of course, in order to achieve the goal of capital flow into manufacturing, inherent deficiencies must continue to be addressed more swiftly and efficiently. It is to improve the domestic workforce's qualifications and skills; to upgrade and complete infrastructure; to simplify and enhance the legal environment's efficacy and efficiency; and to reform administrative processes and procedures, particularly at the local level.

Source SaigonGiaiphong