Significant factors influencing FDI attraction

DNHN - Although considered an appealing investment destination, Vietnam needs to focus on establishing a green economy and lowering greenhouse gas emissions to attract sustainable foreign direct investment (FDI).

FDI growth

Despite the detrimental consequences of the Covid-19 epidemic on global and domestic economic growth in 2021, Vietnam attracted 31.15 billion USD in international investment, a 9.2% increase over the previous year. Investments include new and additional registered capital in registered projects of the world's leading corporations such as LG Group (Korea) in Hai Phong with an additional capital of 2.15 billion USD.; LEGO Group (Denmark) invested 1 billion USD in a factory in Binh Duong province; and O Mon II Thermal Power Plant (Japan) with a total registered capital of more than 1.31 billion USD. 

Foreign investment inflows exceeded US$2.1 billion in January 2022, up 4.2% year-on-year. Notably, the additional capital of adjusted projects reached 1.27 billion USD, up 2.69 times over the same period last year.

Dr Nguyen Dinh Cung, former head of the Central Institute for Economic Management (Ministry of Planning and Investment), indicated that after two years of restrictions on migration and investment due to Covid-19, FDI inflows resumed. by the end of 2021, with newly certified major projects. This growth indicates a healthy outlook for 2022.

A survey conducted by the Japan External Trade Organization (JETRO) showed that 56.2% of Japanese enterprises in Vietnam expect profits in 2022 to improve compared to the previous year and 55.3% of enterprises. Japan in Vietnam plans to expand production and business in the next two years. The survey also shows that the percentage of profitable businesses operating in Vietnam in 2021 is 54.3%, about 50% higher than in 2020.

Vietnam has also become more appealing to investors following the National Assembly's approval of a US$15.4 billion stimulus package aimed at boosting economic recovery and instilling investor confidence. 

Digital transformation, green technology

According to World Bank Country Director for Vietnam - Ms Carolyn Turk, to promote economic growth and attract sustainable and effective FDI inflows, Vietnam needs to focus on investing in digital transformation and application. green technology in production and business activities. 

"The transformation to green development will create several opportunities for Vietnam, particularly now that Prime Minister Pham Minh Chinh has established an ambitious goal of net zero emissions by 2050 at the recent Climate Summit in Glasgow," she noted. This dedication to global issues is also likely to boost Vietnam's growth and investment appeal, as major Vietnamese export markets become more worried about carbon emissions from Vietnamese manufacturers. 

According to economic experts, the purchasing patterns of industrialized economies worldwide have shifted. They are concerned not just with the design and quality of products, but also with the amount of greenhouse gas emissions produced in the manufacturing countries. As a result, greater emphasis will be placed on clothes, electrical appliances, and food goods made through environmentally friendly techniques, elevating the green economy to a critical aspect in Vietnam's investment competitiveness.

The Prime Minister has issued Decision No. 1658/QD-TTG approving the National Green Growth Strategy for the 2021-2030 period, with a vision to 2050. The overall goal is to restructure the economy in association with the innovation of the growth model, environmental sustainability and social equality. 

 Mai Anh