Vietnam FDI to soar in June 2022

According to the Foreign Investment Department, as of June 20th, 2022, the total newly registered capital, adjusted and contributed capital to buy shares, and capital contributions bought from foreign investors reached over $14.03 billion. Many electronic and high-tech product manufacturing projects received enormous capital in the year's first half.  

Increase in capital addition and capital contribution June 2022

As of June 2022, there have been 752 new projects granted investment registration certificates (down by 6.5 percent over the same period last year), with a total registered capital of roughly $5 billion (down by 48.2 percent). 

Additionally, projects have registered 487 times to adjust their investment capital (equalling 105.9 percent of that of the same period in 2021), with the total additional registered capital reaching nearly $6.82 billion. Moreover, 1,707 times of capital contribution and share purchases by foreign investors were recorded with the total value of contributed capital reaching about $2.27 billion (more than 41.4 percent of that of the same period last year). 

The Foreign Investment Department stated that while the amount of newly registered capital has not fully recovered after anti-COVID measures in 2021, adjusted capital, capital contribution, and share purchase have been continuously increasing. 

Increase in adjusted capital

Specifically, according to statistics from the Foreign Investment Agency, adjusted capital in the first half of the year 2022, apart from that of March and May, grows sharply every month. For example, adjusted capital in January increased by 2.69 times compared to the previous month, February increased by 2 times, April by 90 percent, and June by 4.7 times over the same period in 2021. 

Meanwhile, the growth rate of the number of projects with capital adjustment in June showed signs of slowing down compared to the first five months of the year. Thus, the scale and size of capital adjustment per project were relatively high in comparison to the same period last year. 

In the first 6 months of 2022, the number of capital adjustments increased by 5.9 percent, smaller than the 15.5 percent increase in 5 months. On the contrary, the average capital adjustment scale in the first half of 2022 reached about $14 million per adjustment while that of the same period in 2021 was $8.9 million per adjustment. 

During the first 6 months of 2022, foreign investors have invested in 18 out of 21 national economic sectors. In which, processing and manufacturing industries continued to remain leading fields with a total investment of about $8.84 billion, accounting for nearly 63 percent of the total registered investment capital. 

Following is real estate with total investment capital of over $3.15 billion, attributing 22.5 percent of total registered investment capital. Next are the information and communication industry and science and technology activities with a total registered capital of nearly $442.6 million and $408.5 million respectively. 

Capital contribution from 84 countries and territories  

Furthermore, regarding investment partners, 84 countries and territories have invested in Vietnam in the first 6 months of this year. Among these, Singapore is in the leading position with a total investment capital of over $4.1 billion, accounting for 29.5 percent of total investment capital in Vietnam. Ranked second is South Korea with over $2.66 billion, making up 19 percent of total investment capital, equaling 129.6 percent of that of the same period last year. 

With the Lego project with a total investment of over $1.3 billion, Denmark continues to rank third with a total registered investment capital of nearly $1.32 billion, accounting for 9.4 percent of the total investment capital. The following are China, Japan, and Hong Kong.

On the other side, by investment destination, foreign investors have invested in 49 provinces and cities across the country in the first 6 months of 2022. Binh Duong was the province with the largest share of total registered investment capital (with over $2.53 billion of total registered investment capital, accounting for 18 percent of the country's total and increasing by 98.2 percent over the same period). Ranked second is Ho Chi Minh City with over $2.2 billion, equalling 15.8 percent of total capital, increasing 55.2 percent. 

A trade deficit of $1.3 billion in mid-June 

Beside bright points in the overview picture, the trade deficit is a matter of concern for many economists. According to the latest update from the General Department of Customs, the total import and export value of goods in the first half of June reached approximately $31.64 billion, falling by 10 percent compared to the second half of May 2022. 

The total import-export value of Vietnam from the beginning of the year to June 15th reached $337.85 billion, equivalent to a 16.7 percent increase in absolute terms over the same period last year. More specifically, the total import-export value of Foreign Direct Investment (FDI) enterprises added up to $232.67 billion, while that of domestic businesses was $105.18 billion, which increased by 16 percent and 18.5 percent respectively over the same period of 2021. 

Notably, the import value of goods by FDI enterprises in the first phase of June 2022 reached $10.51 billion, dropping by 2 percent compared to that of May 2022. However, by June 15th, the total import value of these businesses was $110 billion, rising by 16.3 percent over the same period of last year and accounting for 64.9 percent of the total import value for this group of enterprises. 

Future expectations of Vietnam

Although the amount of newly registered investment capital in 6 months has not yet been able to recover, the growth level has shown some improvement compared to the first months of the year. 

The Foreign Investment Department also further assessed that the Russia-Ukraine conflict does not seem to have a significant impact on foreign investment in Vietnam. One reason is that Russian and Ukrainian investments account for only a small proportion of total investment capital in Vietnam (approximately 0.23 percent) which indirectly affects high prices and causes supply chain disruptions. 

On the consumer side, the lifting of COVD-19 restrictions and the reopening of international tourism activities have once again boosted the service sector. United Overseas Bank (UOB) Singapore expects that tourism-dependent sectors such as accommodation and food will continue to grow intensely in the second quarter of 2022. 

Moreover, based on the latest data, along with opportunity and risk assessment, the GDP growth rate for Vietnam in 2022 is forecasted by UOB to be 6.5 percent. Consequently, with economic development, experts also expect that Vietnam will continue to thrive as an attractive FDI destination for foreign investors. 

If you are among investors looking for an opportunity in the dynamic developing economy of Vietnam, contact Viettonkin Consulting now to get more insights from our top experts.