FDI from Singapore and the spectacular “usurpation “

Trường Lăng

June 7, 2022


FDI from Singapore and the spectacular “usurpation “

Trường Lăng

June 7, 2022

“Star changes its position”

Although Singapore is still the leading foreign investor in Vietnam, this investor has made a spectacular “usurpation” in the Vietnamese market in the last 2 years, especially since the outbreak of Covid-19.

Previously, the “king” was always Korea or Japan, Singapore, however, won the first position in 2020, with a total registered capital of nearly USD 9 billion, in which, USD 1 billion invested by capital contribution and share purchase, accounting for 31.5% of total foreign investment in Vietnam and as double as the figure of USD 4.5 billion in 2019.

This “miracle” investment was mainly at the beginning of the year, Singaporean investors decided to invest in Bac Lieu Gas Power Project, with a scale of USD 4 billion. Last year, one of the projects was actively discussed by the Prime Minister’s Special Working Group to remove difficulties, help the project to be built soon.

Singapore continued to “take” the leading position of South Korea in 2021, with a total registered capital even higher than in 2020, up to USD 10.7 billion, accounting for 34.4% of total foreign investment capital into Vietnam, up 19.1% over the same period last year.

This is a very remarkable result, because Singapore was usually ranked at the third for many years, with investment rate in Vietnam of about 4 – USD 5 billion. Even in 2015, Singapore only invested USD 2 billion in Vietnam, ranked at the 5th.

Said Mr. Do Nhat Hoang, Director of the Foreign Investment Department (Ministry of Planning and Investment), in 2021, Singapore’s investment capital was 2.2 times higher than Korea’s and 2.7 times higher than Japan’s. Singaporean investors decided to invest USD3.1 billion into Long An 1 and 2 Gas Power Project in this year. Thereof, there was an investment of USD2.19 billion by capital contribution, purchasing shares of Vinfast Trading & Investment Pte.Ltd into Vinfast Trading and Production Company Limited. The two projects themselves accounted for over 49% of Singapore’s total investment in Vietnam.

And another spectacular usurpation continued to take place at the beginning of 2022. In the first month of this year, Singaporean investors registered to invest USD 666 million in Vietnam, accounting for 31.7% of total foreign investment in Vietnam and keeping the leading position. This month, investors from the island nation of Lion contributed capital, bought shares of more than USD 334 million in MV2 Real Estate Joint Stock Company. And that’s why Singapore surpassed Japan to become the second biggest investor in Vietnam, cumulatively.

By the end of last year, Japan was still ranked at the second position, with more than USD 64.39 billion of registered capital in Vietnam, while Singapore was still ranked at the third position, with USD 64.36 billion. It was not such a small gap that Singapore would surpassed soon. By the end of January 2022, Singapore has registered to invest of USD 65.24 billion in Vietnam. Meanwhile, Japan did not increase much, with USD 63.96 billion.

Star has changed its position!

Expect a strong acceleration

It is not too difficult to explain why for 2 consecutive years, Singapore holds the top position in foreign investment in Vietnam.  Mai Phuoc Dung, Vietnamese Ambassador to Singapore told the press that Singapore’s investment of much capital into Vietnam has shown the confidence of Singaporean investors in Vietnam’s macro policies and the business environment and development prospects of in the coming time.

“This is the result of the Government’s process of planning and implementing major policies and Vietnamese and Singaporean enterprises’ active and proactive search for opportunities,” said Mr. Dung. Nguyen Xuan Phuc’s visit to Singapore from February 24 to 26, 2022 will “create a new atmosphere and a new driving force” for a stronger wave of Singaporean investors into Vietnam.

Speaking at the recent Vietnam Business Forum (VBF), the representative of the Association of Associate Members, Mr. Seck Yee Chung, Vice President of Singapore Business Association in Vietnam highly appreciated that Vietnamese Government has issued many mechanisms and policies that help mitigating the impact of the pandemic, while maintaining the measures to prevent Covid-19 and encourage investment. This is one of the important factors that help investors trust and decide to make the investment in Vietnam.

Mr. Seck Yee Chung also particularly emphasized the investments in the warehouse centers, logistics services interested in by foreign investors when the process of shifting production to Vietnam and e-commerce is increasing. Thereof, a concern in the approval procedures for merger and acquisition (M&A) deals, as well as the mechanisms, policies and business models of fintech services in Vietnam.

“Vietnamese government needs to survey and enhance the support for various fintech business models, to issue a controlled trial mechanism to test certain models and ensure that the field is ready for both foreign and domestic investment,” said Mr. Seck Yee Chung.

In fact, this is the recent concern of Singaporean enterprises, after they have spent considerable resources on investment in the fields of processing and manufacturing industries; real estate business; production and distribution of electricity, gas, water, air conditioners… in Vietnam during the past few decades.

According to the recent research of the Foreign Investment Agency, along with the trend of investment shifting away from China, the construction of new production and assembly facilities in ASEAN countries is increasing, resulting in the demand for high-quality business and infrastructure services in these areas. “The region’s strength in terms of service provision, infrastructure, logistics, Singapore enterprises will take advantage of this opportunity to develop more service facilities, infrastructure to meet the needs of investment capital shifting, including to Vietnam”, said the Foreign Investment Department.

Thereof, logistics companies, technology start-ups, enterprises in the fields of financial services, healthcare, and education will increase their overseas investment, including Vietnam, to respond to this trend.

After a 2-year disruption due to Covid-19, many Singaporean entrepreneurs and investors are waiting for returning to Vietnam to look for investment opportunities. Currently, international commercial flights have been reopened, Singaporean citizens can enter into Vietnam. This is an important condition for investment from Singapore to continue the strong acceleration.

Currently, a series of Singaporean big firms are present in Vietnam. Such as Sembcorp, with its major investments, including a joint venture with Becamex, has built a series of industrial parks in Vietnam and attracted more than $18 billion in the secondary investment. Keppel Land, Mapletree, CapitaLand, KinderWorld, United Overseas Bank… are also typical ones.

Source: Baodautu

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