4 sectors forecasted to attract Foreign Direct Investment (FDI) into Vietnam in 2024

4 sectors forecasted to attract Foreign Direct Investment into Vietnam in 2024

Summary of 2023

Despite the global economic challenges, including the overall decline in GDP growth, global trade, and investment, Vietnam achieved significant results in attracting foreign direct investment (FDI) in 2023. The total registered FDI reached a record high of $36.6 billion (an increase of 32.1% compared to the previous year), with disbursed FDI reaching $23.18 billion (a 3.5% increase from the previous year), the highest disbursement level to date.

Moving into 2024

Amidst the ongoing global supply chain shifts and the upgrading of diplomatic relations between Vietnam and the United States to a Comprehensive Strategic Partnership, many experts predict that Vietnam will remain a hot spot for FDI in 2024.

The Foreign Investment Agency (Ministry of Planning and Investment) has recently released a report on the status of attracting foreign investment in Vietnam during the first two months of 2024.

As of February 20th, the total registered capital for new investment, adjustment, capital contribution to purchase shares, and capital contribution to purchase contributed capital by foreign investors amounted to over $4.29 billion, up 38.6% compared to the same period in 2023. The implemented capital of foreign investment projects is estimated to reach around $2.8 billion, up 9.8% compared to the same period in 2023.

FDI inflows have been directed towards 16 out of the total 21 nationally recognized economic sectors. Among them, the manufacturing and processing industry leads with a total investment capital of nearly $2.54 billion, accounting for 59.1% of the total registered capital and increasing by 16.8% compared to the same period. This sector still holds considerable potential as Vietnam continues to integrate deeply into the region and the world (According to the Multilateral Trade Policy Department (Ministry of Industry and Trade), Vietnam has been actively participating in 19 bilateral and multilateral Free Trade Agreements (FTAs) with most economies worldwide. Among these, 16 out of 19 FTAs have been put into effect with over 60 partners, covering extensive regions across continents, accounting for nearly 90% of the global GDP…), and with strong global supply chain shifts and Vietnam’s significant geopolitical advantages.

The real estate business sector ranks second with total investment capital of nearly $1.41 billion, accounting for 32.7% of the total registered capital, more than 3.5 times higher than the same period last year. It is forecasted to continue attracting FDI due to the increasing demand for residential and industrial real estate, supported by government policies and an improved investment environment.

With a proactive approach to attracting and selectively cooperating with foreign investment, focusing on quality, efficiency, technology, and environmental protection, as well as prioritizing projects with high added value, high technology content, linkage with domestic enterprises, and spillover effects, the renewable energy sector and specialized activities in science and technology are expected to shine in attracting FDI in 2024.

In addition, to continue enhancing its capacity to attract FDI, Vietnam needs to intensify investment in developing infrastructure, particularly in electricity supply and transportation infrastructure, as well as logistics; improve the openness of the business environment, especially through administrative procedure reforms; and enhance the quality of education and training to ensure the quality of the labor force supplied to the market in the future.

 

Reference:

  • Foreign Investment Attraction Report in 2023, Foreign Investment Agency – Ministry of Planning and Investment.
  • Foreign Investment Attraction Report in the first two months of 2024, Foreign Investment Agency – Ministry of Planning and Investment.
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