Vietnam witnessed new gigantic foreign direct investment (FDI) projects in late March and early April 2021.

The Provincial People’s Committee of Quang Ninh licensed a US$500 million photovoltaic cell technology project invested by Jinko Solar Hong Kong Company in Song Khoai Industrial Park (Quang Yen town, Quang Ninh province) to produce the largest and most advanced solar panels in the world.

According to the plan, the project will be officially put into operation after seven months from the licensing date. According to a representative of Jinko Solar, this manufacturing project adopts cutting-edge technology, machinery and equipment, wholly imported from advanced countries. The facility is expected to achieve annual revenue of US$1.3 billion and employ over 2,000 workers.

Capital-intensive foreign investors

Song Khoai Industrial Park was officially selected by Jinko Solar as a destination after two visits to Vietnam to survey more than 20 provinces and more than 30 industrial parks in Vietnam.

FDI in Vietnam was also channeled into the retail industry, featured by a US$1.1 billion project invested by Central Retail of Thailand to expand business in Vietnam.

Mr. Philippe Broianigo, CEO of Central Retail in Vietnam, said that in the next five years, the company will invest 35 billion baht (US$1.1 billion) to expand business in 55 provinces of Vietnam.

In 2021, this Thai investor is expected to spend US$211 million to open four commercial centers in some provinces, namely Thai Nguyen, Ba Ria-Vung Tau, Thai Binh and Lao Cai and one mini supermarket in Tay Ninh.

Currently, the service industry in Vietnam has grown by 2.34% annually, led by the retail and wholesale sector which expanded by 7% in the first quarter as compared to the fourth quarter of 2020 and contributed 33.5% to the economy. Given a large population, the service industry, especially the retail industry, is forecast to stage robust growth in 2021. This makes Vietnam one of the fastest-growing and attractive markets in the world.

Promising projects

Many potential projects are also on the horizon. For example, the Department of Planning and Investment of Thua Thien - Hue province has opened a bid for the software, information technology park in Thua Thien - Hue province (Smart Media City) under Section B - An Van Duong New Urban Area. 

This project aims to form an information technology city, provide infrastructure for information technology application and development, information technology product research and development, information technology transfer and information technology incubation.

Recently, the Government and the Prime Minister have issued decrees and decisions on Da Nang City development, enabling the city to permit Imex Pan Pacific Group (IPP) to finance hiring foreign consultants to build and develop Da Nang into a regional financial center.

Although the selection of the investor for the Financial Center project is yet to be made, according to many investors, this approach will enable Da Nang City to draw billion-dollar projects soon.

"For over 5 years, we have prepared thoroughly for both financial and human resources. We have learned from the world for this project. I personally have many connections with a lot of friends worldwide to push forward this project. Three renowned U.S. firms in finance, casino, and financial law are keen on it. Without doubt, the city is not only a recognized best place for living but also a visionary city with such projects to build a financial center, airport city, and a non-tariff zone," said Mr. Johnathan Hanh Nguyen, President of Imex Pan Pacific Group (IPP).

Attractive investment environment

According to the World Bank (WB) in Vietnam, before the COVID-19 pandemic outbreak, FDI inflows into Vietnam were significantly higher than other countries in Southeast Asia such as Malaysia and Thailand (about 2% of GDP).

“This trend will continue in the short term as Vietnam proves to be one of the most successful countries in both aspects: preventing the COVID-19 pandemic and restoring economic growth," said Mr. Jacques Morriet, WB chief economist in Vietnam.

Vietnam's attraction, according to the WB, comes from its economic openness and especially cheap labor. At present, labor costs and wages in Vietnam are only one-half of Thailand and Malaysia, while the quality of the labor force has much improved.

With the prospect of attracting abundant FDI in the coming time, Ms. Carolyn Turk, WB Country Director in Vietnam, said the challenge for Vietnam today is not necessarily attracting as much FDI funding as possible, but optimizing the use of FDI, transferring technology and improving the capacity of the domestic business sector.

According to the WB, Vietnam remains attractive to multinationals looking for low-cost export platforms due to rising wages in China and rising trade disputes with the United States. However, global value chains will change gradually toward adaptation to technological, economic, political and ecological trends. However, only a few of these trends are favorable to Vietnam as the destination for FDI.