Total foreign investment capital into Vietnam continues to be active despite the effects of the Covid-19 epidemic. In comparison with last year, there was a 9.2% increase in 2021 reflected in the value of over $31.15 billion. Furthermore, foreign investment capital into Vietnam totaled 2.1 billion USD in the first month of 2022, a 4.2% rise year on year. While Australia is one of the top 15 nations in the world with the most foreign investment, it only spends a relatively modest amount of money in Vietnam.
Investment registration certificates were given out to several large-scale projects just in the first month of the year, as a matter of fact. Project Goertek is one of them, with an additional $400 million in funding to increase the total investment capital of the project in Nghe An to 500 million USD. Furthermore, Coca-Cola was awarded a certificate to spend 136 million USD in the Phu An Thanh Industrial Park project (Long an), and the corporation has been preparing the investment development plan in Vietnam that the Group’s leader pledged some years ago.
Mr. Do Nhat Hoang, Director of the Foreign Investment Agency (Ministry of Planning and Investment) also stated that large corporations, such as Apple, Samsung, Nike, Adidas, Foxconn, etc. are planning to expand their manufacturing operations in Vietnam, confirming the favorable trend of FDI into the country. The LEGO Group (Denmark) with their $1 billion investment plans, Intel (USA)’s plan to increase capital by 2.5 billion USD, and the semiconductor production project of Hana Micron (Korea) were also named.
Mr. Hoang said: “Vietnam’s prospects for attracting foreign direct investment (FDI) in 2022 and subsequent years are excellent. The world’s leading corporations are bringing many large-scale, high-quality projects to Vietnam”.
This is not only from a view of subjective assessment from Vietnamese authorities, surveys from foreign investors are also indicating the same thing. For European investors, 67% of European enterprises are reported to have a favorable outlook on Vietnamese business conditions in the future. 55.3% of Japanese firms were asked whether they wanted to develop their business in Vietnam, with only 1.9% wanting to shrink, and only about 0.3% had intentions to leave, according to a JETRO survey published recently.
2022 marks nearly 30 years of BlueScope Steel Corporation’s investment in Vietnam. Coming up to Viet Nam from 1993, NS BlueScope Vietnam had 2 factories in Phu My Industrial Zone, Ba Ria – Vung Tau, and Bien Hoa 2 Industrial Zone, Bien Hoa, Dong Nai. According to Mr. Vo Minh Nhut, President of NS BlueScope Vietnam Co., Ltd, with a total investment capital of 130 million USD is not enormous, but BlueScope has effectively made its mark in success and become the leading coated steel manufacturer in Vietnam.
Despite not being a part of the first wave of investors from the Kangaroo land to Vietnam, BlueScope is one of the most successful ones. As a result, BlueScope Vietnam is always the first firm cited in each report by Vietnamese authorities on the attracting situation of FDI from Australia.
In truth, Australian investment in Vietnam is quite modest. According to Foreign Investment Agency statistics, Australian enterprises only registered to invest more than 65 million dollars in Vietnam in 2021. COVID-19 might be the reason for the country’s low investment in Vietnam in 2021. However, cumulatively, by the end of the year, Australia’s total investment in Vietnam has only exceeded $1.9 billion with 550 projects.
Apart from BlueScope Vietnam, other ventures in Vietnam involving investors from the “down under” include Ban Phuc Nickel Mine, Foster’s Tien Giang, Global Aluminum, Viet Uc Fisheries, ANZ Bank, and others are often mentioned. There have also been other well-known projects recently, such as RMIT in education, Futuremilk in dairy, Sunrice in agriculture, and so on. However, ANZ opted to sell its retail division in Vietnam to Shinhan Bank a few years ago. Meanwhile, Foster’s also failed to bring Australian beer to Vietnam…
Apparently, Australian investment in Vietnam is still limited, if not meager when compared to other countries. It is shown in the statistics published in Australia’s direct investment research report in Vietnam conducted by the VCCI research team with the support of Aus4Skills which involves the assessment of the effectiveness in practice and policy solutions that the country’s direct investment in foreign countries increases continuously at an average rate of8.6%/year in the 2016-2020 period. Cumulatively by 2020, Australia even ranked 15th among the largest foreign investors in the world, with a scale of 627.3 billion dollars which accounts for 1.6% of total global investment.
Viet Uc Fisheries
Global Vietnam Aluminium Company Limited
On the other hand, Vietnam was also considered to be a safe and attractive investment destination among the world’s top 20 host economies for FDI. However, the investment of Australian businesses in Vietnam only accounted for 0.5% of total FDI in Vietnam. Australia only ranks 19th among countries and territories investing in Vietnam.
This survey’s result probably indicated why there has been limited Australian investment in Vietnam recently, as well as Australian investors’ hesitation to make such investments in Vietnam. From the standpoint of Australian investors, the ANZ or Foster’s stories are examples of unappealing prospects in Vietnam.
Although Australian investment in Vietnam is not big at the moment, it has made significant contributions to the Vietnamese economy and society. Businesses from this country have also established connections with Vietnamese businesses and the Vietnamese economy. The question is whether or not there are chances for Vietnam, and if so, how can Vietnam capitalize on such opportunities to receive possible capital flows from Australia?
With confidence, Ms. Nguyen Thi Thu Trang, Director of the Center for WTO and International Trade, VCCI claims that there are indeed opportunities. Ms. Trang pointed out 3 free trade agreements (FTAs) with the participation of both countries, including two new-generation FTAs: the CPTPP Agreement and Regional Comprehensive Economic Partnership (RCEP) with several significant commitments of Vietnam for Australian investors.
Along with that, policy recommendations were also made by the VCCI Research Team, including continuing to reform administrative procedures, strengthening control of corruption, improving the quality of human resources, promoting activities of information, investment promotion, promotion of investment destinations in Vietnam, enhancing exchanges and dialogues with foreign investors, and assisting Australian businesses in connecting with domestic partners.
Regarding the attraction of investment, particularly the “eagle” enterprise, Minister of Planning and Investment Nguyen Chi Dung also emphasized the importance of creating favorable conditions for investors, such as clean land funds, human resources, production infrastructure, etc. At the same time, keep abreast of difficulties and obstacles of foreign-invested enterprises to promptly resolve them; simplify processes and procedures, accelerating investment licensing for large investment projects.
Another important thing is promoting the role of the Prime Minister’s Special Working Group in not only resolving difficulties for investment projects but also in mobilizing and attracting investment projects, etc. Along with that, special investment incentive policies for large-scale projects should be implemented. These are necessary preparations for welcoming FDI inflows in general and Australian investors in particular. Most importantly, however, Australian investors and those from other countries must find “attractive investment opportunities” in Vietnam.
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