As of March 20, 2020, the total value of newly registered capital, adjusted capital and capital contribution or share purchase of foreign investors reached 8.55 billion USD, equivalent to 79.1% of the same period in 2019. Capital generated by the FDI project was estimated at 3.85 billion USD, equaling 93.4% as compared to the same period in 2019.
Accumulated to March 20, 2020, the whole country had 31,665 valid projects with a total registered capital of 370 billion USD. The accumulated realized capital of FDI projects was estimated at 215.63 billion USD, equivalent to 58.3% of the total valid registered investment capital.
Details are as follows:
I. FDI INFLOWS
1. FDI attraction in the first quarter of 2020:
1.1. FDI performance:
As of March 20, 2020, foreign direct investment projects were estimated to disburse 3.85 billion USD, or 93.4% as compared to the same period in 2019.
Import and export performance
Export: Export of the FDI sector (including crude oil) reached 40.4 billion USD, equivalent to 97.1% over the same period and accounting for 70.8% of export turnover. Export excluding crude oil arrived at nearly 39.9 billion USD, or 97.1% as compared to the same period in 2019 and a slight increase of 0.2% compared to the same period in 2018, accounting for 67.5% of nation-wide export turnover in the first quarter of 2020. Due to the impact of the Covid – 19 epidemics, the export turnover of the foreign invested sector fell compared to the same period after many years of consecutive increase.
Import: Import of the FDI sector attained 33.18 billion USD, a slight decrease (99.2%) over the same period and accounting for 59% of nation-wide import turnover.
In the first quarter of 2020, although import-export turnover experienced a fall compared to the same period last year, the FDI sector still produced a trade surplus of US $ 7.2 billion (including crude oil) and US $ 6.7 billion (excluding crude oil). Meanwhile, the domestic economic sector showed a trade deficit of US $ 4.4 billion.
1.2. Investment registration
As of March 20, 2020, the total value of newly registered capital, adjusted capital and capital contributed to buying shares of foreign investors arrived at 8.55 billion USD, a fall of 20.9% in comparison with the same period in 2019. Of which:
Newly registered capital: There were 758 new projects granted with investment certificate nationwide in the first quarter of 2020. The total newly registered capital reached US $ 5.5 billion, a rise of 44.8% over the same period in 2019. The newly registered capital saw an increase thanks to Bac Lieu liquefied natural gas power plant (LNG) project being granted a new investment certificate with a total investment of US $ 4 billion in the first quarter of 2020.
Adjusted capital: In the first quarter of 2020, 236 times of projects were registered to adjust investment capital with the total additional registered capital of more than US $ 1.07 billion, or 82% over the same period in 2019.
Capital contribution and share purchase: Also in the first quarter of 2020, the whole country had 2,523 times of capital contribution and share purchase by foreign investors with a total value of capital contribution reaching nearly US $ 2 billion, a rise of 52.6% in the number of capital contribution and purchase of shares and an equivalent of 34.4% of the value in the same period in 2019. Although the number of capital contributions and share purchases has increased, the scale of capital contribution is small, only US $ 0.78 million per capital contribution in average (much smaller than the average scale of USD 3.4 million per capital contribution in Quarter I of 2019, where there was a case of capital contribution or share purchase of Beerco Limited (Hong Kong) into Vietnam Beverage Co., Ltd. totaling US $ 3.85 billion).
If big projects valued at more than 1 USD billion (the new investment project of USD 4 billion in Bac Lieu in 2020 and capital contribution or share purchase made by Beerco into Beverage in 2019) are excluded, the total newly registered and adjusted capital and capital contribution or share purchase made by foreign investors in the first quarter of 2020 equals 64.6% of the same period in 2019. The number of newly registered projects and expanded projects both decreased (equal to 95% and 82.8% over the same period last year). The increasingly complicated epidemic of Covid-19 respiratory disease has greatly affected the travel of investors as well as their decisions to make new investment and to expand the existing projects, making FDI attraction in the first quarter of 2020 be shrunk in both quantity and total registered capital.
In the first quarter of 2020, foreign investors invested in 18 sectors, in which electricity production and distribution led with a total capital of over US $ 4 billion, accounting for 47.5% of total registered investment capital. Manufacturing and processing industry ranked second with total investment capital of 2.72 billion USD, accounting for 31.9% of total registered investment capital. Next are the wholesale and retail business and real estate business with total registered capital of 682 million USD and 264 million USD.
In the first quarter of 2020, 87 countries and territories have made investments in Vietnam. Singapore ranked first with a total investment of 4.54 billion USD, or 53.1% of total investment capital into Vietnam; Japan ranked second with total investment capital of 846.7 million USD, accounting for 9.9% of total investment capital. China ranked third with a total registered investment capital of 815.6 million USD (of which a newly licensed project of 300 million USD and a expanded project of 138 million USD; these two cases accounted for 55.2% of total investment of China in the first quarter), equivalent to 9.3% of total investment. Next are South Korea, Hong Kong, Taiwan.
Foreign investors have invested in 55 provinces and cities across the country. Bac Lieu ranked first with a big project valued at 4 billion USD, accounting for 46.8% of total registered investment capital. Ho Chi Minh City ranked second with a total registered capital of over 1 billion USD, amounting to 12.3% of total investment capital (of which investment in the way of capital contribution or share purchase comprises a large proportion of 78.8% of the City’s total registered investment capital, 53.2% of the total capital contribution of share purchase and 42.3% of the total value of contributed capital nationwide). Tay Ninh ranked third with 506.8 million USD, accounting for 6% of total investment capital. Next are Hanoi, Binh Duong, Ba Ria – Vung Tau.
Several major projects in the first quarter of 2020
– Liquefied Natural Gas (LNG) Plant Project under the operation of Bac Lieu LNG Thermal Power Center (Singapore) having total registered investment capital of US $ 4 billion with the goal of producing electricity from liquefied natural gas.
– Radian Jinyu Tire Manufacturing Plant Project (Vietnam) with a total investment of US $ 300 million aimed at producing full steel TBR tires invested by Chinese investors in Tay Ninh.
– Radian tire production project (China) in Tay Ninh with investment capital increased by 138 million USD.
– Sews – components factory project Vietnam (Japan) with the goal of producing electrical and electronic components for automobiles and motorcycles and plastic products in Hung Yen having investment capital increased by 75.2 million USD.
– The project of manufacturing electronic components, peripheral devices and optical devices (Taiwan) in Hai Phong is expanded with investment increase of 68 million USD.
2. Accumulated foreign direct investment as of March 20, 2020
As of March 20, 2020, there were 31,665 valid projects in total with a total registered capital of 370.1 billion USD. The accumulated realized capital of foreign direct investment projects was estimated at 215.6 billion USD, equaling 58.3% of the total valid registered capital.
– By sector: Foreign investors have invested in 19/21 sectors in the national economic classification system, of which the processing and manufacturing sector accounts for the highest proportion of USD 216.7 billion, or 58.6% of total investment capital, followed by real estate business worth 58.6 billion USD or 15.8% of total investment capital; electricity production and distribution accounting for 7.5% of total investment capital or 27.7 billion USD.
– By investment partners: There are now 136 countries and territories having investment projects in Vietnam. In which, South Korea ranked first with a total registered capital of 68.6 billion USD (a 18.5% share of total investment capital). Japan ranked second with 59.7 billion USD (capturing 16.1% of total investment capital), followed by Singapore, Taiwan and Hong Kong.
– By location: Foreign investment has been present in all 63 provinces and cities nationwide, of which Ho Chi Minh City is still the leading province in attracting foreign investment with US $ 47.5 billion (accounting for 12.8% of the total investment); followed by Hanoi with 34.64 billion USD (accounting for 9.4% of total investment); Binh Duong with 34.61 billion USD (capturing 9.3% of total investment).
3. Evaluation of the Covid-19 epidemic’s impacts on foreign investment in Vietnam in the first quarter of 2020
From the situation of foreign investment associations and enterprises, the difficulties of the enterprises mainly focused on the following issues:
– Shortage of foreign experts and technicians (especially those from Korea, Taiwan and China) due to the policy of restricting travel and cease of issuing work permits for labour from countries where outbreaks occur were causing and would cause great damage to businesses. The Korean Embassy, the Chinese Embassy, the Taipei Economic and Cultural Office, the LG Group, Foxconn Group, Samsung and Business Associations all have written comments on this issue.
– Investment promotion activities and business trips to explore investment opportunities of potential investors were canceled or delayed as a consequence of travel restriction policy, making investment decisions severely effected (Apple, ExxonMobil cancelled business trips and delayed investment decisions).
– The import of production inputs for many foreign investment projects still faced difficulties because the clearance of goods remains delayed, affecting the progress, preparation and implementation of projects in Vietnam as production was carried out moderately or stopped. Apple also had to postpone the expected increase of 20% of orders made in Vietnam (roughly 12 billion USD of export value). Nike estimated that production of about 10 million pairs of shoes and garments is delayed in Vietnam and Indonesia.
– Many businesses had to transport raw materials for production by sea and by air instead of by road, leading a rise in logistics costs. It is not easy to find out-of-China supplies in the short-term that causes increasing costs, unstable quantity and quality (Foxconn, Apple, Nike and many Taiwanese and Chinese businesses in Vietnam).
– Many businesses faced financial difficulties due to a sharp decline in the consumption market and stagnant production. Enterprises experienced a significant reduction in revenue from goods exported to infected countries (EU countries, China, Korea, Japan, Singapore, etc.). Korcham, Eurocham proposed relevant agencies to coordinate the implementation of synchronous solutions to support businesses such as extending bank loans, reducing loan interest, extending tax payment time for businesses.
– Many businesses were unable to maintain their business, and decided to suspend operation or let employees take turns. Many workers lost their jobs and had no income, so their lives faced many difficulties.
4. Solutions to overcome the effects of Covid-19 epidemic on foreign investment in the coming time
The evolution of the disease continues to be unpredictable and affects the production and business situation of foreign invested enterprises. In order to solve difficulties for foreign-invested enterprises in Vietnam, some specific measures need to be implemented as follows:
– For the entry of experts in foreign investment projects, it is proposed to allow the procedure similar as applied in the case of Samsung Group: special entry into Vietnam after a negative test, work in an independent area, self-quarantined, guaranteed and supervised by the Provincial People’s Committee (Official Dispatch No. 1746/VPCP-QHQT dated March 6, 2020 and Official Dispatch No. 1849/VPCP-QHQT dated March 11, 2020).
– To allow foreign experts and technicians working in foreign invested enterprises to have their work permits extended to temporarily replace those who are not admitted. Issuing work permits for Taiwan experts to replace Chinese experts who had no entry to Vietnam.
– To allow the application of quick customs clearance procedures for imported raw materials and goods for production during the epidemic outbreak. Businesses are self-declared and responsible for the declaration. Based on the results of post-clearance inspection and subsequent state management, cases of taking advantage of special policies during the epidemic will be imposed strict penalties.
– The ministries, line ministries and localities shall stop all inspections and examinations of enterprises during the epidemic period so that enterprises can concentrate on production and business and resume their operations after the epidemic’s impacts, except for cases of suspecting or showing signs of law violations.
– To review and provide solutions for proposals of extending project implementation schedule due to epidemic difficulties; extending the time limit for deposit to secure project implementation; shortening the time to perform administrative procedures related to investment projects.
II. FDI OUTFLOWS
In the first quarter of 2020, Vietnam’s total newly registered investment and expanded investment outflows were 49.3 million USD, equivalent to 41.1% of the same period in 2019. Of which 27 projects were newly registered with a total 22.9 million USD invested by the Vietnam side (equal 28.5% compared to the same period of 2019) and 06 times of adjusting investment to the value of 26.3 million USD (or 66.4% compared to the same period in 2019).
Vietnamese investors have invested in 10 sectors abroad. In which accommodation and catering services leads the list with 2 projects, total registered capital of 14.7 million USD, and accounting for 29.9% of the total investment. The professional and scientific sector ranked second with total investment capital of 12 million USD, accounting for 24.3%; followed by the manufacturing, wholesale and retail sector.
There are 13 countries and territories receiving investment from Vietnam in the first quarter of 2020. Leading the list was the United States with 7 new investment projects and 1 extended project, total newly and additionally registered investment reaching 20.1 million USD, accounting for 40.8% of the total investment. Singapore ranked second with 12.8 million USD of investment, accounting for nearly 26%. Next were Cambodia, Cuba, and Hong Kong./.