VietNamNet Bridge - Disbursed FDI (foreign direct investment) capital in 2017 reached a record high of $36 billion, a twofold increase compared with four years ago. 

Disbursed FDI in 2017 reaches a record high of $36 billion

According to FIA (Foreign Investment Agency), by December 20 foreign investors had registered $21.27 billion worth of FDI, an increase of 42.3 percent over 2016. If counting expanded projects and stake purchase deals, the total FDI capital would be $36 billion, or 45 percent higher than 2016.

The business fields most targeted by foreign investors are manufacturing and processing industries, production and distribution, and real estate. Japan has surpassed South Korea to become the biggest investor in Vietnam.

The foreign capital flowing to Vietnam has increased by two times in the last four years, from $20 billion in 2014 to $36 billion this year. The year also saw a record high disbursed capital - $17.5 billion.

The foreign capital flowing to Vietnam has increased by two times in the last four years, from $20 billion in 2014 to $36 billion this year. The year also saw a record high disbursed capital - $17.5 billion.

Dang Pham Minh Loan, deputy managing director of VinaCapital, said that three years ago, VinaCapital invested in a large Vietnamese consumer goods manufacturing company that gained export growth rate of 20 percent in the following years. 

However, the company’s shares lost 50 percent in value in 2017 because the import tariff on the product will be removed, which brought major income to the company. 

The company is facing difficulties because of the appearance of more foreign invested enterprises which make the same product.

“If a leading Vietnamese company is equal to one-fifth of a Singaporean enterprise, the latter will be able to buy the Vietnamese company with its accumulated profit after three years,” she said, comparing the capitalization value of businesses.

Loan said that if Vietnamese businesses do not have reasonable business strategies, they will be swallowed by foreign businesses.

“Many Vietnamese businesses are expecting international ‘integration’ with fear, and  don’t think this is an opportunity,” she said.

Vietnam wants more from FDI

“FDI still has not brought large positive effects to the national economy as expected and FIEs don’t have a big impact on domestic enterprises,” said Vo Tri Thanh, an economist.

“What developing countries expect from FDI are positive impacts on the national economy in terms of management skills and technology,” he said. “FDI has brought jobs, a part of GDP and a part of added value only.”

Vu Thanh Tu Anh from FETP (Fulbright Economic Teaching Program) agreed that the positive impact on the national economy is weak, which can be seen in the modest number of Vietnamese enterprises becoming  first- and second-tier vendors for multinationals.

“As for Intel and Samsung, most of their vendors are FIEs (foreign invested enterprises),” Anh said.