In 2023, Vietnam achieved a record $36,6 billion in foreign direct investment (FDI). At the beginning of 2024, Vietnam's FDI attraction activities were already very vibrant with projects worth hundreds of millions of dollars. This creates expectations that FDI flows into Vietnam will continue to grow strongly in potential and strong sectors in the coming year.
1. Localities and sectors expected to attract investment in 2024
Provinces and cities with many advantages in attracting foreign investment (good infrastructure, stable human resources, efforts to reform administrative procedures and dynamism in investment promotion, etc.) such as Hanoi, Ba Ria - Vung Tau, Bac Giang, Bac Ninh, Dong Nai, Hai Phong, and Ho Chi Minh City. These seven localities alone accounted for 72,1% of new projects and 82,5% of the total capital nationwide in January 2024.
CThe semiconductor industry is still expected to be a vibrant sector. Regarding attracting foreign investment this year, at the 14th session of the Bac Giang Provincial People's Council at the end of 2023, Mr. Duong Van Thai, Secretary of the Bac Giang Provincial Party Committee, also stated that many foreign semiconductor and chip manufacturing companies are surveying investment opportunities in Bac Giang. These investors demand a high-quality workforce. Therefore, the locality is focusing on training human resources to meet the needs of these investors.
According to Nikkei Asia, many of the world's leading chip manufacturers, such as Nvidia and Samsung, are looking to expand their chip business in Vietnam. Vietnam is expected to receive millions of dollars from the US Science and Chips Act and will also be home to Intel's largest global assembly and testing plant.
Assessing the vibrant investment situation compared to the same period in 2023.
According to a report from the Foreign Investment Agency (Ministry of Planning and Investment), in January 2024 alone, Vietnam attracted over US$2,3 billion in foreign direct investment (FDI). This represents a 40,2% increase compared to the same period last year and an 8,1 percentage point increase compared to the end of 2023.The disbursed capital of foreign investment projects is estimated at approximately US$1,48 billion, an increase of 9,6% compared to the same period in 2023. Newly registered investment capital in January 2024 increased sharply compared to the same period due to an increase in the number of new projects (up 24,2%) and some projects with large investment capital (over US$600 million).
New investments increased in both the number of projects and the total registered capital. With a 24,2% increase in the number of projects and several large projects with investment capital of hundreds of millions of USD being newly registered, the total newly registered investment capital in January 2024 increased by 66,9% compared to the same period.
2. Responding to global minimum tax rates
2.1. Samsung and Intel are planning to expand their investments in Vietnam.
According to an assessment from the Ministry of Planning and Investment, Many large corporations and businesses in the electronics and semiconductor industries have already established a presence and are planning to expand their investments in Vietnam. Companies like Intel, Samsung, Synopsys, Qualcomm, Infineon, Amkor, etc., demonstrate Vietnam's crucial and increasingly important role in the global semiconductor supply chain. (For example: Nvidia (USA) committed to making Vietnam its second home; Hana Micron (Korea) inaugurated phase 2 and increased its total investment in Vietnam to $1 billion; LG Innotech (Hai Phong) invested an additional $1 billion in expanding its electronic product manufacturing project...).
However, the global and regional context continues to be complex and volatile, therefore... The situation regarding attracting FDI into Vietnam in 2024 presents more difficulties and challenges than opportunities and advantages.Investors are increasingly seeking investment opportunities in neighboring countries to shorten supply chains. Many countries, such as South Korea and Japan – among Vietnam's largest sources of FDI – the US, and several EU countries, are trying to limit outbound investment by reducing corporate income tax and increasing domestic investment incentives to recoup foreign investment.
2.2. Vietnam's response to the impact of the Global Minimum Tax
According to some assessments, the opportunities to attract foreign direct investment (FDI) in 2024 are opening up as they did in 2008, when Vietnam first joined the WTO. Factors such as the battle for control of core technologies and chip technology are creating opportunities for Vietnam to attract high-tech FDI.
However, Vietnam still Solutions are needed to create a competitive advantage when applying a global minimum tax rate, while simultaneously reforming the business environment to make it more flexible.In addition, better protection of intellectual property rights and improvement of human resource quality are needed to meet the needs of investors.
Vietnam needs to review and adjust its foreign investment policies to align with global investment trends. It should continue to reform administrative procedures, especially those related to the implementation of post-investment registration procedures such as land, construction, fire safety, environment, and customs.
At the same time, Vietnam needs to promptly enact appropriate policies to effectively and flexibly adapt to the impact of global minimum tax rates.This ensures investor confidence and maintains the attractiveness of the investment environment.
