Vietnam’s foreign direct investment picture should rebound in the remaining months of this year, though concerns remain over fulfilling the 2016 target.

The country attracted over US$17.61 billion in newly-registered and expanded foreign direct investment (FDI) capital in the year to October 20, down 8.7% on-year, according to the Ministry of Planning and Investment (MPI).

This was the second time in 2016 that Vietnam reported a fall in FDI attraction. In September, the country also witnessed a slight on-year drop of 4.2% in new and added FDI pledges.

“This slight fall was blamed on the fact that some power projects were still waiting to complete procedures to get licences,” Dang Xuan Quang, deputy director of MPI’s Foreign Investment Agency (FIA), told VIR.

Meanwhile, in the same period in 2015, the country licensed some big power projects, including the US$2.4 billion Duyen Hai 2 thermal power plant, thus increasing its total newly-registered and expanded FDI to US$19.29 billion.

“The FDI attraction is forecast to have a brighter outlook in the remaining months, as the country is expected to license two power projects worth billions of US dollars. In addition, the cities directly under the government’s management are seeking investment licences for projects worth over US$2 billion in total,” he added.

Quang predicted that – besides traditionally attractive sectors such as the processing and manufacturing industry and realty-energy, agro-forestry, and seafood processing will be among the targeted areas for FDI in the next few months.

The FIA aims to attract US$13 billion worth of FDI in the second half of 2016, up 15% from the first half, thus bringing the country’s total committed FDI to US$24.5 billion this year, up 6.5% on-year.

The agency also aims to have nearly US$8 billion worth of FDI disbursed between July and December, up 10% from the first half, increasing the country’s total FDI disbursement to US$15 billion.

This year’s 10-month FDI disbursement is estimated to be US$12.7 billion, up 7.6% year-on-year.

“The FDI attraction goal for 2016 can only be achieved if the country licenses several projects worth billions of dollars in the last two months of the year,” said Nguyen Mai, president of the Vietnam Association of Foreign Invested Enterprises.

Mai added that Vietnam’s business climate has improved. This will be a driving force for the country to attract more FDI in the near future.

The FDI sector earned US$102.7 billion from exports (including crude oil) during January-October, up 8.1% year-on-year. This accounts for 71.2% of the country’s total export turnover which was estimated at US$144.1 billion, up 7.2%.

The country enjoyed a trade surplus of US$3.52 billion, while foreign invested firms gained a trade surplus of US$19.48 billion.

The total export turnover of mobile phones and their spare parts during the period was estimated to reach US$28.3 billion, up 10.3% year-on-year. Most of this sum came from Samsung.

Nguyen Bich Lam, head of the General Statistics Office, said the Galaxy Note 7 incident reduced Samsung Vietnam’s profit but did not have a significant impact on the export turnover of the firm’s smartphones. “Export of this product does not occupy a big share of Samsung Vietnam’s smartphone exports.”

It is reported that the withdrawal of the Galaxy Note 7 worldwide due to battery incidents caused a US$1.1 billion dent in Vietnam’s export turnover in September.

Mai said, “Samsung has boosted exports of other types of phones, compensating for the loss of the Galaxy Note 7. This has made the giant company remain a significant contributor to Vietnam’s 10-month exports.”

Employing over 110,000 local employers and having invested nearly US$7 billion in Vietnam, Samsung will likely account for nearly 20% of Vietnam’s total export turnover this year-an expected US$175 billion.

It is expected that Samsung will reach an export turnover of US$34.7 billion this year, up from over US$30 billion last year.

Mai noted that the FDI sector is currently the key driver of the economy’s growth and exports. “The sector is performing very well, with hundreds of our association’s member companies like Samsung reaping high profits in Vietnam.”

The World Bank’s “Doing Business 2017” report, released in late October, showed that Vietnam ranked 82nd among 190 economies in terms of ease of doing business, up nine notches against the previous year.

Infrastructure, high-tech, high-tech agriculture, and real estate will be the most attractive sectors to foreign investors in the near future, Mai predicted. 

VIR