return icon Vietnamnet.vn

Foreign capital pouring into Vietnam: an opportunity or a challenge?

The foreign capital inflow into Vietnam through M&As soared in the first nine months of the year, raising concerns about an economic crisis like the one that occurred 10 years ago.

Vietnam was expected to benefit from the US-China trade war as many multi-national groups in China announced they would relocate production bases to Vietnam.

 

{keywords}



However, statistics show that FDI into Vietnam is on the decline, which is contrary to the prediction. According to the General Statistics Office (GSO), the FDI registered in the first nine months of the year was $11 billion, a 22.3 percent decrease compared with the same period last year, while additional investment capital registered was $4.8 billion, a decrease of 13.6 percent.

Dinh Tuan Viet, a high-ranking economist of the World Bank in Vietnam, said there has been a new form of investment – M&As and capital contributions to Vietnamese enterprises.

While the foreign investment registered by new investors and the additional investment registered by existing investors in Vietnam have decreased, capital has been flowing strongly through a third mode – buying into Vietnamese enterprises.

Vietnam was expected to benefit from the US-China trade war as many multi-national groups in China announced they would relocate production bases to Vietnam.

GSO reported that in the first nine months of the year, there were 6,502 deals of foreign investors’ capital contributions reported, with total value of $10.4 billion, an increase of 82.3 percent compared with the same period last year.

“The capital inflow has soared through share purchases,” said Nguyen Minh Cuong, chief economist of ADB.

The expert commented that this moment looks like 2007 when Vietnam joined the WTO.

At that time, the foreign capital flowing into the economy was high, while the capability of the national economy to absorb the capital was limited. This caused problems in the stock market, real estate markets, and state-owned economic groups.

As a result, just two years later, in 2009, the economy fell into crisis with high inflation. Vietnam had to pay a heavy price with 10 years of low growth rate.

Now Vietnam is witnessing the second capital movement.

According to the expert, it is now an important time for Vietnam’s economy as the trade war reshapes the entire world’s economy. If Vietnam cannot grab the opportunity, it will not have more opportunities. However, if it cannot do this well, the consequences will be even worse.

Besides M&As, the other noteworthy development is the strong rise of Chinese capital. Of 72 countries and territories which had FDI in Vietnam in the first nine months, South Korea was the biggest investor with $2.1 billion worth of capital registered, followed by China with $2 billion, which accounted for 18.4 percent of total investment.

Kim Chi 

 

Vietnam - bright spot in FDI attraction in ASEAN

Vietnam - bright spot in FDI attraction in ASEAN

News and World Report of the US has ranked Vietnam eighth among 29 best economies to invest in, and first among the Association of Southeast Asian Nations (ASEAN) in the list.

Vietnam worried as high-quality FDI declines

Vietnam worried as high-quality FDI declines

The foreign direct investment (FDI) flow to Vietnam in the first eight months of the year did not increase as expected, but instead fell sharply.

MORE NEWS

Curbing inflation: the optimal goal of monetary and fiscal policies

Monetary and fiscal policies have been tightened to fight inflation in Vietnam (though it is among the lowest in the world), instead of aiming to recover production and boost growth, which is needed after several years of pandemic.

Businesses seek capital as banks run out of ‘credit quota’

Businesses in many fields have voiced their concerns about the lack of capital from banks.

Businesses complain about customs procedures, import taxes

Businesses still must visit ministries in Hanoi to complete paperwork, which they consider a big waste of time and money. They are also concerned about high import taxes.

Vietnam contributes to International Law Commission

Vietnamese Ambassador Nguyen Hong Thao has pledged to make more contributions to the progress and development of international law, for peace, friendship, cooperation and sustainable development worldwide.

Pencak silat fighter enjoys golden year

Pencak silat fighter Quang Thi Thu Nghia has had amazing year of competition when she has won titles from all competitions that she took part in.

Pop singer to compete at MTV Europe Music Awards

Pop singer Pham Dinh Thai Ngan from HCM City will represent Vietnam at the MTV Europe Music Awards (MTV EMA) 2022.

PM hosts national committee on digital transformation’s third session

Prime Minister Pham Minh Chinh chaired the third meeting of the National Committee on Digital Transformation on August 8 to assess digital transformation pace during the first half of 2022 and devise tasks for the time ahead.

Liem to face off against chess king Carlsen at FTX Crypto Cup

Vietnam’s leading chess player Le Quang Liem has revealed that he will take on Norwegian chess king Magnus Carlsen at the FTX Crypto Cup which is scheduled to take place in Miami, USA, from August 15 to August 21.

Vietnam ranks third overall at ASEAN Para Games 2022

Vietnamese athletes bagged seven more gold medals on August 5, the last competition day of the ASEAN Para Games 2022, retaining their third place in the medal tally.

Corporate bond market struggling with challenges

The size of the corporate bond market is estimated at some VND1,374 trillion, equivalent to 15% of GDP. The Government aims to raise this figure to 20% by 2025.

President requires greater efforts to promote value of Ngoc Linh ginseng

Ngoc Linh ginseng deserves the "National treasure" title, and it is necessary to strongly promote the role of this treasure in improving people's livelihoods, President Nguyen Xuan Phuc said .

EVFTA outpaces CPTPP in preference utilisation rate

The utilisation rate of tax incentives set out in the EU-Vietnam Free Trade Agreement (EVFTA) during Q1 soared by over 32%, representing a four-fold rise compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Refusal to issue visas to new VN passport causes problems for travel firms

The rejection of Vietnam’s new passport by some EU member countries is affecting HCM City tourism companies since their customers are unable to travel to those countries.

Vietnam set to scrap COVID quarantine for imported processed seafood

The Ministry of Agriculture and Rural Development has removed COVID-related quarantine requirements for frozen processed seafood products imported for the purpose of reprocessing for export.

HCM City seeks to boost technology transfer from universities

Huynh Kim Tuoc, managing director of Sai Gon Innovation Hub's (SiHub) Start-up Support Centre under the HCM City Department of Science and Technology, affirmed Vietnam holds tremendous potential for technology development
back_to_top