Revealing billion-dollar opportunities in FDI attraction

Although currently, foreign investment in Vietnam is still in a downward trend, many opportunities are ahead.

The SMBC (Japan) deal to buy 15% of VPBank’s charter capital has warmed up foreign investment flows into Vietnam

The deal “warmed up” the Vietnamese market

Unexpectedly, after VPBank sold shares to Sumitomo Mitsui Banking Corporation (SMBC – Japan), with a total value of about 1.5 billion USD, statistics on FDI attraction of Vietnam South have improved significantly.

Accordingly, the total registered foreign investment capital in the first 4 months of the year was estimated at nearly 8.9 billion USD, down only 17.9% over the same period last year, instead of 38.8% after 3 months. Which, investment capital through capital contribution and share purchase reversed spectacularly, from only 1.22 billion USD in 3 months, down 25.5%, jumped to 3.1 billion USD, up 70 .4% over the same period last year.

The billion-dollar deal between VPBank and SMBC, it can be said, has “warmed up” Vietnam’s M&A market and also “warmed up” the flow of foreign investment into Vietnam.

“Foreign investors are still very confident in the growth potential of the Vietnamese market,” said Do Nhat Hoang, director of the Foreign Investment Department (Ministry of Planning and Investment).

Vietnam’s financial and banking market has long been attractive to foreign investors. When the opening of a new 100% foreign-owned bank is being tightened, if you want to penetrate the Vietnamese market, the fastest way is to contribute capital and buy shares of domestic banks.

“Although the world is facing many uncertainties, we believe in the development of Vietnam and believe that VPBank will become a leading bank in Vietnam in the future. SMBC is committed to comprehensively supporting VPBank to achieve this goal,” said Mr. Jun Ohta, CEO of SMBC at the ceremony VPBank signed an agreement on the private placement of 15% of charter capital for SMBC.

That’s not the only billion-dollar opportunity. At the recent Prime Minister’s Dialogue with foreign investors, Deputy Prime Minister Le Minh Khai revealed good news, that right at the conference, there were 3 corporations discussing with the Ministry of Planning and Investment. and Investment, committed to new investment and expansion investment this year, with a total investment capital expected to reach 3.7 billion USD.

These are projects of German, Korean, and Japanese investors, expected to invest in green manufacturing, renewable energy production, and manufacturing in the field of medical equipment. Which, the project of green production and renewable energy is expected to have a capital scale of about 1.5 billion USD; medical equipment production project of about 600 million USD; and energy production and logistics projects of about 1.6 billion USD.

While still waiting for these projects to be realized, another positive news is that Quanta Computer Corporation (Taiwan) has just signed an agreement with the People’s Committee of Nam Dinh Province on the development of a production project. large-scale computer in My Thuan Industrial Park. The project has an investment capital of about 120 million USD, built on an area of 22.5 hectares.

This is Quanta’s 9th factory globally, but it is the first factory of this technology group in Vietnam. Interestingly, Quanta is Apple’s MacBook manufacturing partner, so the appearance of this corporation also means that “big man” Apple is continuing the trend of moving production to Vietnam.

Another information, at the beginning of April 2023, the Thai Binh Provincial People’s Committee also signed a Memorandum of Understanding on studying and investing in the Infrastructure Business and Construction Project of the Pharmaceutical-Biological Industrial Park with the Makara Capital Partners Fund. , Sakae Corporate Advisory and Newtechco Group JSC. Although this project only has an estimated investment capital of about 150-200 million USD, according to the plan, it can attract about 2.8 billion USD of secondary investment in the fields of pharmaceuticals and biology.

Realize opportunities

The opportunity is not small, but the important thing is how to realize these billion-dollar opportunities. The fact, most likely, large-scale projects will again have problems related to the global minimum tax.

Foreign Investment Department, when publishing data on foreign investment attraction in the first 4 months of the year, although it still emphasized the positive factor that the number of newly registered projects increased sharply (65.2%) compared to the previous year. compared with the same period last year, but once again mentioning the fact that “there are signs that large corporations are cautious, considering continuing to make large investments in Vietnam in the context of the impact of the global minimum tax policy.” bridge”.

At the dialogue between the Prime Minister and foreign investors, Mr. Kim Sung Hun, General Director of Amkor Technology Vietnam Company frankly suggested that the Government should soon make a decision as well as measures. to cope with the deterioration of the investment environment when a global minimum tax policy is introduced.

Amkor is a corporation specializing in manufacturing components and semiconductor products and has decided to invest in a 1.6 billion USD project in Bac Ninh, of which phase I is 500 million USD. According to the plan, this factory will come into operation by the end of this year. It is possible that Amkor will also be affected by the global minimum tax, so it is understandable that this investor is worried about the policy response of the Vietnamese Government.

In recent years, investors and economic experts have also warned many times that, if Vietnam’s competition to attract foreign investment is not timely, the competition for foreign investment will be reduced, and the opportunity to welcome the “greatest great” will be. eagle” will be affected.

Not only is the issue of the global minimum tax but many issues related to the investment and business environment of Vietnam are also recommended by foreign investors as the need for further reform. Even Mr. Kim Sung Hun also recommended that Vietnam should come up with clearer and more detailed standards on sub-law documents related to fire prevention and fighting, and relax regulations when censoring. appraise business-specific models of high-tech industries

“The speed of administrative procedures in Vietnam is still slow. Up to 66% of Japanese businesses in Vietnam said that administrative procedures seem to be slowing down, while this figure in ASEAN is only 47%. Therefore, Vietnam needs to eliminate informal charges. Businesses need to carry out administrative procedures smoothly and transparently,” said Mr. Takeo Nakajima, Chief Representative of the Japan Trade Promotion Organization (JETRO) in Hanoi.

Regarding the global minimum tax issue, the Korean Business Association in Vietnam (KoCham) suggested that Vietnam should redirect incentives based on cost, instead of based on income as in the past, including incentives in cash, support for activities such as R&D, human resource training, etc.

The issues of approving fire prevention and fighting infrastructure, or the licensing mechanism for foreign workers are also problems that need to be resolved so that businesses can rest assured to expand their investment and business.

Source: Investment Newspaper