Vietnam expects foreign investment to hit record $16 billion this year: report

By Vi Vu   August 4, 2017 | 07:00 pm GMT+7
Vietnam expects foreign investment to hit record $16 billion this year: report
An employee (L) holds a smartphone as she is on the way to work at the Samsung factory in Thai Nguyen province, north of Hanoi. Photo by Reuters

Cheap labor continues to be a magnet for foreign investors.

Actual foreign direct investment flowing into Vietnam is forecast to rise to a record high this year as the country continues its efforts to improve the economic climate, an official has said.

Dang Huy Dong, deputy minister of Planning and Investment, was quoted as saying in a Bloomberg report that disbursed FDI will exceed $16 billion this year, and pledged investment will reach $28 billion.

“FDI growth is very impressive so far this year and we expect it to continue,” he said. The country received $15.8 billion of actual investment last year, which was up 9 percent from 2015, according to the ministry.

Dong said the government would continue to improve the business environment as it aims to draw more investment into areas including exports, energy and high-technology.

The fate of the Trans-Pacific Partnership, the biggest trade deal Vietnam has ever engaged in, is hanging in the balance following the U.S. withdrawal.

But Vietnam is shrugging off the uncertainty as its low wages and young workforce continue to play an effective investment magnet, Bloomberg said.

FDI inflow into Vietnam rose 6.5 percent in the first half of this year to $7.72 billion, according to figures from the ministry.

Pledges for new projects and additional investment were up nearly 55 percent on-year at $19.22 billion, with nearly half heading to the manufacturing and processing industries.

Vietnam’s Prime Minister Nguyen Xuan Phuc has established a board of experts, including economists from France, Japan, Singapore and the U.S., who will advise him on economic matters.

He also expressed support on Wednesday for a draft law that aims to double foreigners’ home ownership terms in Vietnam to 99 years in special economic zones.

The government has set an economic growth target of 6.7 percent for this year, one considered ambitious by many experts, especially after a relatively sluggish first six months. The IMF and HSBC have revised their growth forecasts for Vietnam down to 6.3 and 6 percent, respectively.

The central bank cut key policy interest rates for the first time in three years last month to spur growth.