Top FDI source China pours over $56 billion into Vietnam with nearly 5,000 projects

By Bach Duong   May 4, 2016 | 05:05 pm GMT+7

China, including Taiwan, Hong Kong and Macau, is the largest foreign investor in Vietnam in terms of total capital with more than 4,759 projects worth up to $56.7 billion, mainly focused on the processing and manufacturing industries.

According to the Foreign Investment Agency under Vietnam's Ministry of Planning and Investment, average investment in Chinese projects is around $12 million, while the nationwide average is $19 million.

Taiwan accounts for 2,478 projects with total investment capital of nearly $31 billion, leaving behind the mainland with only 1,296 projects worth close to $10.2 billion.

Regarding the number of investment projects, South Korea ranks top with 4,970 projects, but its total investment capital is smaller than China's at $45.2 billion.

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China invests mainly in the construction, processing and manufacturing industries in Vietnam. Photo by VnExpress

China’s investment concentrates on the processing and manufacturing industries in Vietnam, with numerous gas, water and power production and distribution projects. The following priorities are construction and real estate.

Nations and territories with the largest FDI investment in Vietnam as of December 31, 2015

Nations/territories Project No. Investment capital

China:

-Taiwan

-Hong Kong

-Macau

4,759

2,478

975

10

$56.7 billion

$31 billion

$15.5 billion

$57 million

South Korea 4,970 $45.2 billion
Japan 2,914 $38.9 billion
Singapore 1,544 $35.1 billion

The investment methods chosen by Chinese firms are mainly direct investment with wholly invested capital projects or under Build-Operate-Transfer (BOT), Build Transfer (BT) or Build-Transfer-Operate (BTO) agreements.

Chinese investment spreads across Vietnam. In the north of the country investors target strategic locations with good infrastructure and transport near the border with China.

Ho Chi Minh City, Binh Thuan, Ha Tinh, Dong Nai, Binh Duong, Lao Cai, Hai Phong and Quang Ninh are currently the top attractions for Chinese investors.

In its thirst for energy and materials, China has been strengthening its foreign investment in recent years. Private Chinese enterprises are scouting for new markets, and Vietnam is an enticing destination. Investors anticipate that more investment capital will pour into Vietnam in the future.

Large Chinese investment projects in Vietnam:

- Hung Nghiep Formosa Ha Tinh Steel Limited Company. Iron and steel production, trading, port business, coal clinker, cement manufacturing. The total investment in Phase 1 was $10.5 billion and this will be the largest iron and steel project in Southeast Asia.

- Vinh Tan 1 Thermal Power Project in Binh Thuan. The plant will be constructed over four years under the BOT model with investment capital of $2 billion.

- Hung Nghiep Formosa Dong Nai Textile Limited Company project in Nhon Trach Industrial Park, Dong Nai province. The project aims to build textile, polyester, spinning, yarn and fiber facilities, and a water plant with investment capital of $1 billion.

- Texhong Group's textile, polyester, spinning and fiber facilities in northern provinces worth over $1 billion.

Other large Chinese projects include the Viet Luan tire project worth $400 million in Tay Ninh province, and the Tan Cao Tham rubber processing plant and the Vietnam-China Mining and Metallurgy project in Lao Cai province, both worth $337.5 million.

China may be the largest FDI investor in Vietnam, but many projects have gained in notoriety, including Phase 2 of the Thai Nguyen iron and steel plant extension (over $360 billion), the Cat Linh- Ha Dong urban railway project and the Da River water pipeline project.