Nearly 1 billion USDin foreign investment pouring into Vietnam’s green growth sector

According to the 2023 Foreign Direct Investment Annual Report released by the Association of Foreign Investment Enterprises (VAFIE), FDI inflows into green growth areas in developing countries increased by 37% compared with 2022. In Vietnam, FDI companies and local companies have invested approximately US$900 million in green growth-related industries.

On March 26, VAFIE held a release ceremony for the 2023 FDI Annual Report with the theme of "Facing New Challenges and Opportunities - Striving for Higher Quality and Efficiency in Attracting FDI." At the meeting, VAFIE Chairman Professor Nguyễn Mại pointed out that global FDI increased by 3% in 2023 to US$137 billion after a 12% decline in 2022.

Global and Vietnam FDI Trends

FDI in developing countries increased slightly, especially investment in green growth areas increased by 37%. Global capital markets have seen strong growth in green finance, with sustainable bonds growing fivefold in the past five years.

It is worth noting that the flow of FDI in the United States has changed significantly, and many American companies have reduced investment in China; in 2023, China will only account for 1.8% of the United States' overseas investment plans, a significant decrease from 5.2% in 2019.

FDI from developing countries is growing faster than FDI from developed countries.

According to official data, the amount of FDI registered in Vietnam increased to US$3.661 billion in 2023, an increase of 32.1% compared with 2022. However, actual FDI execution increased by only 3.5% to US$2.318 billion.

Key industries and investment growth

FDI attracted by the processing manufacturing industry continues to maintain strong growth, with registered FDI in this field reaching US$2.35 billion in 2023, accounting for 64.2% of the total new registrations.

In Vietnam, green growth-related industries such as renewable energy, solid waste treatment, wastewater and exhaust gas treatment, machinery required for green economy

In fields such as machinery and equipment production, it has attracted approximately US$900 million in investment, which accounts for approximately 2% of Vietnam's GDP, with an average annual growth rate of 10%-13%.

Investment region and country distribution

In terms of FDI attraction, Ho Chi Minh City tops the list with a registered capital of US$585 million in 2023, followed by cities such as Haiphong, Quang Ninh, Bac Giang and Thai. It is worth mentioning that Hanoi has not entered the top five in attracting FDI for two consecutive years.

From a country and regional perspective, Singapore will invest the most in Vietnam in 2023, with a total registered capital of US$680 million, accounting for 18.6% of the total FDI registered capital; followed by Japan, with a total registered capital of US$660 million, accounting for 18.6% of the total FDI registered capital. 17.9%. Hong Kong jumped to third place with a total registered capital of US$470 million; China ranked fourth with a total registered capital of nearly US$450 million.

Attractiveness of industrial parks and economic zones
In 2023, Vietnam's industrial parks and economic zones attracted US$2.77 billion in foreign investment. Compared with last year, new investment projects, adjusted funds and actual FDI have increased. Many regions are working to transform traditional industrial parks into eco-industrial parks to attract more foreign investment.

Investment environment challenges
Although international organizations and foreign investors speak highly of Vietnam's investment environment, there are still some areas that need improvement. For example, administrative procedures are opaque and investment procedures are time-consuming, which increases operating costs; there are shortcomings in infrastructure, especially power supply; there is a shortage of high-quality human resources; and the process of green transformation is slow.

Future strategies and actions
Facing new challenges and opportunities, Vietnam needs to strengthen implementation and take timely actions to effectively implement the 2023 foreign direct investment strategy. This includes improving the investment environment, increasing administrative efficiency, improving infrastructure, providing high-quality human resources, and accelerating the green transformation process. Through these measures, Vietnam expects to attract more high-quality and efficient foreign direct investment to promote sustained economic growth and green transformation.

For more information about real estate projects in Ho Chi Minh City and neighboring provinces, please contact FTT LAND!

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