Vietnam’s FDI: Recapping a 35-year journey.

Over 35 years, Vietnam’s registered foreign direct investment (FDI) has grown to US$524 billion from just US$2 million in 1988.

The three big waves of foreign investment over the past 35 years

By the end of 2022, upwards of 36,000 FDI projects were active with total funds of $441 billion, 57% of which have been disbursed.

In 1988, Vietnam’s economy started a new chapter with its first-ever FDI project in the southern province of Ba Ria – Vung Tau. For the first few years after that, foreign investors were still hesitant, thus projects and capital only trickled into Vietnam.

By 1991, FDI growth sped up, marking the first big wave of foreign investment, with projects and capital value constantly surpassing previous records. Many industry giants flocked to Vietnam to outsource their manufacturing, like Taiwanese footwear producers PouChen and Feng Tay, and Japan’s Honda with its motorbikes.

The FDI market grew cold with the 1998 Asian financial crisis and did not recover until 2002.

In 2006, Vietnam welcomed its first few billion-dollar projects from American chipmaker Intel and South Korean steel manufacturer Posco, gathering a new record of US$10 billion and marking the second big FDI wave for the country.

Total registered FDI then climbed to a new height of US$72 billion in 2008, the same year in which South Korean conglomerate Samsung – now Vietnam’s largest foreign investor, began constructing their first factory in Bac Ninh Province.

The 2008 global financial crisis wreaked havoc on Vietnam’s FDI resulting in actual FDI disbursed fluctuating around US$10-11 billion, much lower than initially committed.

From 2015 to 2019, FDI made a comeback, marking the third big wave of foreign capital, during which FDI did not spike abruptly like in the 2005-2008 period, but grew consistently. The pandemic at the start of 2020 put a halt on cross-border investments, causing FDI to plunge.

After 35 years, South Korea, Singapore and Japan are the three biggest contributors to Vietnam’s FDI.

Top 10 biggest sources of FDI in Vietnam

Since the start of the 2000s, FDI has slowly become one of the pillars of Vietnam’s economy.

At present, FDI contributes 19% to the country’s GDP while providing jobs to 35% of its labor force despite only accounting for 3% of businesses.

Sourse: https://e.vnexpress.net/news/business/economy/recapping-a-35-year-journey-vietnam-s-fdi-4679123.html