While public investment has risen sharply, private investment (including FDI) has fallen. New measures must be put in place to restore growth.
>> The Prime Minister stresses the importance of public investments
>> A new flow of foreign direct investment expected in 2023
>> Hanoi applies synchronous mechanisms and policies to attract foreign investment
| To consolidate its development, Vietnam must eliminate as soon as possible the obstacles to the reception of quality investments. |
| Photo : Mekongasean.vn/CVN |
During the first two months of 2023, while public investment has seen a strong increase, private investment (including foreign direct investment) has fallen. New measures must be put in place to restore growth.
As of February 20, foreign direct investment (FDI) disbursed was estimated at around USD 2.55 billion, a decline of nearly 5% compared to the same period of 2022. The investments were directed towards 17 of the 21 sectors of the national economy. The manufacturing industry leads with more than 2.17 billion USD released, followed by real estate with almost 397 million USD disbursed. The manufacturing industry continued to see the greatest number of new investment projects. Of the 39 provinces and major cities into which foreign investors have injected money, Bac Giang is the most attractive province, followed by Ho Chi Minh City, Quang Ninh, and Dong Nai…
“In February 2023, public investment amounted to nearly 30 trillion VND (1.26 billion USD), an increase of nearly 37% year-on-year. Since the beginning of the year, public investment disbursed reached nearly 57 trillion VND (2.4 billion USD), an increase of 18.3% year on year and representing 8.3% of the annual plan. foreseen. Meanwhile, Vietnam attracted only USD 535.4 million in FDI, the lowest level since 2019. Disbursed capital also fell by 4.9% compared to the same period of 2022. The sluggish global economy has prevented foreign investors from expanding their business in Vietnam”says Dô Thi Ngoc, director of the Department of Statistics and the Dissemination of Statistical Information, under the General Statistics Office.
A great effort from the Vietnamese government
According to economist Lê Duy Binh, executive director of the Economica Vietnam center for economic studies, in the context of the slowdown in the world economy, the strong growth in public investment reflects a great effort by the Vietnamese government. However, the growth of the national economy should not depend solely on public investment. It is therefore essential to promote private investment, especially FDI.
“Public investment is seen as a tool to stimulate private investment, especially if it is a public-private partnership. The figures for the first two months of the year do not reflect the health of the Vietnamese economy as a whole, but it proves that this tool is not yet used effectively. In other words, public investment is not yet able to stimulate private investment. This issue needs to be resolved quickly”he believes.
But how ? In addition to improving the investment environment, better supporting businesses and promoting entrepreneurship, economists have suggested stabilizing the market to reassure investors. It is also important to properly determine the priority projects and provide investors with better support to accelerate the implementation of projects. This point of view is shared by Nguyên Hai Minh, vice-president of the European Chamber of Commerce in Vietnam (Eurocham).
“According to European investors, it is by investing in its infrastructure that Vietnam will be able to attract new investments. Thus, the country must do better planning, prepare the ground for investors, promote public-private partnership (PPP) and above all make investment procedures transparent. Currently, no foreign investors participate in the PPP. The main reason is that the incentive policies proposed by Vietnam are not really interesting. However, the construction of roads, logistics, energy and even green infrastructures serving sustainable development are areas of excellence for European companies.”, he observes.
According to the German Chamber of Commerce and Industry in Vietnam, 93% of German companies established in the country wish to continue their activities and many others intend to move their production from China to our country. The optimism of foreign investors proves that despite the slowdown in the flow of investment in the first two months of 2023, the long-term outlook remains positive, given the political stability, the increasingly relevant macroeconomic policies and the strategy. development of Vietnam in the long term…
“German companies are more optimistic regarding the prospects for investment in Vietnam. The policies taken by the Vietnamese government will have made it possible to accelerate the economic recovery following the pandemic”said Dao Thu Trang, head of the market development strategy advisory service at the German Chamber of Commerce and Industry in Vietnam.
Obviously, to consolidate its development, Vietnam must eliminate the obstacles to the reception of quality investments as soon as possible.
VOV/VNA/CVN
