For the first time, Vietnam was named among the top 20 host economies for foreign direct investment (FDI), with a total inflow of US$16 billion.
According to the UN Conference on Trade and Development’s (UNCTAD) World Investment Report 2021, the country rose five places from previous year’s rating to 19th place. With a dip of only 2%, Vietnam remained among the top three ASEAN beneficiaries, while Singapore and Indonesia saw drops of up to 21% and 22%, respectively.
However, the flow of FDI was still substantial because of an increase in investment in electricity projects, such as a $5 billion gas-fired power plant proposed by ExxonMobil (US) and a $2.2 billion coal-fired power plant developed by Thai MNEs in the Quang Tri Economic Zone.
Local investment promotion measures, such as the ability to submit some conflicts between foreign investors and the government to international arbitration, according to UNCTAD, are critical to attracting FDI inflows. The Vietnamese government has increased the list of business lines eligible for investment incentives, as well as published a full list of standards that must be met in order for businesses to be declared high-tech enterprises eligible for tax benefits.
The total FDI pledges to Vietnam fell by 2.6 percent year on year to $15.27 billion in the first half of 2021, but the FDI disbursement rate increased by 6.8% to $9.24 billion.
Currently, Vietnam has 33,787 foreign investment projects with a total registered capital of $397.89 billion, with US$241.1 billion disbursed, accounting for 60.6 percent of the pledged amount.
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