Foreign Direct Investment in Vietnam in High Gear

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10987405545_2ae197f637_zJanuary 25th 2016.

By the end of 2015, there were over 2,000 foreign direct investment projects in Vietnam with total capital of US$15.6 billion according to the General Statistics Office, a 12.5% YOY increase.

Samsung Electronics HCMC CE Complex, one of the bigger FDI projects in Vietnam after receiving a license to add US$600 million last year, has lifted the total investment for Samsung in Saigon High-tech Park to US$2 billion. Upon completion, it will be one of Samsung’s four biggest plants.

“Foreign capital flowing into Vietnam in the context of deep integration is a very good sign that can help the market become more competitive and force local enterprises to reform and gain more market share,” economist Dinh The Hien stated. Projects like Samsung’s investment are expected to increase Vietnam’s local supply systems, increase competitive ability to join the global supply chain, and increase their workforce productivity.

However, with the increase in FDI, smaller domestic companies must react in response to foreign goods coming into Vietnam as competition. Local enterprises that do not react well will most likely not be able to compete and will need to stop operations. An example would be the retail industry. Many Korean, Japanese, and Thai retail groups have arrived in Vietnam and threaten Vietnam’s share of their own market.

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