Investment News

DBS Bank: Vietnam continues to be a prominent destination for FDI capital flows in the manufacturing sector




Vietnam's economic growth decelerates in 2023 amid many challenges in the global economy, but this is still an attractive destination for foreign direct investment (FDI) in the manufacturing sector.

 Workers of Samsung Electronics Vietnam Co., Ltd. located in Yen Binh Industrial Park, Dong Tien ward, Pho Yen town, Thai Nguyen province produce smartphones. Photo: Anh Tuan/TTXVN

The above is the content mentioned in the research report of DBS Bank - Singapore's leading multinational banking and financial services group published on July 3.

According to the report, Vietnam's economic growth recovered in the second quarter of 2023 but was still slow due to the impact of the difficult global economic environment.

Specifically, the report points out that Vietnam's exports may increase slightly in the second half of 2023 as the global electronics industry cycle recovers, while Vietnam's domestic service activities and tourism will continue. continue to grow and support the economy.

The report forecasts that the economy will be supported through loose fiscal and monetary policies. In addition, Vietnam's construction industry increased sharply in the second quarter of 2023 thanks to increased public spending, thereby creating improvements in infrastructure, helping Vietnam maintain its competitive advantage and continue to attract investment. long-term foreign investment. However, the tightening of policies by developed economies may constrain global demand for Vietnamese products and overall growth prospects.

According to the report, despite cyclical headwinds, FDI is still a "favorable wind" for Vietnam in the context of global supply chain diversification. The growth of Vietnam's manufacturing industry for export plummeted when the global economy faced many difficulties but showed signs of recovery in the second quarter of 2023. Similarly, the output of exported goods also tends to increase, in which electronics exports are expected to change positively in the fourth quarter of 2023. This item accounts for the largest proportion of Vietnam's exports, nearly 30%.

In addition, the DBS report assesses that Vietnam is still the main beneficiary of the shift in production or co-production thanks to its own favorable factors including competitive costs for a relatively skilled workforce, is a signatory to many free trade agreements (FTA), bright medium-term growth prospects at 6-7% and a growing electronic ecosystem,... Total newly registered FDI capital in the first half in early 2023, it will increase by about 30% compared to the same period in 2022, showing Vietnam's prospects of attracting foreign investment.

The report highlights a sharp increase in new FDI capital flows into the manufacturing sector in 2023, despite global economic difficulties and other restrictions following the COVID-19 pandemic. This trend reflects foreign investors' confidence that Vietnam's long-term potential remains undiminished. DBS experts believe that Vietnam's attractiveness to FDI capital flows is likely to remain intact in the near future.

According to