FDI sector affirms key role in Vietnamese economy

Since the Foreign Investment Law was promulgated, foreign invested enterprises (FIEs) have continuously developed to make a significant contribution to transforming the country’s economic growth model and move towards the orientations for industrialisation and modernisation, thereby accelerating the economic integration process and enhancing the country’s position in the international arena.

Pivotal role in national economy

In fact, the FDI sector’s boost to economic growth has increased from 21.52% in the 2011 - 2015 period to 25.1% in the 2016 - 2020 period. In 2021, due to the impact of the COVID-19 pandemic, the sector’s contribution witnessed a downward trajectory, accounting for 14% of the national economy.

The proportion of FDI contributions to the country’s total export turnover has increased rapidly over the years, from just 30% in 1997 to 65% in the 2011 - 2015 period, and 71% in the 2016 - 2020 period.

FIEs have served to accelerate the transition from an economy slipping into a continuous trade deficit to one recording a trade surplus for many consecutive years, racking up a trade surplus of US$33.845 billion, US$28.5 billion, and US$41.9 billion in 2020, 2021, and 2022, respectively. Its major exports have made inroads into demanding markets such as the United States and the European Union.

These important gains have helped create a driving force in promoting domestic production and gradually turning Vietnam into one of the world's leading exporters with an export scale ranking 20th globally, according to the 2022 report by the United Nations Conference on Trade and Development (UNCTAD).

The country ranked second in ASEAN, behind Singapore, and 17th in terms of export of processed and manufactured industrial goods in 2019. It was listed among the group of the top 10 exporting countries in the world for many products such as textiles, footwear, rice, and mobile phones. Notably, up to 95% of industrial and electronics exports are sourced from FIEs.

The sector’s export activities have diversified products, changing the structure of export goods towards modernity, as well as expanding export markets to more than 200 countries and territories.

Furthermore, it has also contributed positively to the state budget, with a ratio of 12.65% in the 2011 - 2015 period and 13.8% in the 2016 - 2022 period.

In addition, the FDI sector has generated jobs, improving the quality of human resources, and bringing a positive income to workers. statistics show FIEs created 2.1 million jobs, 3.2 million in 2015 and 4.59 million in 2021.

Technology absorption and technology transfer

In recent times, through FDI projects, several industries such as post and telecommunications, banking, oil and gas, construction, and transportation have all absorbed advanced technologies from the world.

FIEs have enabled the creation of many high-quality products, thereby better meeting the market demand and rapidly raising export turnover of products such as computers, smartphones, and household electronics and mechanical engineering.

Most notably, in the field of high technology, FIEs developed a greater presence at high-tech parks across the country. Among them, after 15 years of establishment the Saigon High-Tech Park boasts about 130 investment projects with a total registered capital of nearly US$7 billion, attracting the presence of several of the world's leading giants such as Intel, Microsoft, Nidec, Sanofi, Nipro, and Samsung.

According to the latest preliminary statistics compiled by the General Department of Vietnam Customs, during the nine-month period the FDI sector’s total import-export turnover reached more than US$341 billion, down 11.9%.Despite enduring a sharp decline, FIEs still account for a larger proportion to the country's total import-export turnover at 68.8%.