Event

48 years after the complete liberation of the South to unify the country (April 30, 1975 - April 30, 2023), Vietnam is increasingly making an impression on international friends by its ability to rise from the ashes of war to make "Asia's Miracle”[1].

Vietnam's economy after 48 years of libration  

Ten years after unification, Vietnam faced difficulties caused by the aftermath of the war. The situation began to improve since Vietnam implemented the "Reform" policy in 1986, with new thinking being applied in the economy and achieving many impressive results. Since the 1990s, Vietnam's GDP has tripled compared to before 1986 and has maintained a stable economic growth rate of about 7.5% per year[2].

From 2020 to 2022, while some countries were still struggling to cope with the COVID-19 pandemic, Vietnam's business activities were getting vibrant again, and Vietnam's economy recovered at a faster rate. Vietnam's socio-economic statistics quickly attracted the attention of the market. GDP in 2022 increased by 8.02% over the previous year, reaching the highest increase in 2011 - 2022 due to the economy's recovery[3].

The role and position of Vietnam are increasingly enhanced in the international arena. With a multilateral foreign policy and diversification of international relations, since becoming a member of the United Nations in 1977, Vietnam has established diplomatic relations with nearly 180 countries and trade relations with more than 160 countries and regions. Vietnam has  shown  its  initiative  and  positivity  in  foreign  affairs  and  international  integration. According to the World Bank (WB) assessment, Vietnam is the most open economy in the world, successfully maintaining a diversified export market. The US is still the largest export market among Vietnam's trading partners, followed by the EU, ASEAN, China, Japan, South Korea, etc.

Not only achieving impressive achievements in economic development, but Vietnam is also increasingly becoming an attractive destination for foreign investors, always among the top emerging economies in Asia in terms of economic growth, the destination of multinational companies and FDI enterprises. As one of the few countries that has succeeded in economic reform and attracting foreign investment, this was primarily achieved when the National Assembly passed the Law on Foreign Investment in Vietnam at the 2nd session of the eighth National Assembly on December 29, 1987. This is considered a historical turning point, the most important legal document formalizing the admission of foreign investment, creating favorable conditions to invite foreign-invested enterprises to Vietnam.

More  than  30  years  later,  the  foreign  direct  investment  (FDI)  sector  is  becoming  an indispensable  part  of  the  economy,  contributing  significantly  to  the  socio-economic development of Vietnam. The structure of the FDI sector in GDP tends to increase gradually from 2005 to the present[4]. In 2005, the FDI sector contributed 15.16% to GDP growth. This number tended to increase steadily until 2008, although there was a slight decrease in 2009 and 2010, but then continued to increase and gradually increased to 20.35% in 2019. This result shows that, The FDI sector is increasingly making important direct contributions to economic growth.

A series of brands of large corporations worldwide have been present in Vietnam, such as Samsung,  Intel,  Microsoft,  Toyota,  Honda,  KFC,  and  Starbucks...  making  significant contributions  to  the  state  budget.  Most  of  these  corporations  are  looking  forward  to continuing to expand and invest in Vietnam for a long time.

The situation of attracting foreign investment in centrally run cities

During the 35-year journey of attracting foreign direct investment (1987-2022), Vietnam has attracted nearly 438.7 billion USD in FDI with 36,278 valid projects[5]. Of these, 274 billion USD has been disbursed, equal to 62.5% of the total valid registered investment capital[6].  According  to  the  Foreign  Investment  Agency  (Ministry  of  Planning  and Investment), this is the first time the gap between registered and disbursed capital is so close. Usually, the disbursed capital is only about 60-70% of the registered capital. Particularly in 2022, it reached nearly USD 27.72 billion, and disbursement reached a record of USD 22.4 billion, up 13.5% over the same period in 2021. Compared to 1991, the amount of FDI registered in Vietnam was 2.07 billion USD, of which realized FDI capital is 428.5 million USD, reaching over 20% of registered capital[7].

Foreign investors have invested in 19 industries out of 21 national economic sectors. The processing and manufacturing industry took the lead with a total investment of more than 16.8 billion USD, accounting for 60.6% of the total registered investment capital. The real estate  business  ranked  second  with  a  total  investment  of  more  than  4.45  billion  USD, accounting for 16.1% of the total registered investment capital. Next were the electricity production and distribution industries; scientific and technological activities with registered capital of more than 2.26 billion USD and nearly 1.29 billion USD, respectively. In terms of the  number  of  new  projects,  the  wholesale  and  retail  sectors,  the  manufacturing  and processing industries, and professional science and technology activities attracted the most projects, accounting for 30%, 25.1%, and 16.3% of total projects respectively[8].

Accumulated up to now, out of 5 centrally-run cities, Ho Chi Minh City led in terms of the number of projects and total FDI capital with 11,598 projects, with a total investment capital of 56.4 billion USD. Hanoi city has attracted nearly 40 billion USD with 7,407 FDI projects. Next was Da Nang City, which has attracted 980 FDI projects with a total investment capital of more than 4 billion USD. Hai Phong City has attracted nearly 860 projects with a nearly 25 billion USD capital. Can Tho City has attracted 85 projects with a total capital of 2.26 billion USD.

Source: Statistics Agencies in localities

It can be seen that the amount of capital to attract investment to Da Nang city is still modest compared to the situation of investment attraction in the capital - Hanoi, and the economic locomotive of Vietnam - Ho Chi Minh City. The number of investment projects in Da Nang is slightly higher than those in the sister city of Hai Phong. Still, in terms of capital, it is only 16% of the capital attracted by Hai Phong. Compared to Can Tho - a city with a long history of development since the 18th century but only became a city directly under the Central Government since 2004, 07 years later than Da Nang city, Da Nang has attracted nearly 12 times the number of projects and twice the investment capital. This shows that Da Nang city needs to focus more on attracting foreign direct investment projects, especially those with large and influential investment capital, to promote further development of the economy.

Remarks on investment attraction of Da Nang

After 48 years since the liberation and 26 years since becoming a city directly under the Central  Government,  Da  Nang  has  constantly  been  shifting  towards  industrialization  and modernization,  rising  to  become  a  modern,  civilized,  and  core  city  of  the  Central  Key Economic  Zone,  becoming  an  attractive  investment  destination  for  domestic  and  foreign enterprises.

Attracting foreign investment began flourishing in 2000 when the City People's Committee issued  Decision  No.  31/2000/QD-UB  dated  April  17,  2000,  to  establish  an  Investment Promotion  Center  to  implement  the  "one-stop  shop”  policy  for  domestic  and  foreign investors. This can be considered a breakthrough in implementing the policy of the City Party Committee and the City People's Committee on improving the investment environment and attracting foreign investment into the city. The situation of attracting FDI into the city in 2001-2005 has had positive changes. Total newly and additionally registered capital reached 390 million USD. There were 54 newly licensed projects with a total registered capital of 338 million USD. The majority of FDI capital focused on the manufacturing sector (reaching US$187.5 million, accounting for 55.47% of total FDI attracted during this period).[9]

In the period 2006-2010, the total newly and additionally invested capital reached 2.22 billion USD. In which, newly registered capital in the city reached 1.88 billion USD, there were milestones with very high investment capital, such as 2007 (832.3 million USD) and 2008 (633.9 million USD). The number of projects and investment scale increased significantly compared to 2001 - 2005. Investment projects in real estate - tourism dominated in this period (15 projects, registered capital of USD 1.21 billion, accounting for 64.37% of the total newly granted capital attracted in this period).

From 2011 to 2015, compared with localities with similar economic conditions, competitive advantages and located in the same region, the investment environment in Da Nang still has a Certain  attractions  for  foreign  investors  in  several  sectors,  such  as  real  estate  -  tourism, logistics  services,  education,  health  care,  and  information  technology.  Da  Nang's  FDI attraction in 2011 - 2015 ranked first in the Central region.

In this period, new and additional investment capital reached 1.82 billion USD, of which newly granted investment capital reached 1,014 million USD. The frozen real estate market has slowed down FDI inflows into this sector. Although the total newly registered FDI capital decreased, the number of projects increased significantly compared to the previous period (224 projects, an increase of 122 projects compared to the 2006-2010 period). The investment capital structure also changed compared to the previous period. At this stage, the wave of investment  into  Vietnam  from  small  and  medium-sized  enterprises  was  developing  very strongly,  most  of  the  projects  had  small  capital,  and  88.85%  of  the  projects  had  a  total investment capital of less than 5 million USD (199/224 projects). New investment projects in this period focused mainly on the service sector and high-tech industry, such as information technology, electronics, precision mechanics, etc., in accordance with the city's orientation for calling investment.

It  can  be  seen  that  investment  in  the  city  began  to  shift  from  the  real  estate  business (accounting for 51.9% of the total registered investment capital during this period) to other sectors, such as the technology industry. In particular, after Da Nang Hi-tech Park (one of the three national multi-functional high-tech parks in Vietnam) came into operation in 2018, the proportion of investment capital shifted to high-tech industry (accounting for 48.16%), real estate, tourism (accounting for 33.83%), services (accounting for 16.4%) and other industries accounting for 0.02%.

In the period of 2016 - 2020, Da Nang City has attracted 530 newly registered FDI projects with a total newly registered investment capital of 1,045.4 million USD (in which, Industrial Parks and Hi-tech Parks have attracted 44 projects with a total investment capital of 507.63 million  USD  and  486  foreign  direct  investment  projects  that  were  investments  outside industrial and hi-tech parks, granted investment registration certificates with a total registered investment  capital  of  537.77  million  USD);  60  projects  increased  in  capital  with  total additional capital of 144.5 million USD; there were 605 turns of capital contribution, share and contributed capital purchase in economic organizations with a total value of 211.8 million USD. The disbursed capital ratio was estimated at 51% to 53%/total registered capital.

Accumulated to March 15, 2023, the city has 980 FDI projects with a total investment capital of over 4.062 billion USD from 45 countries/territories around the world. Investment projects focused  mainly  on  the  manufacturing  and  processing  industries,  high-tech  industries, electronics, precision mechanics, supporting industries, real estate - tourism, trade, medicine, economy,  education,  information  technology,  logistics  ...  in  accordance  with  the  city's orientation of calling for investment. Many large-scale production and business projects have been completed and put into operation, many projects to expand investment scale, increase capacity, increase investment capital, etc., contributing to the city's economic growth.

Foreign direct investment is vital in promoting the city's socio-economic development. These contributions are not only expressed through quantitative statistics such as contributing to positive economic restructuring, the proportion of contribution to the growth rate of GRDP of the whole economy, and the level of contribution to the state budget over the years, export growth rate, the number of employees, labor productivity increased over the years... but also reflected in qualitative indicators such as contributing to improving the competitiveness of enterprises in the city by attracting many projects with advanced technology; management model  and  business  method  were  also  improved,  especially  information  technology application;  contributing  to  improving  the  quality  of  human  resources,  promoting international  integration  and  developing  the  city's  brand,  establishing  development cooperation relations in many fields with other localities and cities.

The  goal  is  that  by  2030,  Da  Nang  will  attract  7  billion  USD  of  investment  capital  for investment  projects  in  the  city  and  focus  on  attracting  investment  in  key  fields  such  as information  technology  and  manufacturing  electrical  components,  electronics,  high technology  (biotechnology,  automation,  and  mechatronics  technology,  new  material technology...), R&D, supporting industries in the field of mechanics, precision mechanics, electricity - electronics ... To achieve the above goal and achieve the following remarks in attracting investment, in the coming time, Da Nang city will need to accelerate construction- investment, and completion of infrastructure in transport, railway station, airport, seaport. In addition to investment in infrastructure development, Da Nang needs to continue to propose and  build  more  mechanisms  and  policies  on  encouraging  investment,  such  as  specific mechanisms and policies to form a financial center, a duty-free zone, policies to develop international yacht centers, policies to train and attract high-quality human resources, etc