The processing and manufacturing industry was the top recipient, accounting for nearly $17.1 billion or 62.6 percent of the total FDI capital. This influx of investment presents significant opportunities for supporting industries to supply components, materials, and services to these foreign-invested firms.

The Ministry of Planning and Investment’s figure indicates that Singapore ranks first in total investment in Vietnam, surpassing $7.79 billion which makes up nearly 28.6 percent of all FDI capital. This amount represents a 61.3 percent increase compared to the same time frame in 2023. Following Singapore, China invested over $3.61 billion representing 13.3 percent of the overall capital, an increase of 5.4 percent from the previous period.

Currently, Bac Ninh is the leading province in attracting FDI capital with $4.7 billion accounting for 17.2 percent of the total FDI capital of the country, 3.15 times higher than the same period. Ho Chi Minh City has returned to second place with nearly $2.1 billion accounting for 7.7 percent of the total registered capital.

Deputy Head Tran Viet Ha of the Management Board of Export Processing Zones and Industrial Parks of Ho Chi Minh City, stated that these figures highlight Vietnam in general and Ho Chi Minh City in particular, as ongoing attractive destinations for foreign investors, especially in the processing and manufacturing sectors.

In response to the surge in investment, numerous domestic enterprises have significantly scaled up their operations to secure a more prominent position within global supply chains. 

The Ho Chi Minh City Department of Industry and Trade has confirmed a sustained recovery and positive growth trend in the city's industrial production index (IIP).

In the first 10 months of the year, the IIP index was estimated to increase by 6.9 percent over the same period. In particular, the processing and manufacturing industry increased by 6.8 percent.

With growth momentum, actual data from the market show that many supporting industry companies have entered the global supply chain with various products or increased value.

Director Huynh Van Teo of Nhat Minh Design and Manufacturing Company, stated that he is collaborating with Isgec, the supplier of the stamping machine line. Concurrently, he is engaged in the production and supply of metal tools, which encompass drill bits, cutting pieces, tool holders, measuring tools, and center drills, for various international corporations that manufacture end products, including Mitsubishi, Okazaki, Magafor, Nidec, and Fuji Seiko.

Another company CNS Amura Precision has affirmed its supply capacity when owning thousands of product models of all kinds specializing in supplying to Japanese and European partners.

Vietnam presently boasts approximately 2,000 enterprises engaged in the production of supporting industry products. Among these, 5 percent-10 percent possess the capability to manufacture products, mechanical components, and plastic molds that have competitive advantages for export to markets in the United States, Japan, and South Korea.

These companies serve as tier 1 suppliers for numerous foreign-invested corporations that manufacture final products domestically. In Ho Chi Minh City specifically, this sector consistently represents a significant portion of the city's economic growth framework. Since 2016, the average growth rate of these enterprises has been 7.83 percent, reflecting their substantial efforts to advance.

Enhancing the supporting industry and achieving a profound integration into the global supply chain extends beyond merely fostering industrial growth. It serves as a crucial basis for enticing FDI to both enter and remain in the Vietnamese market. As reported in Ho Chi Minh City, there have been 197 newly registered projects this year, amounting to a total capital of $1.1 billion. 

Additionally, there have been 143 instances of increased investment capital totaling $220.7 million along with 178 foreign investors contributing capital and acquiring shares, which collectively amounts to $208.2 million. 

The robust growth of the supporting industry in recent years has generated considerable interest in attracting foreign investment. An increase in the share of domestically produced supporting industry goods will enable foreign-invested companies to reduce risks associated with disruptions in the global supply chain. This insight was highlighted by a representative of the Japan External Trade Organization, who noted that it serves as a significant lesson learned from the events of 2020.

About companies that make supporting industry products, lots of them have filled their orders from now until the end of the first quarter of 2025. Still, these companies need to work on boosting their capacity to ramp up production to handle big orders and achieve greater value.

Chairman Do Phuoc Tong of the Ho Chi Minh City Mechanical and Electrical Association stated that the limited competitiveness of Vietnamese enterprises, in comparison to regional counterparts manufacturing similar products, can be attributed to insufficient capital resources. 

Over 90 percent of the companies engaged in the production of supporting industry products are classified as small and medium-sized enterprises. These businesses face significant challenges in obtaining loans, primarily due to their inability to provide adequate collateral.

Moreover, domestic enterprises have been burdened by persistently higher investment loan interest rates than their regional peers, severely undermining their production capabilities and market competitiveness.

Therefore, while embracing the wave of foreign investment into Vietnam, especially Ho Chi Minh City, it is imperative to prioritize the urgent fortification of the capacity of domestic supporting industry enterprises.

Regarding this issue, Deputy General Director Nguyen Quang Thanh of Ho Chi Minh City State Financial Investment Company, said that in order to support enterprises in increasing their production capacity, the city has allocated VND1,500 billion of the budget for the Investment Stimulus Program. Accordingly, enterprises will have access to a loan source of VND200 billion and enjoy a loan interest rate support of up to 100 percent. This is a solution to support improving the production capacity of enterprises in the city, including the supporting industry.

Source: SGGP News