1. Unlocking Business Success: The Power of Working Capital Turnover
In the first nine months of 2022, Vietnam's economy experienced a remarkable resurgence, with an impressive surge in realized social investment capital. This period saw an estimated capital of 2,130.3 trillion VND, signifying a substantial 12.5% increase compared to the previous year. This remarkable growth is a testament to the robust recovery of production activities and business within the country.
2. Foreign Direct Investment (FDI) Takes the Lead
A standout feature of this surge was the remarkable increase in foreign direct investment (FDI) realized in Vietnam, which witnessed a substantial 16.3% surge compared to the same period in the previous year. This growth in FDI marks the highest increase in the nine months between 2018 and 2022. Furthermore, the ratio of realized FDI to registered capital reached a record-high of 82.3%, demonstrating the appeal of Vietnam as an investment destination.
3. Diverse Capital Channels
In the nine months of 2022, the total realized investment capital across the society reached 2,130.3 trillion VND. This sum was distributed across various channels:
State Capital
State capital accounted for 25.6% of the total capital, reaching 544.9 trillion VND. This represents a substantial 16.1% increase compared to the previous year.
Non-State Sector
The non-state sector contributed significantly, reaching 1,227.1 trillion VND, which is an increase of 10% compared to the previous year.
Foreign Direct Investment (FDI)
FDI sector realized 358.3 trillion VND, marking a remarkable increase of 16.3% compared to the same period in the previous year.
4. Government's Role in Stimulating Investment
The government played a pivotal role in this resurgence by directing the disbursement of public investment capital, aiming to facilitate the quick and sustainable recovery of the economy. Several directives were issued, and six government working groups were established to inspect, urge, and address any difficulties and obstacles in the investment process.
In the first nine months of 2022, realized investment capital from the state budget reached 334.5 trillion VND, equivalent to 58.7% of the annual plan. Although this is a commendable achievement, it falls slightly short of the target of exceeding 65%. Factors contributing to this variance include new projects that required preparation time, sudden increases in construction material prices, and issues in site clearance compensation and resettlement.
5. Adapting to New Challenges
The government adapted its strategies to combat the COVID-19 epidemic's impact, focusing on safe and flexible approaches. This approach aimed to stabilize and develop production, business, and investment, which significantly benefited the economic recovery.
6. Foreign Investment in the Spotlight
As of September 20, 2022, the total registered capital of foreign investors in Vietnam reached nearly 18.75 billion USD. This number represents a 15.3% decrease compared to the previous year, primarily due to a decline in newly registered capital. Specifically:
- Newly registered capital decreased by 43% compared to the same period last year.
- Adjusted registered capital increased by 29.9%.
- The total value of capital contribution and share purchase by foreign investors rose by 1.9%.
It's worth noting that when excluding a significant spike in early 2021, the total registered foreign investment capital in the first nine months of 2022 actually increased by 5.74% compared to the previous year.
7. Increasing Foreign Investment Projects
The number of projects registered for foreign investment increased significantly in the first nine months of the year:
- 1,355 new projects were granted investment registration certificates, marking an 11.8% increase from the previous year.
- 769 projects registered to adjust their investment capital, reflecting a 13.4% increase.
8. Leading Investors
Among the 63 countries and territories with newly licensed investment projects in Vietnam during this period, Singapore was the largest investor, contributing 1.45 billion USD, followed by Denmark with 1.32 billion USD, Japan with 927.5 million USD, Korea with 749.1 million USD, and China with 735.3 million USD.
9. Record-High Realized FDI
The realized FDI investment in Vietnam in the first nine months of 2022 reached a record-high of 15.43 billion USD, marking a 16.3% increase compared to the previous year. The high ratio of realized FDI to registered capital for the period 2018-2022 reached 82.3%, underscoring foreign investors' confidence in Vietnam's business environment.
10. Positive Changes in Investment Laws
The Investment Law of 2020 brought several positive changes, such as the removal of unnecessary administrative procedures, support for start-up investment projects, and simplification of approval processes for investors of large projects. These changes contributed to reforming administrative procedures and promoting investment.
11. A Bright Economic Outlook
Vietnam is poised to be one of the fastest-growing countries in Southeast Asia in 2022 and 2023, according to international organizations like Moody's, the World Bank, the IMF, and the ADB. This optimism is based on the positive economic indicators seen in the first nine months of 2022.
12. Striving for Excellence
As Vietnam enters the final quarter of 2022, it faces crucial tasks to meet its socio-economic development goals for the year. This includes an emphasis on promoting the disbursement of public investment capital.
The Prime Minister's Directive No. 17/CT-TTg, issued on October 5, 2022, accelerates the allocation and completion of investment procedures for medium-term public investment plans for 2021-2025. The Ministry of Planning and Investment has proposed eight solutions to expedite public investment capital disbursement in the last months of 2022, demonstrating a strong commitment to meeting the government's targets.
13. Positive Business Environment
A survey conducted by the Ministry of Planning and Investment in collaboration with the Vietnam Business Forum Alliance in September 2022 revealed that over 90% of enterprises achieved medium to high business efficiency and financial status. Most businesses expressed optimism about Vietnam and planned to expand their investments in 2023. The government's production and business support policies were also highly rated, further fostering a positive business environment.
Additionally, the Ministry of Planning and Investment is working on criteria for evaluating the effectiveness of foreign investment in Vietnam, with a focus on attracting large-scale projects, high technology, innovation, pervasiveness, and high-added value, contributing to the country's sustainable socio-economic development.
14. Attracting Global Confidence
The remarkable improvements in the business environment, production, investment, and international trade in the first nine months of 2022 have gained international recognition. Foreign investors are placing their trust in Vietnam's investment environment, paving the way for promising foreign investment in the final months of 2022.
In conclusion, Vietnam's remarkable economic performance in the first nine months of 2022 demonstrates the country's resilience, adaptability, and commitment to creating a conducive environment for business and investment. The positive outlook for the economy and foreign investment reaffirms Vietnam's status as a compelling destination for global investors.
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Q&A
Question 1: What is capital, and what are the primary categories of capital?
Answer 1: Capital is a broad term that encompasses various forms of financial resources and assets. There are three primary categories of capital:
- Financial Capital: Includes money, investments, and other liquid assets.
- Human Capital: Represents the knowledge, skills, and expertise of individuals.
- Physical Capital: Refers to tangible assets such as machinery, equipment, and real estate.
Question 2: How do businesses use capital, and why is it essential for their operations?
Answer 2: Businesses use capital to finance their operations, invest in assets, and fuel growth. Capital is essential for several reasons, including funding startup costs, expanding facilities, hiring talent, and covering day-to-day expenses. Effective capital management is vital for business success.
Question 3: What role does capital play in personal finance, and why is it important for individuals?
Answer 3: In personal finance, capital represents the financial assets and resources individuals have at their disposal. It plays a critical role in achieving financial goals, such as buying a home, saving for retirement, and building financial security. Managing personal capital wisely is essential for long-term financial well-being.
Question 4: How can individuals and businesses enhance their capital management skills?
Answer 4: Enhancing capital management skills involves setting financial goals, budgeting, saving, investing, and making strategic financial decisions. Individuals can seek financial advice, save regularly, and diversify investments. Businesses can assess their capital needs, optimize cash flow, and explore financing options for growth.
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