Expand FDI capital into high-tech fields

Vietnam is becoming a “convergence point” of the world’s technology “giants” with projects worth hundreds of millions of dollars, even billions of dollars…

FDI capital flows into Vietnam over the past many years have been “creating” a new trend, which is focusing on green, clean technologies and fields with high technology content. Not only are startup projects in financial technology, education, and artificial intelligence attracting tens of millions of dollars in capital, Vietnam is also becoming a “convergence point” for technology “giants” world with projects worth hundreds of millions of dollars, even billions of dollars…

From the perspective of FDI capital poured into startups, developments in venture capital activities over the past 10 years show that investment in Vietnamese startups has had strong developments. From having only a few deals with a total value in 2013 of only about 10 million USD, the amount of investment capital began to increase sharply in the following years, especially from 2019 and peaked in 2021 with 165 deals with total value up to 1,442 billion USD.

ATTRACT CAPITAL INTO THE FIELD OF FINANCIAL TECHNOLOGY, EDUCATION, AND ARTIFICIAL INTELLIGENCE

However, this number has decreased over the past two years. In the current uncertain global economic context, venture capital activities in Vietnam have slowed down, marking a decrease for two consecutive years since 2021. In the first 9 months of 2023, the total value of The deal decreased by 13%, reaching only 427 million USD. This trend is more clearly shown in the sharp decrease of 40% in the number of deals, reaching the lowest level since 2018 with 56 recorded transactions.

According to data reported by Do Venture and NIC, except for later-stage investment rounds, the number of transactions has also decreased significantly in deals with small and medium capital call sizes, with the most significant decrease. is 50% in deals worth less than 500 thousand USD. The number of transactions in the range of 10 – 50 million USD decreased significantly. This trend shows the increasing presence of “mature” technology companies in Vietnam’s startup ecosystem.

According to Ms. Le Hoang Uyen Vy, co-founder and CEO of Do Ventures, in the current challenging context, raising capital is becoming increasingly difficult as investors are very cautious with disbursement decisions. Along with the decrease in the number of deals, investment value also decreased clearly in early-stage investment rounds, showing the caution and rigor of investors even with large-scale investments. small. While the average value of Pre-A and Series A rounds continued to increase, the average value of Series B rounds decreased by 44%. This shows the strong impact of shrinking capital markets on growth companies.

Talking about the “taste” of foreign investment funds in 2024, Ms. Nguyen Ngoc Huong Thao, representative of AVV Investment Fund, said that in a young market like Vietnam, almost all industries will opens up many opportunities for startups to develop and attract investment capital. However, each investment fund has its own preferences and priorities in choosing.

“Some sectors always receive priority attention from many investment funds, especially due to the size of the market and the favorable times they bring to startups, for example the financial technology sector. , educational technology, as well as startups using artificial intelligence to digitize traditional industries, are all potential areas that will attract strong attention from investment funds in 2024 and beyond. next time,” Ms. Thao said.

Startups’ mobilization of capital from investors in 2024 from foreign funds may still face many difficulties. Ms. Hoang Thi Kim Dung, Country Director of Genesia Ventures Vietnam, hopes that startups will “focus more inward” to survive, which means optimizing costs and diversifying revenue sources, to ensure business cash flow. “Startups will need to focus on core products, bringing real value to convince customers to come and stay, instead of pursuing the strategy of “burning money” to get customers at all costs,” Ms. Dung shared.

As for startups, focusing on core products is still considered a key factor to attract investment capital flows, especially from large-scale foreign funds. Mr. Tran Hoai Van, Chief Operating Officer (COO) of Actable AI (an AI startup founded by a team of Vietnamese people in the UK and developing products for different markets including Vietnam) said. : in fact, current investment is taking place on a global scale.

“It is important that businesses have an effective business model that meets market needs and has the ability to penetrate new markets. At that time, investment capital will no longer be such a big problem. Therefore, it is necessary to find business models suitable for specific markets, such as virtual assistant projects customized for Vietnam’s needs,” Mr. Van emphasized.

FDI TREND IN GREEN, CLEAN PROJECTS WITH HIGH TECHNOLOGY CONTENT

In addition to capital sources in the field of startups, in the field of technology, especially high technology, for many years, especially the period after 2019 until now, when the Politburo officially issued Resolution 50 on orientations to perfect institutions and policies, improve the quality and efficiency of foreign investment cooperation by 2030 (August 2019), FDI capital flows into Vietnam have become more selective, Focus on high-tech fields, spearhead and pervasive industries.

Typically, a series of high-quality FDI projects, such as phone manufacturing, electronic components, and chip manufacturing, have invested in Vietnam. For example, Amkor Group invested 1.6 billion USD in Yen Phong 2 Industrial Park (Bac Ninh) to build a factory to produce, assemble and test semiconductor materials and equipment. This is also Amkor’s largest semiconductor factory in the world (officially put into operation in October 2023).

Previously, in September 2023, Hana Micron Vina (Korea) – an enterprise manufacturing and processing integrated circuit boards used for mobile phones and other smart electronic products – also officially opened its doors. into a semiconductor manufacturing factory of Hana Micron Vina Company in Van Trung Industrial Park, Viet Yen district (Bac Giang). This is the first semiconductor manufacturing project in the North. Hana Micron Vina leaders said that by 2025, the company plans to increase total investment to over 1 billion USD, annual revenue is expected to reach 800 million USD and create 4,000 jobs for Vietnamese workers.

Luxshare-ICT Vietnam Company, part of the Chinese multinational Luxshare-ICT Group, in November 2023 invested an additional 330 million USD to expand its production factory in Bac Giang, increasing the company’s total capital. This in Bac Giang province increased to 504 million USD. Luxshare-ICT is a manufacturer of Airpods and many other devices for Apple. Luxshare – ICT also invested 290 million USD in Nghe An with two projects, Luxshare ICT 1 worth 140 million USD and Luxshare 2 worth 150 million USD in VSIP Nghe An Industrial Park (Hung Nguyen), to produce electronic components.

Another technology corporation, Quanta – a large computer equipment manufacturing corporation from Taiwan (China) – in 2023 also signed with Nam Dinh province an agreement to develop a computer manufacturing and processing project. laptops and desktop computers at My Thuan Industrial Park (My Loc district) with a total expected investment of up to 120 million USD.

In Hai Phong, in June 2023, this province awarded the Investment Registration Certificate to adjust capital increase for the LG Innotek Hai Phong Factory project for the period 2023 – 2025 with a capital of 1 billion USD, increasing the total investment capital. of the project to more than 2 billion USD, to build V3 factory to produce camera modules for export; creating 2,600 more jobs for workers, expected profits of 400 million USD/year and contributing about 100 billion VND/year to the budget. LG Group is the largest investor in Hai Phong with a total investment capital of 7.24 billion USD, accounting for 37% of the total FDI capital of the entire city (as of mid-2023).

Thus, with a series of projects implemented in 2023, along with previous technology “giants” entering Vietnam such as Intel, Samsung,… shows the attraction of foreign investment in the field of technology. promoting technology transfer in Vietnam has been achieving positive results.

Many experts believe that from the practice of FDI capital flows investing in Vietnam in recent times, it can be seen that a new trend has emerged, whereby FDI capital focuses on green and clean technology fields and goes into new fields. fields with high technology content such as chip and semiconductor manufacturing. These are the positive points of FDI capital flows into Vietnam in recent years.

However, the above signs also pose new requirements for Vietnam on human resources issues in the field of high technology and semiconductor industry, requiring adaptive solutions to absorb investment capital flows. High quality from foreign corporations.

In addition, experts also believe that in order to retain large technology corporations, in addition to maintaining macroeconomic stability and appropriate tax, fee, and land incentive policies, Vietnam needs to prepare synchronously. on technical infrastructure of industrial parks, factories, electricity, water, social infrastructure and especially high quality domestic human resources.

Source: vneconomy.vn