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INVESTMENT REPORT SUPPLY CHAIN OF ELECTRICAL EQUIPMENT MANUFACTURING INDUSTRY VIETNAM 9M/2022

The Year of 2022 is the year that the world economy suffers many negative impacts. The consequences caused by the Covid-19 epidemic, the energy and food crisis caused by the Russian – Ukraine war, which pushed up prices and inflation rate, China is still carrying out the blockade measures to prevent the epidemic, which has made the economy during the 9 months of 2022 very bleak. Facing these economic risks, most of the experts forecasts the economy cannot be recovered in the next quarter, global economic growth still has many challenges in terms of politics, epidemics, and inflation, … In that context, the latest forecast of global GDP growth in 2022 will only fluctuate between 2,4%-3,2%.

World FDI is on a downward trend from 2017 to 2021. In 2021, global FDI flows increased by 30% compared to 2020. However, in 2022, global FDI is quite gloomy compared to 2021 due to the impact of uncertainly on investor behavior, risks from supply chain disruptions and the increasing of raw material costs and other risks from political and economic conflicts in the world. Global FDI is forecasted to be flat or down compared to 2021.

China is the largest exporter of electrical equipment in 2021 with 898,9 million USD, followed by Hong Kong with 395,5 million USD. In 6 years (2016 – 2021), China has always maintained the leading position in the export market of the electrical equipment industry. Besides, in terms of import market, in the five years of 2016 – 2020, the US is the leading country in the import market of electrical equipment, but by 2021, China has surpassed and become the world’s largest importer of electrical equipment.

Viet Nam’s GDP growth in the third quarter of 2022 is estimated to increase sharply by 13.67% over the same period last year according to the General Statistics Office (GSO). This is the highest Q3 growth rate over the past decade. In the context of complicated world situation with inflation shocks in many countries at the beginning of 2022 and Vietnam is just in the early stages of post-pandemic growth, the growth figure is very impressive, showing that the economy is thriving very clearly.

In the electrical equipment industry, electric wires and cables are among the most exported products. The export value of electric wire and cable products is still showing a clear growth trend. In 9 months of 2022, the export value of this product has a slight increase compared to the same period in 2021. China and the US are two major export markets of Vietnam in this industry.

Status of investment projects in the electrical equipment industry

Investment in the electrical equipment industry showed a continuous increase before 2020 but decreased during the period of the Covid-19 epidemic, so far there is no sign of a full recovery.

In terms of total investment capital, Vietnam’s electronics industry market records 5.5 billion USD in total registered capital and 339 total projects from 2013 to present and heavily depended on the big players in the industry, especially from FDI capital sources. The good news is in 2019 and 2021 recorded many large-scale capital investment projects. The capital flow over the years has fluctuated strongly, not in a clear increasing direction like the number of projects, but in general, there is an increasing trend. Crucially, DDI capital projects in recent years tend to be more flourish, both in 100% DDI capital projects and DDI-FDI capital joint ventures.

The North attracts the largest scale of registered investment capital and the most projects among three regions, especially in the provinces and cities of the Red River Delta economic region.

In term of the scale of registered investment capital, the registered capital in the electrical equipment industry, especially in large scale projects, is mainly located in the Northern provinces over most of the years. Except in 2019, the amount of capital poured mostly into the Southern provinces. Prominent provinces are Bac Giang, Quang Ninh and Ho Chi Minh city. The Central region has a significant project as Vines factory project in Ha Tinh. In which, processing and assembly projects account for the largest amount of capital.

In terms of the number of investment projects,

The North is the region with the highest concentration of electrical equipment projects followed by the South and the projects has scattered distribution in the Central. Since the Covid-19 epidemic appeared, the number of projects has decreased sharply and there is no prospect of recovery in 2022.

Some of the provinces and cities that attract many projects in the electrical equipment industry include Binh Duong, Dong Nai, Bac Ninh, Bac Giang and Long An. We can observe that among the top 5 provinces that attract the most projects, 3 are from the South. This shows that in terms of attracting the number of investment projects, there is not a clear distinction between the North and the South. But in the South, there are a few main provinces, while in the North, investment locations are selected and distributed more widely.

Vietnam Electronic Components Industry Total production value of global electronic components in 2019 is estimated at x, xxx million USD, down x% compared to 2018. By the end of September 2019, the world electronic components price index reached xx, decreased. x% compared to the highest level in October 2018. The value of industrial production of electronic components in 2019 is estimated at about xxx, xxx billion, up xx% compared to 2018. According to the latest forecast of the Vietnam Electronics Business Association, the consumption level of Electronic products of Vietnam will increase by xx% in 2020. Due to the low labor cost as well as the advantage of position in the local markets and with the explosion of the Internet, developing countries, including Vietnam, have many opportunities to participate in the supply chain of products. electronic products in the global market...