By April 20, 2023, foreign investors had contributed nearly 8.8 billion USD in newly registered capital, adjusted and contributed capital to buy shares and buy contributed capital, representing an 82.1% year-on-year rise. Of this amount, the foreign direct investment (FDI) projects accounted for an estimated 5.85 billion USD, which was a 1.2% decline compared to the same period in 2022. The total number of valid projects in the country was 37,065 as of April 20, 2023, with a total registered capital of approximately 445.9 billion USD. The accumulated realized capital of foreign-invested projects amounted to 279.8 billion USD, accounting for 62.8% of the total valid registered investment capital.
Attraction of foreign direct investment (FDI) during the initial four months of 2023.
a. FDI performance:
Realized Capital:
By April 20, 2023, foreign direct investment (FDI) project disbursement had reached over 5.85 billion USD, representing a 1.2% decline compared to the same period in the previous year and a 1 percentage point increase compared to the first quarter of 2023.
Import and Export Performance:
Export: Inclusive of crude oil, the export turnover was estimated at 81.19 billion USD, down by 10.8% year-on-year, accounting for 74.6% of the total export. Excluding crude oil, the total export turnover was 80.56 billion USD, marking a 10.8% year-on-year decline, and contributing to 74% of the country’s total export turnover.
Import: The foreign-invested sector’s imports stood at about 67.1 billion USD, down by 15.5% compared to the corresponding period, accounting for 65.2% of the country’s import turnover.
Despite the contraction of the export turnover in the initial four months of 2023 (down by 0.8 percentage point compared to the first three months), the FDI sector recorded a trade surplus of 14.1 billion USD that includes crude oil, and nearly 13.5 billion USD excluding crude oil. Meanwhile, the domestic sector saw a trade surplus of 8.3 billion USD.
b. Investment registration
By April 20, 2023, foreign investors had contributed around 8.88 billion USD in newly registered capital, adjusted capital, and capital contributions and share purchases, showcasing an 82.1% year-on-year increase. While newly registered capital and capital contributions and share purchases adjusted capital gained, adjusted capital kept declining.
Details:
Newly Registered Capital: The licenses for 750 new foreign-invested projects were approved, worth over 4.1 billion USD, a growth of 65.2% in number and 11.1% in value over the previous year.
Adjusted Capital: A total of 386 projects applied for capital adjustment (up 19.5% year-on-year), with an additional capital of approximately 1.66 billion USD (a 68.6% decrease year-on-year but an increase of 1.7 percentage points over the initial three months and 16.5 percentage points over the initial two months).
Capital Contributions and Share Purchases: Foreign investors made 1,044 capital contributions and share purchases, up 1.8% year-on-year, with a value of more than 3.1 billion USD, which was up 70.4% year-on-year.
By Sector:
Investors directed foreign investments towards 18 out of the 21 sectors of the national economic classification system. The processing and manufacturing industry attracted the most significant funds, accounting for 57.8% of the total at over 5.1 billion USD, but it decreased by 17% year-on-year. The banking and finance sector followed with an investment of over 1.5 billion USD, comprising 17% of the total and increasing 12 times compared to the same time frame in the previous year. The real estate and wholesale and retail sectors garnered 972 million USD (down 65.5%) and 372 million USD (down 44.3%) respectively.
It merits attention that the processing and manufacturing sector had the most number of newly-registered projects (29.9%) and capital-adjusted projects (40.8%). Meanwhile, the wholesale and retail sector led the tally in capital contributions and share purchases (40.8%).
By Counterpart:
Approximately 77 countries and territories invested in Vietnam in the first four months of 2023, with Singapore occupying the top spot as the leading source of foreign investment, with nearly 2.2 billion USD, contributing 27.4% of the total FDI registered in the country, down 29.5% on-year. Japan ranked second and increased by 2.63 times year-on-year, with around 2 billion USD, accounting for 22.1% of the total. China came third with a total registered investment capital of 752 million USD, representing 8.5% of the total and down by 30% on-year. Taiwan (China), Hong Kong (China), Republic of Korea (RoK), and Hong Kong (China) followed respectively.
In terms of the number of projects, the RoK had the most newly-registered projects registered (accounting for 16.1%), turns of capital adjustment (24.4%), and capital contributions and share purchases (28.2%).
By Location:
Foreign investors invested in 46 provinces and cities nationwide in the first four months of 2023, with Hanoi leading the way with a registered capital of over 1.1 billion USD, representing 19.2% of the total and increasing by 2.6 times over the same time in 2021. Bac Giang was ranked second with 1 billion USD, accounting for 11.3% of the total and increasing by 3 times compared to the same period in the previous year. Additionally, Ho Chi Minh City, Binh Duong, and Dong Nai ranked among the top investment destinations.
Ho Chi Minh City remains the leading city in the number of new projects (40.9%), turns of adjusted projects (24.6%), and capital contributions and share purchases.
Assessment of the FDI performance during the first four months of 2023
While there was a year-on-year drop of 1.2% in the registered investment capital of FDI projects compared to the same period last year, it improved when compared to the previous months, posting an increase of 1 percentage point.
After a slight dip in the first quarter, newly registered capital for FDI projects increased by 11.1%. Although the number of new projects decreased when compared to the first quarter of 2023, the growth rate of new projects increased significantly by 65.2% year on year, surpassing the total investment capital. This indicated that small and medium-sized enterprises retained their confidence in Vietnam’s investment environment to expand, while large corporations evaluated their business strategies, taking account of the effect of Global Minimum Tax policy. Although under-1-million USD projects accounted for nearly 70% of foreign-invested projects registered in the first four months of 2023, these projects only added up to 2.2% of the total value.
Cities and provinces that offer a superior infrastructure, reliable human resources, streamlined administrative procedures, and robust investment promotion activities such as Hanoi, Bac Giang, Ho Chi Minh City, Binh Duong, Dong Nai, Bac Ninh and Hai Phong, remain the preferred locations for newly-invested projects.
Despite a decline in the export of the FDI sector, it managed to generate a trade surplus that compensated for the trade deficit of the domestic business sector. The FDI sector, having registered a trade surplus of nearly 14.1 billion USD (including crude oil) and approximately 13.5 billion USD (excluding crude oil), offset the trade deficit of 8.3 billion USD that the domestic business sector reported, thus aiding in identifying a trade surplus of about 5.2 billion USD for the country.
Conclusion
In conclusion, the first four months of 2023 exhibited mixed results for foreign direct investment in Vietnam. While the FDI sector helped the country achieve a surplus in trade balance, newly registered capital decreased in the first quarter, and projects continued to focus on specific locations with advantages. Nevertheless, the growth rate of new projects was larger than total investment capital, indicating continued interest and confidence in Vietnam’s investment environment among small and medium-sized enterprises. Overall, Vietnam remains a favorable destination for foreign investors, and the country’s outbound investments demonstrate its strategic goal to expand its global presence and participate in multinational projects.
(Reference from Ministry of Planning and Investment publish on April 26, 2023)
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