Vietnam stood out as a notable exception in attracting Foreign Direct Investment (FDI) on both the global and regional scales last year. The Southeast Asian economy is expected to continue its strong performance in attracting FDI this year.
Data from the United Nations Conference on Trade and Development (UNCTAD), as reported by Rồng Việt Securities Company (VDSC), showed that global FDI in 2023 increased by 3 percent compared to the previous year, reaching over US$1.365 trillion. This increase was mainly driven by a significant rise in European Union countries’ investments. In contrast, FDI in the Asia-Pacific region, traditionally a major player in global investment, experienced a 9 percent decline, amounting to $849 million. This decline included a 6 percent reduction in China, a 47 percent reduction in India, and a 16 percent reduction in ASEAN countries.
However, Vietnam, Thailand, and Indonesia maintained impressive growth in FDI throughout 2023, with increases of 32.1 percent, 42 percent, and 13.7 percent, respectively. Vietnam led the chart in terms of the recorded FDI amount.
“Vietnam remains an exceptional case in attracting FDI on both the global and regional scales in 2023,” noted VDSC.
Read more: Thailand’s SEC Propels Digital Asset Regulation: Fostering Innovation and Investor Protection
According to the Foreign Investment Agency, under the Ministry of Planning and Investment (MPI), Vietnam’s total registered FDI capital reached $36.61 billion in 2023. The accumulated realized capital of foreign investment projects in the Southeast Asian economy was estimated at $23.18 billion, marking a 3.5 percent increase from the previous year and setting a new national record in FDI disbursement.
The number of newly registered projects in 2023 reached 3,188, a 56.6 percent increase compared to the previous year. Additionally, the number of registered projects with increased capital grew by 14 percent. The average registered capital per new project slightly increased by 3.6 percent compared to 2022.
According to fDi Markets, a global FDI source monitor, FDI into Vietnam’s processing and manufacturing industry accounted for 64 percent of the total registered FDI capital, reaching $23.5 billion, a 39.9 percent increase compared to the previous year.
Energy remained a bright spot in 2023, with large projects including the $1.99 billion Thái Bình LNG Power Plant by Japan, the $1.5 billion photovoltaic cell production project by Chinese Jinko Solar, and the $1.05 billion electronic component manufacturing projects by LG Innotek (South Korea).
As of January 20, 2024, Vietnam’s total FDI capital reached approximately $2.4 billion, marking a 40.2 percent increase compared to the same period in 2023.
Newly registered capital reached $2.0 billion, a 66.9 percent increase from the same period. However, additional registered capital and capital contribution decreased by 23.1 percent and 33.1 percent, reaching $35.4 million and $16.5 million, respectively.
The significant increase in FDI in January 2024 has been attributed mainly to large-scale real estate investment projects.
A major urban development project in Hà Nội with a total capital of $662 million accounted for 53.9 percent of the total registered investment capital attracted in the real estate sector in the first month of the year. Excluding this surge, registered investment capital in the first month of the year was equivalent to the same period in 2023. However, capital for foreign investment projects was estimated to reach $1.5 billion, a 9.6 percent increase.
Thanks to the positive growth in FDI throughout 2023, Vietnam’s FDI disbursement rate has significantly improved. In 2023, FDI disbursement reached $23.2 billion, a 3.5 percent increase compared to 2022.
“Growth in FDI in January 2024 reinforces our view that FDI disbursement may accelerate further due to the large amount of FDI registered in 2023 and multinational companies continuing to diversify their investments out of China. Vietnam remains an attractive investment destination due to its strategic location, various free trade agreements (FTAs), and competitive labor costs. Upgrading diplomatic relations with the United States and Japan will further boost investment in Vietnam,” noted Hà Nội-based VietCap Securities Company.
Read more: New Tax Law for Foreign Banks in Dubai
UNCTAD’s forecast suggests that global FDI flows may experience modest growth in 2024, influenced by predictions regarding inflation and borrowing costs in stable developing markets. However, negative developments, such as political risks, high debt levels in countries, and the risk of declining global economic growth, still overshadow the positive direction. Moreover, in 2024, voters in more than 80 countries and territories (representing over half of the world’s population) are expected to vote in elections, which will also impact global investment.
VDSC experts predict that the prospects for attracting FDI in 2024 will remain positive due to Vietnam’s potential as a destination for the strategic diversification of supply chains by global manufacturers, the country’s trend of positive economic growth, and a stable political environment.
Source: Vietnam News