Doing Business

Updated Vietnam FDI Landscape in the First 8 Months of 2023

Trường Lăng

September 11, 2023

Doing Business

Updated Vietnam FDI Landscape in the First 8 Months of 2023

Trường Lăng

September 11, 2023

In the ever-evolving landscape of global investment, Vietnam has been steadily emerging as a beacon of opportunity. As of the first eight months of 2023, the country has seen a remarkable influx of Foreign Direct Investment (FDI), signaling a growing confidence among international investors. 

In this comprehensive exploration, Viettonkin Consulting unravels the story behind Vietnam’s FDI success, offering insights into what to expect in the nation’s dynamic economic landscape. Join us on this journey as we uncover the highlights of FDI flow into Vietnam, shedding light on the opportunities that lie ahead for investors and the nation’s sustainable growth.

FDI projects

According to the Ministry of Planning and Investment, Vietnam has seen a notable surge in FDI during the first eight months of 2023. As of August 20, FDI registered in the country stood at nearly USD 18.15 billion, marking an impressive 8.2% increase compared to the same period in the previous year. Notably, this growth is attributed to an upswing in new investments and capital contributions, despite a decrease in adjusted investment capital.

During this period, Vietnam attracted 1,924 new investment projects that received official investment registration certificates. These ventures collectively accounted for over USD 8.87 billion in registered capital, signifying a substantial increase of 69.5% in the number of projects and a significant boost of 39.7% in capital compared to the corresponding period in the previous year. This surge underscores the country’s appeal as an attractive destination for foreign investors.

Furthermore, a total of 830 projects pursued capital adjustments, amounting to an additional USD 4.53 billion in capital. While there was a 22.8% increase in the number of projects adjusting their capital, the total capital involved experienced a decrease of 39.7% when compared to the same timeframe. Additionally, foreign investors engaged in 2,268 transactions, which included capital contributions and share purchases, totaling USD 4.47 billion. This signifies a 6.5% decrease in transaction volume but a noteworthy 62.8% increase in capital flow compared to the corresponding period.

Destinations of FDI attractions

According to the Foreign Investment Agency, FDI flowed into 54 provinces and cities across Vietnam during the first eight months of 2023. Hanoi led this surge with a total registered investment capital of over USD 2.34 billion, accounting for nearly 12.9% of the total registered investment capital and experiencing a remarkable 2.89-fold increase compared to the same period in 2022. Following closely was Hai Phong, ranking second with a total registered investment capital of over USD 2.08 billion. Subsequent to these cities were Ho Chi Minh City, Bac Giang, Binh Duong, and more.

Notably, when considering the number of projects, Ho Chi Minh City emerged as the nationwide leader in terms of new projects (39.6%), project capital adjustments (23.4%), and capital contributions through share purchases (67%).

Top FDI attracting Sectors

In terms of sectors, foreign investors directed their investments into 18 out of the country’s 21 national economic sectors during the first eight months of 2023. The manufacturing and processing industry took the lead, with a total investment capital of nearly USD 13 billion, representing approximately 67.8% of the total registered investment capital and witnessing a notable 14.7% increase compared to the same period.

The real estate business sector secured the second position with a total investment capital of over USD 1.76 billion, constituting more than 9.7% of the total registered investment capital, despite experiencing a 47.2% decrease compared to the corresponding period. The financial and banking sectors, as well as professional activities and scientific and technological sectors, ranked third and fourth, with total registered capital reaching nearly USD 1.54 billion (an increase of nearly 63.7 times) and nearly USD 800 million (a 28.9% increase), respectively.

When considering the number of new projects, the manufacturing and processing industry also led in terms of new projects (31.2%) and capital adjustments (56.5%). Wholesale and retail trade topped the list in terms of capital contribution through share purchases, accounting for 42.4%.

Top FDI investors 

During the first eight months of 2023, Vietnam witnessed investments from a total of 100 countries and territories. Among them, Singapore led the way with a total investment capital of over USD 3.83 billion, commanding more than 21.2% of the total investment capital into Vietnam, despite a 15.4% decrease compared to the same period in 2022.

China secured the second position with nearly USD 2.69 billion, accounting for 14.8% of the total investment capital, and experiencing a significant 90.8% increase compared to the same period.

Japan claimed the third spot with a total registered investment capital of over USD 2.58 billion, representing more than 14.2% of the total investment capital, and witnessing a notable 73.1% increase compared to the corresponding period. Following these countries were South Korea, Hong Kong, Taiwan, and more.

In terms of the number of projects, China led in the category of new projects (20.7%), while South Korea took the lead in capital adjustment projects (27.6%) and capital contributions through share purchases (28.7%).

Behind the figures

The influx of USD 18.15 billion in Foreign Direct Investment (FDI) into Vietnam for the first eight months of 2023 can be attributed to several key factors. In August 2023, Vietnam welcomed the Innovation Precision Factory project, valued at USD 165 million, located in VSIP Nghe An. 

This venture, funded by Green-wich Management Limited from China, is set to produce aluminum alloys for the electronics and green energy sectors. It serves as a vital support industry, providing essential inputs for the production of various electronic products such as phone casings, laptop covers, power banks, chargers, and smartwatches, with a designed capacity of 100,000 tons per year. 

The project, spanning 11.78 hectares, is expected to commence operations in October 2024 and is estimated to generate employment opportunities for approximately 1,500 workers.

Additionally, Runergy PV Technology (Thailand) CO.,LTD embarked on a project to manufacture single crystal silicon bars and semiconductor wafers at the Hoang Mai I Industrial Zone, Southeastern Economic Zone of Nghệ An, with a total investment of USD 293 million. The project boasts a designed capacity of 14,635 tons of silicon bars per year and 995 million 182mm semiconductor wafers per year. Their service offerings include silicon bars, semiconductor wafers, and factory space rentals.

Savills Vietnam’s latest report highlighted the appeal of Vietnam as an ideal destination for moving manufacturing facilities beyond China. The report underscored Vietnam’s geographical proximity, skilled workforce, competitive costs, and robustly developing infrastructure. Moreover, investors from South Korea, Japan, Europe, and the United States have affirmed Vietnam’s status as their top investment choice.

During the Vietnam Industrial Property Forum (VIPF) held on August 24, 2023, Deputy Minister of Planning and Investment, Mr. Tran Quoc Phuong, emphasized that despite the rapidly changing, complex, unpredictable global and regional economic context, coupled with numerous difficulties and challenges, Vietnam continues to shine as a beacon on the map of foreign direct investment attraction, thanks to its numerous advantages and incentives.

Over time, more investors will want to come to Vietnam to invest. The reason is that the Vietnamese government has set new standards for industrial zones, particularly in carbon emissions reduction commitments. Vietnam can go even further because these commitments are attracting new investments to Vietnam. For example, Vietnam is implementing a global minimum tax, which is advantageous in attracting new investors.

Bruno Jaspaert, CEO of the DEEP C Industrial Zones complex

What to expect?

At the end of August, Prime Minister Lee Hsien Loong of Singapore paid a visit to Vietnam as part of a series of events organized by both nations to celebrate the 50th anniversary of diplomatic relations and the 10th anniversary of the Strategic Partnership between Vietnam and Singapore. This recent visit has injected fresh momentum into the economic cooperation between the two countries.

Vietnam and Singapore are already engaged in various economic collaborations, spanning infrastructure development, education and training, trade, and investment. In the foreseeable future, Vietnam and Singapore are poised to further intensify their economic cooperation in emerging fields such as climate change mitigation, green economy initiatives, digital transformation, and innovation.

Prime Minister Pham Minh Chinh has signed Decision No. 912/QD-TTg to establish an inter-agency working group to implement the Memorandum of Understanding on Vietnam-Singapore Economic Partnership. This decision is anticipated to provide strong impetus for the agreement’s implementation from the Vietnamese side.

Regarding the digital economy, both countries are set to bolster collaboration in developing and connecting digital governments, digital economies, and digital societies. This includes sharing and linking national databases.

In the realm of green economy, Vietnam and Singapore share common goals, aiming to achieve net-zero emissions by 2050. Both nations are committed to focusing on clean energy and green energy cooperation in the near future.

These are promising areas with substantial potential for collaboration, offering ample room to support the development objectives of both countries.

Final thoughts

The story of FDI in Vietnam for the first eight months of 2023 is one of resilience, innovation, and collaborative spirit. From impressive FDI figures to the diverse sectors drawing investors’ attention, and the strategic partnerships shaping the nation’s future, Vietnam’s economic landscape is in a state of transformation.

As investors from around the world increasingly recognize Vietnam’s potential, the nation continues to pave the way for sustainable development. The strategic initiatives between Vietnam and Singapore in green and digital economies signal an exciting journey toward a more interconnected, innovative, and sustainable future.

In the wake of this FDI surge, one thing is clear: Vietnam’s rise as a global investment hub is not a fleeting moment but a sustained trajectory. For businesses seeking to expand their horizons and investors in search of vibrant opportunities, Vietnam beckons with open arms.

Now, it’s your turn to be a part of this promising future. Seize the opportunity to explore, invest, and grow with Viettonkin Consulting. Our team of experts is here to guide you through the intricate world of international investments, ensuring your journey is marked by success and prosperity.Ready to embark on your investment journey? Contact us today and let’s shape the future together!

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