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FDI into Vietnam on the rebound

FDI into Vietnam on the rebound

Wednesday 29, 06 2022
FDI into Vietnam recovered slightly in May, despite the impact of the ongoing conflict between Russia and Ukraine, in addition to the rising commodity prices.

FDI in Vietnam reached over 14.03 billion USD

According to the Foreign Investment Department (under the Ministry of Planning and Investment), as of June 20, 2022, the total newly registered capital, adjusted capital, and contributed capital to buy shares by foreign investors in Vietnam reached over 14.03 billion USD, equaling 91.1% over the same period in 2021.

Foreign investors have invested in 18 industries out of 21 of Vietnam's economic sectors. The processing and manufacturing industry continued to lead with a total investment of nearly 8.84 billion USD, accounting for about 63% of total registered investment capital. The real estate sector ranked second with total investment capital of over 3.15 billion USD, accounting for 22.5% of total registered investment capital. Next are the information and communication industries; professional science and technology activities, with a total registered capital of nearly 442.6 million USD and 408.5 million USD, respectively. The rest are other industries.

Vietnam's economic sectors

In terms of the number of new projects, wholesale and retail, the manufacturing and processing industry, and professional science and technology activities are the industries that attract the most projects, accounting for 30.1%, 25.4%, and 16.5% of total projects.

Foreign investors have invested in 49 provinces and cities across Vietnam in the first 6 months of 2022.

In terms of the number of new projects, foreign investors still focus on investing in big cities with convenient infrastructures, such as Ho Chi Minh City and Hanoi. Specifically, Ho Chi Minh City leads in the number of new projects (40.4%), the number of contributed capital (68.3%), and is second in the number of projects with capital adjustment (14%, ranking behind 16.6% of Hanoi).

Accumulating valid projects until June 20, 2022, foreign investors have been present in all 63 provinces and cities throughout Vietnam. Of which, Ho Chi Minh City is still the leading locality in attracting foreign investment, with nearly 55.2 billion USD (accounting for 12.9% of total investment capital); followed by Binh Duong with nearly 39.6 billion USD (accounting for 9.2% of total investment capital); Hanoi with over 37.7 billion USD (accounting for over 8.8% of total investment capital).

According to the number of projects, Korea is still the partner with investors interested in and making new investment decisions as well as expanding investment projects and contributed capital the most in the first 6 months of 2022 (accounting for 21.3% of the total number of new projects, 35.9% of adjustments and 36.7% of contributed capital).

valid projects

Accumulating valid projects until June 20, 2022, there are currently 139 countries and territories with valid investment projects in Vietnam. Specifically, Korea is at the top with a total registered capital of nearly 79.3 billion USD (accounting for 18.5% of total investment capital). Singapore ranked second with nearly 68.9 billion USD (accounting for 16.3% of total investment capital), followed by Japan, Taiwan, and Hong Kong.

A bright factor against inflation pressure

United Overseas Bank (UOB) of Singapore has just released the Economic Growth Report and the forecast for the next quarter for markets, including Vietnam.

The report maintains Vietnam's 2022 GDP growth forecast at 6.5% and the main inflation rate at 3.7%.

However, inflation may increase to 5% in 2023 due to facing many challenging risks in a scenario where the Russia-Ukraine conflict lasts more than 100 days and the tension and sanctions are not yet reduced.

According to UOB, one of the positivities of the Vietnamese economy is that FDI inflows into Vietnam have increased somewhat in May.

newly registered capital

Accordingly, newly registered capital decreased by 53.4% over the same period last year, but adjusted capital and contributed capital increased strongly by 45.4% and 51.6%, respectively, helping registered FDI capital in the first 5 months of 2022 decrease only by 16.3% over the same period, to 11.71 billion USD.

The amount of registered FDI capital increased sharply in 2021 to 31.15 billion USD is a factor affecting 2022's decline.

The lifting of domestic COVID-19 restrictions and the reopening of international tourism activities have given new life to Vietnam's service sector. UOB expects tourism-dependent sectors such as accommodation and food to grow again in the second quarter of 2022, after nine consecutive quarters of decline.

"Based on the latest data and the difficulties ahead, we keep the GDP growth forecast for Vietnam in 2022 at 6.5%, in line with the Government's plan of 6 - 6.5%. The forecast is based on the premise that GDP growth in the second quarter of 2022 will reach 6% year-on-year and then increase to 7.6% in the third quarter of 2022," the UOB report stated.

 

Compiled by VietnamCredit

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