Foreign Direct Investment inflows into Vietnam update in July

The Foreign Investment Agency (Ministry of Planning and Investment) recently released information about the situation regarding attracting foreign direct investment (FDI) in the first seven months of 2022. As a result, foreign investors made $15.41 billion in investments in Vietnam, which is 92.9% more than they did during the same time in 2021.

Decrease in Registered Capital, Increase in Adjusted Capital

Newly registered foreign direct investment capital totaled $5.27 billion, a 43.5% decrease in capital from the same period last year; contributed capital to purchase shares totaled $2.58 billion, a 25.7% increase; and additional registered foreign direct investment capital totaled $7.24 billion, a 59.3% increase over the same period in 2021.

However, according to the Foreign Investment Agency, realized investment capital for foreign investment projects in the seven months of 2022 totaled $11.57 billion, up 10.2% from the same period in 2021 and up more than 1.3 points from the previous six months.

According to the Foreign Investment Agency’s representative, businesses are continually increasing, maintaining, and regaining production. This demonstrates that foreign investors have a lot of faith in Vietnam's standing in the global supply chain. 

It is believed that newly registered capital has not fully recovered following the interruption caused by measures to stop the spread of COVID-19, which is why newly registered foreign direct investment capital decreased while registered capital increased significantly in 7 months.

Meanwhile, adjusted capital continues to increase strongly. Although the growth rate in the number of projects with adjusted capital was slow compared to the first months of the year, the average scale of capital adjustment per project was relatively high compared to the same period last year. In particular, many projects for manufacturing electronic and high-tech products have had their capital raised on a large scale in just 7 months.

Top Recipient Sectors of FDI Inflows in July: Processing and Manufacturing Continues to Lead

Also, according to the Foreign Investment Agency, in the past 7 months, foreign investors have invested in 18 industries out of a total of 21 national economic sectors.

Processing and manufacturing continues to lead, with a total investment capital of over $10 billion, accounting for 64.3% of the total registered investment capital. The second place is real estate, with a total investment capital of over $3.21 billion, accounting for nearly 20.7%.

Next, in turn, are the branches of professional activities in science and technology; information and communication, with a total registered capital of nearly $526.2 million and $465 million, respectively. 

Counterparts and Locations Attracting FDI

There were 88 countries and territories investing in Vietnam in the first 7 months of 2022. Singapore leads the list with a total investment capital of over $4.3 billion USD, using 27.7% of the total investment capital in Vietnam, down 27.3% over the same period in 2021. South Korea ranks second with nearly $3.26 billion, accounting for nearly 21% of total investment capital, up 48.2% over the same period. With the Lego project, with a total investment of over $1.3 billion, Denmark continues to rank third with a registered investment capital of nearly $1.32 billion, accounting for 8.55% of the total investment capital.

Foreign investors have invested in 51 provinces and cities across the country in the first 7 months of 2022. Binh Duong leads the way with a total registered investment capital of nearly $2.6 billion, accounting for 16.7% of the total capital. registered investment and increased 94.9% over the same period in 2021. Ho Chi Minh City ranked second with a total investment capital of over $2.43 billion, accounting for 15.6% of total capital, up 36.5% compared to the same period. Bac Ninh ranked third with a total registered investment capital of over $1.68 billion, accounting for 10.8% of total capital and increasing more than 2.8 times over the same period in 2021.

Foreign investors still focus on investing in big cities with convenient infrastructure, such as Ho Chi Minh City and Hanoi. Ho Chi Minh City leads in the number of new projects (40.2%), the amount of capital contribution to buy shares (67.8%) and ranks second in the number of projects with capital adjustment (14, 7%).

Future Expectations

The analysis team from VNDirect predicts that as Vietnam accelerates its economic opening and many international flights resume operations, total registered FDI capital will recover in the following two quarters.

In addition, Vietnam still benefits from foreign multinational companies pursuing the China +1 strategy and diversifying into Vietnam due to competitive labor costs, proximity to China, and the country’s political stability. A portion of the production lines at some of the biggest technology companies in the world are also soon to be relocated to Vietnam.

The outlook for FDI in Vietnam for the final two quarters of 2022 is still uncertain, but the early indicators point to a bright future for investment projects in this alluring and secure market. For more insights on the FDI situation in Vietnam, contact us now.