Vietnam's FDI in January 2023 decreased by nearly 20%, what do experts think about the trend of FDI in the coming time?

Feb 14, 2023

According to a recent report on foreign direct investment (FDI) from the Ministry of Planning and Investment, as of January 20, 2023, the total newly registered capital, adjusted and contributed capital to buy shares, buy shares and buy shares. contributed capital (GVMCP) of foreign investors reached nearly USD 1.69 billion, down 19.8% over the same period in 2022. Realized capital of foreign investment projects is estimated at USD 1.35 billion. , down 16.3% over the same period in 2022.

Accumulated to January 20, 2023, the whole country has 36,458 valid projects with a total registered capital of nearly $441.31 billion. The accumulated realized capital of foreign investment projects is estimated at nearly 275.35 billion USD, equaling nearly 62.4% of the total valid registered investment capital.

It can be seen that, if in 2022 FDI inflows into Vietnam are still very stable (realized FDI is a 10-year high), in January, the FDI figure showed the first decline. Registered FDI in a downtrend is a phenomenon that has appeared since mid-2022.

The more important figure, January realized FDI also showed weakness. However, DSC Securities assessed that the decline could come from investors keeping capital and not investing during the Lunar New Year (the past 11 years, 8 years of FDI implementation decreased in the Lunar New Year). Therefore, investors need to monitor FDI data until the end of Q1 before concluding that the decline in FDI is sustainable.

In addition, although the total registered FDI decreased, the number of newly registered projects increased by 49% over the same period, while the newly registered FDI increased sharply by 300% over the same period (Total registered FDI includes (1) registered FDI). new registration, (2) registration for adjustment, (3) capital contribution to purchase shares).

FDI tháng 1/2023 của Việt Nam giảm gần 20% có phải là một dấu hiệu đáng lo? - Ảnh 1.

According to DSC, although 2023 is a story about the risk of economic recession, Asia is still expected to have good growth (Vietnam's recession in 2009 GDP still grew by 5.4% over the same period). Therefore,  DSC expects the value of FDI into Vietnam to continue to grow in 2023.

As previously shared, Mr. Andrew Jeffries, country director of the Asian Development Bank (ADB) in Vietnam, said that tourism will be a big driving force for Vietnam's economy in 2023. Besides, FDI will continue to be a driving force for Vietnam's economic development in 2023.

According to HSBC, despite the short-term global technology downturn, technology companies continue to invest in Vietnam. The latest development comes from Chinese display maker BOE, a display supplier to both Apple and Samsung, which plans to invest up to $400 million to build two factories. Meanwhile, the sentiment of European businesses also shows a similar optimistic view, shown in the latest quarterly survey of the European Business Association (Eurocham) in Vietnam. In fact, although total FDI declines in 2022, FDI in the manufacturing sector remains solid, further highlighting Vietnam's competitive advantage in this sector.

In an analysis earlier this year, VinaCapital Chief Economist Michael Kokalari said that according to a survey by JETRO and other organizations, Vietnam's main attraction as a destination for FDI stems from the fact that The reality is that wages at factories are only a third of what they are in China, and the quality of the workforce is comparable to that of China.

Another factor is Vietnam's geographical proximity to Asia's supply chains, especially the high-tech industry. In recent years, more and more multinational companies have begun to diversify their production activities outside of China for various reasons including China's "Zero Covid" policy and the US trade war - Central.