Data from the UN Conference on Trade and Development (UNCTAD), according to Rong Viet Securities Company (VDSC), showed global FDI in 2023 increased by 3% compared to a year earlier, reaching more than US$1.365 trillion, primarily attributed to a sharp increase in investment from EU nations.
Vietnam, Thailand and Indonesia maintained impressive growth in FDI throughout 2023 with increases of 32.1%, 42%, and 13.7%, respectively, with Vietnam topping the chart in FDI amount recorded.
"Vietnam remains an exception in attracting FDI in the global and regional context in 2023," said VDSC.
According to the Foreign Investment Agency, under the Ministry of Planning and Investment (MPI), the total registered FDI capital in the nation reached US$36.61 billion last year. Elsewhere, the accumulated realised capital of foreign investment projects in the Southeast Asian economy was estimated at US$23.18 billion, a 3.5% rise from the previous year, setting a new national record in terms of FDI disbursement.
The number of newly registered projects in 2023 reached 3,188, marking a 56.6% increase compared to last year’s same period, while average registered capital per new project soared slightly by 3.6% compared to 2022.
According to fDi Markets, a global monitor of FDI sources, FDI into the Vietnamese processing and manufacturing industry accounted for 64% of the total registered FDI capital, hitting US$23.5 billion, up 39.9% on-year.
Energy remained a bright spot in 2023 with several large projects, including the US$1.99 billion Thai Binh LNG Power Plant by Japan, the US$1.5 billion photovoltaic cell production project by Chinese Jinko Solar, and the US$1.05 billion electronic component manufacturing projects by LG Innotek (the Republic of Korea).
As of January 20, the total FDI capital in the country reached roughly US$2.4 billion, a 40.2% increase compared to the corresponding period in 2023.
Newly registered capital reached US$2.0 billion, a 66.9% increase from the same period. In comparison, additional registered capital and capital contribution dropped by 23.1% and 33.1%, reaching US$35.4 million and US$16.5 million, respectively.
The significant increase in FDI in January is thought to be primarily due to large-scale real estate investment projects.
A major urban development project in Hanoi with a total capital of US$662 million accounted for 53.9% of the total registered investment capital attracted in the first month of the year in the real estate business sector. Excluding this sudden surge, registered investment capital in the year's first month was equivalent to the same period in 2023. However, actual investment capital for foreign investment projects was estimated to stand at US$1.5 billion, a 9.6% increase.
Thanks to the positive growth in FDI seen throughout 2023, the nation's disbursement rate of FDI capital enjoyed a remarkable improvement. In 2023, FDI disbursement hit US$23.2 billion, a 3.5% increase compared to a year earlier.
"Growth in FDI in January 2024 continued to reinforce our view that FDI disbursement may continue to accelerate due to the large amount of FDI registered in 2023 and multinational companies continuing to diversify their investments out of China. Vietnam looks to remain an attractive investment destination due to advantages such as its strategic location, various free trade agreements (FTAs), and competitive labour costs. Upgrading diplomatic relations with the United States and Japan will help increase investment in Vietnam," said Hanoi-based VietCap Securities Company.
According to UNCTAD's forecast, global FDI flows may experience modest growth in the year ahead due to predictions about inflation and borrowing costs in stable developing markets. However, negative developments are still overshadowing the positive direction, related to political risks, high debt levels in countries, and the risk of declining global economic growth. In addition, this year will see voters in more than 80 countries and territories (representing over half of the world's population) vote in elections, which will also impact global investment.
According to VDSC experts, the prospects for this year’s FDI attraction will remain positive due to the country’s position as being viewed as a potential destination for strategic diversification of supply chains by global manufacturers, its trend of positive economic growth, and a stable political environment.
