The disbursement of foreign direct investment (FDI) in Vietnam during the nine months of 2022 reached nearly US$15.4 billion, up 16.2% year-on-year, a report of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has shown.

Electronics production at SGK Company in Chuong My Industrial park, Hanoi. File photo

“Businesses are firmly on the recovery track, which is evident via expansion and investment activities,” stated the FIA.

The FDI commitments declined by 15.3% during the period to over $18.7 billion.

In the nine months, 1,355 new projects have been approved with total registered capital of $7.12 billion, up 11.8% in the number of projects but down 43% in capital year-on-year.

The FIA attributed the lower investment capital in fresh projects to the global economy's slow recovery following severe Covid-19 impacts and geo-political tension.

According to the FIA, the Covid-19 prevention measures adopted during the last months of 2021 proved to be a significant issue for investors traveling to Vietnam in search of investment opportunities applying for a new project license.

The unstable global political environment, high inflationary pressure, and disruption of the global supply chains have also caused negative impacts on the investment capital from major economies, especially Vietnam’s economic partners.

The FIA also noted a lack of large-scale FDI projects with capital over $100 million compared to the same period of the previous year, as they accounted for over 60% of total new investment capital during the January-September period in 2021. This included the LNG Long An I and II plants with a combined registered worth of $3.1 billion and the O Mon II Thermal Power Plant worth $1.3 billion.

This starkly contrasted to the nine months of 2022, with projects of over $100 million each making up 37.2% of total investment capital.

The agency, however, suggested an encouraging trend as the number of new projects are rising in recent months, with the figure in September increasing by 6.8% against August and 46.2% compared to July.

Meanwhile, 769 existing projects have been injected an additional $8.3 billion, up 13.4% in number and 30% in the capital, while 2,697 projects had nearly $3.28 billion contributed by foreign investors, which was down 4.7% across several projects, but up 2% in value year-on-year.

“These numbers reflect the confidence of the foreign businesses in Vietnam’s economic environment, as they are still pushing for expansion of their ongoing projects in the country,” stated the FIA.

Overall, investors poured money into 18 of 21 economic fields and sectors in the first nine months of 2022. Manufacturing and processing led the pack with investment capital of over $12 billion, accounting for 64.6% of total registered capital. Real estate came second with $3.5 billion, or 18.7%, followed by science and technology with $677 million.

According to the FIA, the wholesale, retail, and manufacturing sector made up the largest number of new projects at 30% and 25.7%, respectively.

Among 51 cities and provinces having received FDI in the period, Ho Chi Minh City has attracted the most significant portion of commitments with $2.96 billion, or 15.8% of the total. Binh Duong ranked second with over $2.7 billion (14.4%), followed by Bac Ninh with $1.78 billion (9.5%).

The FIA, however, noted that most new projects are concentrated in major cities with advantages in infrastructure systems, such as Ho Chi Minh City, or 41.8% of the new projects. At the same time, Hanoi tops the list in terms of projects with additional funds, or 18.4%.

The report added that out of 97 countries and territories registering projects in Vietnam in the first nine months of 2022, Singapore took the lead with $4.75billion, or 25.3% of the total newly registered FDI projects, followed by South Korea with $3.8 billion, or 20.3%, and Japan with US$1.9 billion, or 10.2%.