HANOI: Vietnam attracted US$1.69bil worth of foreign investment in the first month of 2023, down 19.8% year-on-year (y-o-y).

According to the Foreign Investment Agency (FIA) under the Planning and Investment Ministry, one bright spot in January was that 153 new foreign investment projects, valued at US$1.2bil , were granted licences.

That was up 48.5% in number and 3.1 times in value, which confirmed the confidence foreign investors have in Vietnam, the FIA said.

During the month, capital added in operating projects by foreign investors saw a yearly decline of 76% to US$306.3mil , while their capital contributions and share purchases also declined 61% y-o-y to over US$174mil .

At the same time, disbursed capital registered a decline of 16.3% to an estimated US$1.35bil in the first month of this year, the FIA said, adding that the processing and manufacturing industries saw US$1.05bil worth of foreign investment disbursed, making up 77.6% of the total.

Since January had two long holidays - New Year and Lunar New Year - the decreases in foreign investment capital did not fully reflect the general trend of capital flows to Vietnam, the agency added.

Projects related to the wholesale, retail and repair of automobiles and motorised vehicles accounted for the lion’s share of the total, at 54.1% or US$651.9mil .

They were followed by those in the processing and manufacturing industries, which together tallied US$351.2mil , while those in other sectors accounted for US$202mil , or 16.8%.

Also in January, 28 foreign countries and territories invested in Vietnam. Singapore was the largest with US$767.6mil , followed by China with US$198.2mil .

Vietnamese investors poured US$126.7mil into their overseas projects, increasing by 3.4 times the ratio for the same month in 2022.

Of the countries that received Vietnam investments, South Korea got the most with US$125.1mil , accounting for 98.7% of the total, followed by Thailand (US$1.5mil or RM6.4mil or 1.2%) and Laos (US$140,000 or RM594,580 or 0.1%).

Experts said Vietnam is expected to attract much more foreign direct investment (FDI) this year, due to its impressive economic performance in 2022, improved business climate, and the advantages enjoyed through its free trade agreements.

Do Van Su, deputy director of the Department of Foreign Investment, said Vietnam is expected to attract between US$36bil and US$38bil worth of FDIs in 2023.

South Korea, Japan and Taiwan are expected to be among the main sources of these investments as they continue to pump money into South-East Asia, he added.

Economist Le Dang Doanh said the country needs to speed up its administrative reforms, improve its investment environment and ensure policy stability.

Planning and Investment Minister Nguyen Chi Dung said priority would be given to projects that use new and green technologies, and have high added value.

“Though there are admittedly still problems related to the quality of human resources, Vietnam remains an appealing destination for foreign investors due to its supportive policies,” he added.

A survey by the Planning and Investment Ministry found that 76% of enterprises were satisfied with its support policies.

They were most satisfied with the value-added tax waiver and reduction policies, said Dung, adding that the policies to stabilise fuel prices, improve the work permit issuance process, customs clearance procedures for import and export, and protect workers’ livelihoods, also figured prominently in the survey.

To continue to attract foreign investment, Dung said it is vital for Vietnam to develop innovation and financial centres at regional and international levels.

“It is also important to stabilise the economy and improve infrastructure and the quality of human resources,” he added.

 - ANN