Registered foreign direct investment capital in Vietnam declined 7.3% year-on-year to nearly $10.86 billion in the first five months of the year, while disbursed capital dropped 0.8% to $7.56 billion.
The Foreign Investment Agency (FIA) said both registered and disbursed FDI capital saw improvements in the five-month period compared to the first four months.
In January-April, registered FDI plunged 17.9% to $8.88 billion, while disbursed capital decreased 1.2% to $5.85 billion.
Registered FDI capital included newly registered capital, additional capital of ongoing projects, and capital contributions for stake acquisitions.
In the year to May 20, manufacturing and processing received the largest amount of registered FDI with $6.64 billion, accounting for 61.2% of Vietnam's total and down 2.5% year-on-year.
The banking-finance sector ranked second with $1.53 billion, or more than 14.1%, up 12 times, followed by the real estate sector with nearly $1.16 billion, down 61.3%. Wholesale-retail attracted $481 million, up 28.3%.
Of the 82 countries and territories investing in Vietnam in the period, Singapore led the pack with $2.53 billion, or over 23.3% of the total, down 14.3% year-on-year.
Japan ranked second with nearly $2.1 billion, accounting for 19.1% of the total, nearly 2.2 times higher than the same period last year, followed by mainland China with $1.61 billion (14.8%), up 41.9%; Taiwan; Hong Kong; and South Korea.
Among localities, Hanoi ranked first in terms of registered FDI capital with $1.87 billion, accounting for 17.2% of the country's total and up 2.7 times compared to the same period last year, followed by Bac Giang with over $1 billion (accounting for 9.4% and up 2.4 times), Ho Chi Minh City, Binh Duong, and Dong Nai province.
Newly-registered FDI capital in the five-month period reached $5.26 billion, up 27.8%. Capital expansion of operational FDI projects dropped 59.4% year-on-year to $2.28 billion.
Capital contributions for stake acquisitions rose 67.2% to over $3.32 billion, largely thanks to the acquisition of a 15% stake at VPBank by Japan’s Sumitomo Mitsui Banking Corp. (SMBC) for about $1.5 billion.
Newly-registered FDI capital strongly increased in the five months (up 27.8% year-on-year) compared to the figure in the first four months (up 11%). The number of newly-registered projects rose by 1.2 percentage points compared to the first four months and 66.4% year-on-year.
The FIA noted that the year-on-year growth pace of the number of newly-registered projects was higher than that of newly-registered capital, reflecting that small and medium-sized foreign investors continued to view Vietnam as an attractive investment destination with new investment decisions.
"But there are signs that large corporations are cautious given the upcoming enforcement of the global minimum tax (GMT)," the agency, under the Ministry of Planning and Investment, added.
In the five-month period, those worth below $1 million accounted for nearly 70% of new FDI projects, but their total investment capital made up only 2.2% of the country's total newly-registered capital.
Many OECD countries stated that they will apply the GMT rule at the beginning of 2024. The GMT under OECD Pillar Two is a once-in-a-lifetime global tax reform that will apply to multinational companies with revenue above 750 million euros.
Vietnam plans to apply this new tax rule in early 2024.