Vietnam pulled in US$3.1 billion in foreign direct investment during January-February 2023, down 38 percent from the same stretch in 2022, according to figures released 9 March by the Ministry of Planning and Investment. Singapore led the donor list, pumping capital into northern Bac Giang province and Ho Chi Minh City, while manufacturers absorbed roughly 70 percent of the total. Disbursement slipped 4.9 percent to US$2.55 billion, and export revenue from foreign-invested firms, including crude oil, fell 5.3 percent year-on-year to US$38.4 billion.
Sector split favours factories
Manufacturing dominated the inflow, drawing US$2.17 billion across metal products, electronics and automotive components. Real estate followed at just over US$390 million, while wholesale and retail rounded out the top three with more than US$200 million. The skew toward factories reflects Hanoi’s effort to keep Vietnam at the centre of the China-plus-one supply-chain shift, even as global demand softens.
A Singaporean semiconductor packaging plant worth US$600 million in Bac Giang accounted for the single largest project registered in the period. “Clients want resilience, not just cheap labour,” a regional supply-chain director at Jabil told the Nikkei Asia forum on 2 March, explaining why his firm is doubling floor space outside Ho Chi Minh City despite falling orders from U.S. tech brands.
Singapore tops investor table
Singapore remained Vietnam’s largest source of FDI, contributing close to US$1.2 billion in fresh pledges. Taiwan came second with US$370 million, mainly in footwear and precision plastics, while the Netherlands placed third at US$260 million, led by a dairy complex in Long An province. South Korea, Sweden and mainland China added smaller but still notable sums, though Beijing’s share continued to shrink as geopolitical tension pushes Chinese firms to cloak their ownership through third-country vehicles.
The ranking underlines how investors from rule-of-law jurisdictions are filling the space that Chinese state-linked capital once eyed. A European Chamber of Commerce report released 7 March praised Vietnam’s “progressive easing” of digital-licence rules while warning that “opaque land pricing and slow permit grids still favour players with political connections”, a nod to lingering risks from domestic and Chinese intermediaries.
Bac Giang and Ho Chi Minh City pull ahead
Bac Giang province, bordering China, captured US$840 million, eclipsing traditional magnet Ho Chi Minh City at US$520 million. The northern province has courted high-tech investors with 15 percent corporate-tax breaks and ready-built factories only a three-hour truck ride from Shenzhen. City planners in Ho Chi Minh City, by contrast, spent the first quarter reviewing zoning violations that idled at least 30 industrial hectares, delaying several mid-sized Japanese moulding projects.
Local officials say the gap may narrow once a US$900 million battery plant by South Korea’s LG Energy Solution clears environmental appraisal in the city’s Cu Chi district. “We are shifting from quantity to quality,” Le Thanh Liem, vice-chairman of the municipal People’s Committee, said at an investment seminar on 28 February, pledging faster clearance for projects that bring R&D centres rather than simple assembly lines.
Disbursement lags behind pledges
Actual money disbursed reached US$2.55 billion, a 4.9 percent decline that outpaced the 38 percent plunge in new registrations, suggesting earlier mega-projects are still drawing down credit lines. Analysts at SSI Securities in Hanoi attribute the resilience to multinationals that secured dollar loans before interest rates spiked, but they warn the pipeline could thin if export earnings keep falling.
Foreign-invested exporters shipped US$38.4 billion worth of goods, equal to 76 percent of Vietnam’s total export turnover yet 5.3 percent lower than a year earlier. Smartphones and garments led the slide as U.S. and EU consumers trimmed discretionary spending. “The FDI story is still intact, but it is now tied to whether Vietnam can crack higher-value niches before China reopens fully,” said economist Can Van Luc during a 6 March briefing hosted by the Vietnam Chamber of Commerce and Industry.
Outlook clouded by global headwinds
Government economists have trimmed the 2023 FDI target to US$22 billion, down from last year’s realised US$27.7 billion, citing slower growth in the United States and Europe. The Ministry of Planning and Investment is preparing a decree that would allow foreign investors to buy stakes in state-owned enterprises slated for partial privatisation this year, a move aimed at offsetting the manufacturing slowdown.
Yet red tape persists. The World Bank’s 24 February note on Vietnam pointed to “overlapping inspections” that can keep factories idle for months, a burden that falls hardest on small and mid-sized suppliers trying to relocate from southern China. Meanwhile, Beijing’s own charm offensive, offering fresh tax holidays in Guangxi just across the frontier, could lure back some labour-intensive investors if Vietnamese wage creep continues.
For now, the first-quarter numbers signal caution rather than collapse. Singaporean and Taiwanese money is still flowing into high-tech estates north of Hanoi, while European food and pharma groups scout sites around Da Nang. Whether that trickle turns into a torrent will depend on how quickly Vietnam simplifies land access and whether Western companies accelerate their move away from Chinese exposure.
