Successful Year of FDI Attraction

In 2024, foreign direct investment (FDI) in Vietnam experienced sustained growth, with significant contributions from the technology, electronics and semiconductor manufacturing sectors. This capital flow is forecast to extend its positive pace in 2025 and beyond. Given challenging externalities, this showed the resilience and attractiveness of the Vietnamese economy.

Vietnam is considered a successful model for foreign direct investment attraction

Success in FDI attraction

Vietnam is considered a successful example of FDI attraction thanks to its increasingly improved investment institutions and environment, stable political foundation and relatively high economic growth foundation.

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), in November 2024, pledged FDI fund was nearly US$4.12 billion, much higher than other months of the year, totaling nearly US$31.38 billion in the first 11 months, up 1% year on year. Disbursed FDI value in Vietnam was estimated at US$21.68 billion in the first 11 months, representing a year-on-year growth of 7.1%.

Alongside more licensed FDI projects in Vietnam, the quality of investment projects and investment structure continued to improve. Most of the projects, both fresh and expanded, are involved in processing and manufacturing industries (accounting for 63%), featuring many giant projects engaged in semiconductor, energy (manufacturing batteries, photovoltaic cells and silicon bars), electronics and high value-added products. This not only creates jobs for local people but also helps transfer technology and enhance production capacity for domestic firms.

Remarking on FDI attraction in Vietnam, FIA said that FDI funding has largely flowed into provinces and cities with many proven advantages to foreign investors such as good infrastructure, stable human resources, streamlined administrative procedures and dynamic investment promotion like Bac Ninh, Quang Ninh, Ho Chi Minh City, Hai Phong, Hanoi, Binh Duong, Ba Ria-Vung Tau, Dong Nai, Nghe An and Bac Giang. These Top 10 localities alone accounted for 79.6% of new projects and 69.4% of the country's FDI inflows in 11 months.

According to experts, given slowing global investment flows, Vietnam is still one of the favorite choices of foreign investors, showing the resilience and attractiveness of the Vietnamese economy.

Furthermore, according to many domestic and foreign financial institutions, Vietnam's prospects for FDI flows will continue to go at a steady pace thanks to core factors like the country's more important and stronger role in the supply chain diversification strategy of multinational manufacturers, positive economic growth recovery and stable macro economy.

Opportunity to become a key link

In recent years, Vietnam has attracted significant interest from global tech giants seeking high-tech investment opportunities. US-based Apple Inc. completed transferring 11 audio-visual equipment manufacturing factories to Vietnam. Besides, its three popular partners in Vietnam, namely Foxconn, Luxshare and Goertek, have increased capital and expanded factories in the country.

Besides, after the Chairman of the US Semiconductor Industry Association (SIA) and leaders of top US semiconductor firms like Intel, Ampere, Marvell, Cirrus Logic, Infineon and Skyworks came to explore the local investment environment in December 2024, Vietnam embraced more opportunities to become an important link in the global technology chain.

Currently, Vietnam has specialized working groups to directly negotiate with and support large corporations. The Government also made commitments on advocating green growth and reducing greenhouse gas emissions towards net zero emissions by 2050. On this path, the shift to prioritizing new, clean and renewable energy sources is taken into account.

The Ministry of Planning and Investment also submitted the semiconductor human resource development project, aiming to train and develop 50,000 workers for the semiconductor industry by 2030. Vietnam aimed to reaffirm its role as a reliable partner and become a key link in the global technology value chain. In particular, the "green lane" investment policy, expected to be approved soon, is hoped to boost foreign investment inflows.

According to the Business Confidence Index (BCI) Report for the third quarter of 2024 by the European Chamber of Commerce in Vietnam (EuroCham), more than 69% of European businesses remain optimistic about long-term investment prospects in Vietnam. Despite obstacles in the way, business expansion plans remain promising, with nearly 80% of respondents saying to have 1-3 offices or production facilities in Vietnam.

Additionally, the AHK World Business Outlook Fall 2024 survey showed that German businesses remain optimistic about the Vietnamese market. 81% of respondents are satisfied with current operations, 50% expect business growth, and 35% plan to increase investment. Vietnam's focused renewable energy and sustainable development strategy is in line with Germany's strengths in green technology, thus opening up great opportunities for innovation and cooperation.

To embrace these opportunities, Vietnam will continue to apply policies and mechanisms to facilitate business operations, including foreign direct investment firms to take part in research and development (R&D), expand connections with the domestic business sector and increase contributions to the economy.

The country will review, resolutely remove and immediately handle difficulties and obstacles in institutions, laws and administrative procedures to create momentum for breakthroughs.

Last but not least, it will actively overcome bottlenecks in skilled human resources, especially in semiconductor and electronics, and address blackouts in some localities with many electronics projects.

By Thu Ha, Vietnam Business Forum