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FDI fuels Vietnam’s momentum to reach double-digit economic growth

Published

1 week ago

March 5, 2025

According to the General Statistics Office (GSO), Vietnam secured 38.23 billion USD in FDI last year, positioning itself among the top 15 developing countries for FDI inflows. Notably, the disbursement of FDI capital hit a record high of 25.35 billion USD, up 9.4 per cent from the previous year. The influx has contributed significantly to Vietnam’s position as a regional leader in economic growth.

FDI fuels Vietnam’s momentum to reach double-digit economic growth

Yarn production at the Logitex Co. Ltd in the Vu Ninh Industrial Cluster, Thai Binh province (Photo: VNA)

Hanoi – Vietnam’s impressive economic growth in 2024 was fueled by contributions from various sectors, with foreign direct investment (FDI) playing a pivotal role. As the country aims to achieve a growth rate of at least 8 per cent in 2025 and double-digit growth in subsequent years, the contributions from the FDI sector need to be amplified.

Vietnam in top 15 destinations for FDI

Deputy Prime Minister Nguyen Chi Dung said the FDI sector has left a significant milestone in bolstering Vietnam’s collaboration with global tech giants such as NVIDIA in R&D activities, technology transfer, and high-quality human resources development to capitalise on semiconductor and AI’s potential, helping deliver on the country’s targets in the new era.

FDI has shared the investment burden in a context where state budget resources remain limited and spread across various priorities. Besides generating millions of jobs, the sector has boosted exports, expanded international economic relations, and enhanced Vietnam’s competitiveness in global economic integration. It currently accounts for over 70 per cent of the country’s total export turnover.

The sector has actually emerged as one of the main drivers of Vietnam’s economic growth, with its influence extending deeply into the country’s socio-economic landscape. Against the backdrop, it is necessary to identify strengths and weaknesses to enhance the sector’s effectiveness and contributions.

With a view to realising the target of luring some 150-200 billion USD in FDI for 2021-2025, and 200-300 billion USD for 2026-2030, measures need to be taken to settle several existing issues within the FDI sector, including cases of non-compliance with Vietnamese laws, violations of environmental protection regulations, labour and wage infractions, and tax evasion.

Besides, transfer pricing has become increasingly sophisticated, raising questions about why some FDI enterprises report losses while simultaneously proposing expansion of their investments in Vietnam. Although regulatory authorities have identified and penalised many companies, combating transfer pricing remains challenging.

Improvements for enhanced attractiveness

Experts proposed several ways to enhance FDI’s impact on Vietnam’s economic growth, laying stress on the significance of maintaining preferential policies to lure the capital and making them more transparent, attractive, and competitive. They held that FDI policies should be selective, with priority given to quality, efficiency, technology, and environmental protection. Furthermore, administrative reforms should enhance support for the FDI sector while management should be tightened with proactive post-inspection measures, creating conditions for investors to shorten preparation and implementation time of projects.

They also suggested that Vietnam should prioritise projects featuring advanced and clean technologies, modern governance, high added value, spillover effects, and global connectivity between production and supply chains. Additionally, the country should continue negotiating and signing free trade agreements to create a favourable environment for foreign trade, thereby attracting FDI to launch production for export in Vietnam.

Vietnam is gradually shifting towards enhancing FDI quality by focusing on selective, proactive attraction of high-tech, environmentally friendly projects in spearhead sectors. Notably, in recent years, Vietnam has identified semiconductors and AI as two strategic industries to drive national development.

Deputy Director of the National Innovation Centre (NIC) Vo Xuan Hoai said that Vietnam has proactively developed a domestic semiconductor ecosystem and created a favourable legal corridor to welcome global enterprises.

He said Vietnam has made impressive progress in semiconductor cooperation with the US, the Republic of Korea (RoK), Japan, Taiwan (China), and Europe. Last year, the NIC announced its partnership with NVIDIA, a major chip and AI corporation, to set up an AI R&D Centre and an AI Data Centre.

The Vietnamese Government is planning to train some 50,000 semiconductor engineers by 2030 to meet the increasing demand of this strategic sector.

To enhance the capacity for genuine and effective evaluation and control of the FDI sector’s contribution to the economy, the Prime Minister recently issued a decision establishing criteria for evaluating the effectiveness of foreign investment in Vietnam. Notable among these are 29 economic indicators measuring important factors such as budget contributions, profit before tax, profit margins, and linkages between FDI enterprises and domestic companies.

In another move, the Government issued a decree on the establishment, management, and use of the Investment Support Fund, affirming its commitment to to promoting high-tech enterprises, particularly in semiconductors and AI. This initiative not only serves as an important driver for enhancing competitiveness but also helps Vietnam integrate more deeply into the international market.

Director General of the RoK-based Hana Micron, Inc. Lee Dong-Chul said that Vietnam has become an attractive destination for high-tech enterprises on the back of the Government’s strong support, sound infrastructure, and high-quality human resources at rational costs.

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Townhouse rents fall in HCM City as demand declines

Project

Real estate capital heading into suburban areas

Published

2 hours ago

March 12, 2025

Industrialzone.net

The shortage of affordable apartments in Ho Chi Minh City has led buyers with tight budgets to seek properties in neighbouring markets.

The real estate market in Ho Chi Minh City is facing a scarcity of land, while the cost of project development is continuing to rise. This has forced investors to carefully consider which product segments to focus on to ensure profits.

Real estate capital heading into suburban areas

Photo: baodautu.vn

Investors with land in strategic locations close to the city centre are prioritising the development of mid-range and high-end products to optimise financial outcomes.

As a result, buyers seeking affordable options are being forced to look elsewhere.

“The shortage of affordable apartments in Ho Chi Minh City has led buyers with limited finances to seek items in neighbourhoods like Binh Duong, Dong Nai, and Long An. In these areas, apartment prices hover at around $1,200-$1,600 per square metre, creating strong demand,” said Giang Huynh, head of research and S22M at Savills Ho Chi Minh City.

From another perspective, the average rental yield for apartments in Binh Duong is currently 4.7 per cent, well above the 3.7 per cent yield in Hanoi and 3.6 per cent in Ho Chi Minh City.

Dinh Minh Tuan, southern regional director of real estate trading platform Batdongsan.com.vn, shared that the high rental yield in Binh Duong is largely due to reasonably priced luxury apartments, with high rental prices and stable occupancy rates.

On average, a luxury apartment in Binh Duong can be rented for $400-$480 per month for a one-bedroom unit, and from $600-$800 for a two- to three-bedroom unit.

Meanwhile, in Ho Chi Minh City or Hanoi, apartments in the $1,800-$2,000 per square metre range can only be rented for around $280-$480 per month, depending on the number of bedrooms, not to mention the increasingly stiff competition in enticing tenants.

In response to the strong capital shift, real estate firms in Ho Chi Minh City’s suburban areas are accelerating legal procedures to launch new projects.

This trend reflects the investors’ agility and creates attractive opportunities for both homebuyers and investors in 2025.

Accordingly, Kim Oanh Group plans to launch a 27-hectare urban area in New Binh Duong City in the first quarter of 2025.

This will be the first project the company has collaborated on with Surbana Jurong, a partner from Singapore, under EDGE green standards.

The project features 1,656 townhouses and terraced houses, and 1,666 social apartments, priced from $28,000 per unit.

Major developer Phat Dat Real Estate Development Corporation plans to launch two major projects, Thuan An 1 and 2 in Binh Duong province, covering a total area of 4.46 ha.

The 1.8ha Thuan An 1 will provide 2,604 apartments and shophouses, while the 2.66ha Thuan An 2 will have 3,270 apartments and 16 townhouses. These projects are located on key roads.

Simultaneously, southern developer An Gia Group plans the launch of 3,000 apartments at The Gio Riverside and 76 shophouses in Di An city.

The three-hectare project, located on the provincial route DT16, offers nicely designed apartments with one to two bedrooms.

Regarding opportunities for homeownership, Phan Cong Chanh, an expert in real estate investment, noted that owning a home requires solid knowledge and time to raise financial resources.

For young people, buying a home immediately is a challenge due to limited finances.

Buyers can explore financial support packages and use leverage to shorten the time needed to purchase real estate. This needs to be accompanied by a reasonable plan to ensure long-term affordability.

“Overall, owning a home is not just a purchasing decision; it also requires a smart financial strategy. Whether choosing to buy immediately, rent, or invest in real estate in any segment, individuals must consider their financial conditions and personal plans carefully,” said Chanh.

Project

VinFast looks to long term with operational roadmap

Published

4 hours ago

March 12, 2025

Industrialzone.net

Carmaker VinFast aims to become a powerhouse in the electric vehicle market as it grapples with tougher competition abroad.

VinFast looks to long term with operational roadmap

The company wants to double EV sales when compared to last year’s figure

Potential investment from JTA Investment through an MoU between Vingroup and Qatar Investment Fund, which was unveiled last week, aligns perfectly with VinFast’s ambitious vision of scaling up production and sales in a competitive international market, the company said.

JTA Investment is exploring a potential equity investment of at least $1 billion in VinFast, the Nasdaq-listed EV manufacturer, as well as a strategic partnership aimed at supporting the company’s global expansion and technological development.

“This collaboration will unlock significant opportunities for Vingroup and its subsidiaries to drive technological, infrastructural, and sustainable economic advancement in Vietnam, while establishing a foundation for international expansion,” said Le Thi Thu Thuy, vice chairwoman of Vingroup.

Global electric vehicle (EV) competition is expected to get tougher as the demand for EVs is projected to increase further this year, but the outlook is being hindered by uncertainty surrounding tariffs and policy changes.

In 2025, S&P Global Mobility projects that 15.1 million battery EVs will be sold worldwide, a 30 per cent increase on last year. It is anticipated that 16.7 per cent of the light vehicle market will be made up of battery-based EVs.

S&P also reported that major unknowns await Chinese manufacturers BYD and Tesla in 2025 due to assumed changes to the US Inflation Reduction Act.

Last year, VinFast stated that it was delaying the opening of its North Carolina factory until 2028, which will allow the company to optimise its capital allocation and manage short-term spending more effectively, focusing more resources on supporting near-term growth targets and strengthening existing operations.

The company is expanding its strategy in India, Indonesia, and the Philippines, where EV infrastructure is developing rapidly but competition from domestic brands is limited. Experts said that in order to sustain long-term growth, it needs to compete with Chinese manufacturers and prove its competitiveness beyond its home market.

VinFast is scheduled to open factories in Subang, West Java and in the southern Indian state of Tamil Nadu this year. The plan to expand into India aims to seize growth opportunities in the world’s most populous nation and rapidly expanding EV market.

On February 28, VinFast and Motech Automotive Service Centres, through its franchisor and operator in the Philippines, signed an MoU on expanding the service network for VinFast’s EVs in the market. The agreement aims to meet the increasing demand for EVs among Filipino consumers, while affirming VinFast’s long-term commitment and determination to utilise green transformation across the region.

VinFast and Motech will collaborate to accredit over 60 Motech service workshops as approved VinFast service centres. In the Philippines, these service centres will have the authority to handle VinFast EV maintenance, warranties, and repairs. This year, VinFast intends to open over 100 similar service workshops throughout the Philippines.

In 2025, the company has set the ambitious target of doubling sales to around 200,000 EV globally after announcing impressive results in 2024, with 97,300 EVs sold globally, of which about 87,000 vehicles came from the domestic market.

Project

M&As in crucial sectors poised for rapid expansion

Published

6 hours ago

March 12, 2025

Industrialzone.net

Following the downturn, Vietnam’s merger and acquisition landscape is set to gain momentum in 2025, driven by spearhead industries from technology to manufacturing. Julien Curtet, partner of Index Partners, shared with VIR’s Thanh Van his insights into the overview and the prospect of the market.

How do you see Vietnam’s merger and acquisition (M&A) market affected by global market volatility?

M&As in crucial sectors poised for rapid expansion

Julien Curtet, partner of Index Partners

In 2024, global M&A activity rebounded, reaching approximately $3.5 trillion (a 15 per cent increase from 2023) with around 7,500 deals above $30 million. Corporate acquisitions rose by 12 per cent, and financial investor activity surged by 29 per cent, driven by private equity amid easing interest rates. Key sectors included technology, energy, financial services, and telecom.

Vietnam mirrored global trends with notable M&A activity in technology, energy, and industrial sectors, supported by a resilient macro and rising foreign investment.

In 2024, Vietnam’s M&A market experienced a downturn in transaction value, influenced by global economic uncertainties stemming from geopolitical tensions and currency fluctuations. However, deal volume reached around 160 transactions in the second half of 2024, marking a 25 per cent rise from the first half of 2024 and a 32 per cent jump from the second half of 2023, signalling a strong recovery trend and positive momentum for future growth. Some key deals in the second half of 2024 were Masan’s acquisition of an additional 7.1 per cent stake of VinCommerce from SK Group for $200 million, KIDO’s acquisition of Hung Vuong, Nvidia’s acquisition of VinBrain, and SK Group’s $300 million acquisition of Iscvina Manufacturing.

Mid-cap deals up to $25 million dominated Vietnam’s M&A market, accounting for just over half of total deal volume despite a 28 per cent drop in total transaction value. Mid-size transactions in the second half of the year included ADA’s acquisition of Customore and Elan’s $8.89 million acquisition of TMC Vietnam.

Could you shed light on some key drivers for the Vietnamese market in 2025 and beyond?

In 2025, it is set for strong growth, driven by key sectors such as infrastructure, technology, consumer, and manufacturing. Infrastructure will see a surge in investment, particularly in transportation and logistics, supported by government initiatives.

The technology sector is poised for rapid expansion, fuelled by favourable policies and accelerating digital transformation. Consumer spending is expected to rebound from a low base, signalling a recovery in the consumer sector.

Meanwhile, the manufacturing sector, which contributed over one-quarter of GDP in 2024, is projected to grow by 10 per cent in output, supported by new industrial zones and increased foreign investment.

The market is set to accelerate in the second half of 2025, fuelled by stable global interest rates and rising investor confidence.

Vietnam’s strong economic momentum, pro-investment policies, and booming sectors like technology, manufacturing, infrastructure, and recovery of consumer will drive deal activity, cementing its status as a key M&A hub in Southeast Asia.

How do foreign dealmakers approach strategies amidst global economic uncertainty, especially tariffs and new US policy?

Foreign dealmakers are reshaping their M&A strategies. Despite the challenges, Vietnam remains a key destination for cross-border investment, driven by its rapidly expanding technology, consumer, and manufacturing sectors.

Vietnam is rapidly advancing its technology sector, emerging as a significant player in the global digital landscape. Its commitment to technological innovation is evident through key partnerships, such as the collaboration with Nvidia to establish AI research and data centres in the country.

To further entice high-tech investments, the government offers substantial incentives, including up to four years of tax exemptions and a 50 per cent tax reduction for the subsequent nine years, as well as financial support from national sci-tech development funds.

Additionally, Vietnam’s consumer market is expected to recover in 2025, fuelled by a rising population, and increasing disposable incomes, boosting demand for goods and services. With consumer confidence rebounding and spending accelerating across sectors, Vietnam’s consumer market is regaining momentum as a vital driver of economic growth.

Vietnam is emerging as a manufacturing and logistics hub, attracting foreign investments due to its competitive labour costs (20–50 per cent lower than regional peers) and a 9.8 per cent increase in manufacturing output in 2024. An “anything but China” strategy is driving multinationals to shift production to Vietnam.

The country is also benefiting from major infrastructure projects, including the Long Thanh International Airport and deep-sea ports in Haiphong, are strengthening its logistics position, while expanding industrial areas and cross-border e-commerce fuel growth in both sectors.