Investing
Vietnam’s opportunities exponentially increasing
What are the key implications of tariffs and trade shifts for Vietnam and the broader ASEAN region?
 |
| Aparna Bharadwaj, leader of the firm’s Global Advantage Practice |
Vietnam and the world are at a critical crossroads. Rising geopolitical risks and historic trade uncertainty are reshaping the global economy. The first wave of US tariffs targeting China, and potentially Mexico and Canada, signals a broader shift under the “America First” trade policy. This new reality is forcing countries and businesses to adapt rapidly to an evolving economic and geopolitical landscape.
Against this backdrop, Vietnam is uniquely positioned as a key connector between geopolitical blocs. Even before the latest tariff announcements, Southeast Asia was on track for strong momentum – deepening ties with both China and the US.
By 2033, we projected ASEAN-China trade to grow by $558 billion, driven by increased bilateral investment and cooperation. At the same time, ASEAN-US trade is set to outpace global trade growth, expanding at +4.3 per cent annually over the next decade.
To sustain this momentum, Vietnam should consider continuing to attract multinational companies pursuing China+1, or more, strategies in their efforts to diversify supply chains and mitigate geopolitical risks.
Vietnam has emerged as one of ASEAN’s most dynamic economies, thanks to its competitive cost base, strong industrial capabilities, and strategic location. These macro shifts position Vietnam to capitalise on export-driven growth, investment-led development, and high-value job creation across critical sectors.
As Vietnam upgrades manufacturing capabilities, companies need to add more value in local production. Today, there is still dependence on China for components, machinery and others which can leave Vietnam vulnerable to tariffs. The solution is to upgrade manufacturing capabilities within Vietnam.
The next decade will define Vietnam’s role in the global economy. How can Vietnamese businesses and policymakers best position themselves to seize this moment?
The recent pandemic and Russia-Ukraine conflict kicked off a fundamental shift to focus on supply chain resilience, and the ongoing US-China trade conflict adds to the complexities of global dynamics among trade partners.
As non-aligned partners, Vietnam and Vietnamese businesses have stood out amidst these uncertainties with strong value proposition such as low cost of production, infrastructure maturity, trade/investment ecosystem, trained labour and favourable government policies and regulations.
The exponential growth of opportunities indicates that Vietnamese businesses must adapt their strategies and operations to regional and global competition. One key strategy is to think global – from diversification of its supply chains to other ASEAN neighbours and beyond, to prospecting buyers in new mature destinations or emerging markets.
For example, Vietnam is one of the few countries in Asia that has free trade deals with both the western and eastern parts of Europe. Businesses should take advantage of these, which provide preferential rules for exporting Vietnamese products, or gaining access to the markets via rules such as assurance in non-tariff measures, transparency in regulations and the minimisation/reduction in tariffs.
Another critical strategy is to think for tomorrow. Vietnamese companies should also allocate resources on upgrading their manufacturing capability towards embracing technological and sustainability evolution.
Companies that can respond, invest in, and adapt their capabilities in digitalisation and sustainable offerings will see rewards in improvements to efficiency, productivity and remain highly competitive in the evolving trade landscape. Investing in digital platforms, automation, and data-driven decision-making will help businesses adapt to changing market conditions.
How can ASEAN position itself to thrive amid increasing geopolitical tensions?
Southeast Asian countries and ASEAN have been able to balance competing global geopolitical dynamics. ASEAN is an attractive location for companies looking for a new base of operations to de-risk supply chains. It would be important to continue the efforts to maintain neutrality and combine it with an emphasis on multilateral mechanisms for regional powers and global partners to leverage it as a platform for dialogue and cooperation.
Southeast Asia has a range of supportive institutional and infrastructure policies in recent years to enhance the free flow of goods and services among member states. These include the ASEAN Economic Community Initiative, ASEAN Single Window, and ASEAN Free Trade Area.
Major trade agreements also now mean the region has competitive trade access with countries that together account for 40 per cent or more of global GDP.
ASEAN can allocate resources and political will to develop a robust connectivity infrastructure and to enable Southeast Asian countries to play a larger role in global supply chains, by creating effective and efficient connections from the world to Southeast Asia and vice versa.
Overall, ASEAN’s is on strong growth momentum economically, and analysts have forecasted the region’s economy to be the world’s fourth largest by 2030. This trajectory provides a promising foundation for socioeconomic uplift and local fundamentals as hubs for consumer demand.
The Ho Chi Minh City Real Estate Association (HoREA) has proposed a pilot mechanism that would allow businesses to invest in and construct worker housing within industrial parks.
In a document submitted to the Prime Minister, contributing feedback on a draft pilot policy aimed at boosting social housing development, HoREA suggested that businesses, cooperatives, and cooperative unions operating within industrial parks be permitted to build accommodation for their workers. It also called for allowing companies to rent housing outside industrial parks for the same purpose.
HoREA emphasized that all costs related to building or renting worker housing should be recognized as legitimate business expenses and be included in the enterprise’s operating costs.
The association further recommended expanding the policy framework to allow companies within industrial parks to lease social housing or worker accommodation built by third-party developers outside the park premises.
According to Mr. Lê Hoàng Châu, Chairman of HoREA, the current Housing Law (2023) only allows companies to rent worker housing inside industrial parks, without clearly defining whether they can rent social housing outside the parks or construct such housing themselves.
With worker housing demand at industrial parks far exceeding supply, HoREA pointed out that current social housing and dormitory offerings are inadequate. Meanwhile, commercial housing remains out of reach for most workers due to high prices. Therefore, the association urges the government to introduce policies enabling manufacturing businesses—despite not operating in real estate—to develop their own accommodation solutions for employees.
HoREA underscored that such policies would create a strong legal foundation, empowering enterprises and cooperatives to proactively resolve housing issues for workers. If allowed to construct their own housing, companies could ensure homes go to those in need, boosting employee retention, improving living standards, and supporting sustainable growth in industrial zones.
The association also proposed financial support mechanisms, including tax incentives, access to preferential loans, or government-matching support, to reduce the financial burden on companies participating in worker housing development.
Previously, many businesses had expressed a desire to buy land, build housing, and offer installment-based homeownership plans to workers, whereby employees would pay monthly through salary deductions. While this model helps workers secure long-term housing, legal procedures remain a major hurdle.
Providing accommodation has increasingly become part of corporate strategies to retain labor, alongside other employee welfare policies. For example, Nissei Electric Vietnam (Linh Trung 1 Export Processing Zone, Thu Duc City) has built a dormitory complex with 285 shared rooms, housing up to 2,280 workers. Eternal Prowess Vietnam (District 12) and Thien Phat Company (Linh Trung 2 EPZ) have also invested in on-site worker housing. Thien Phat’s project includes 368 units (35m² each), rented at VND 2.2 million/month, with 80% of the units for families and 20% for shared accommodations.
As of Q2 2024, Ho Chi Minh City has 18 industrial parks with around 1,700 businesses employing approximately 320,000 workers. Citywide, over 1.3 million people are employed in factories. However, there are only 16 official worker housing complexes, accommodating about 22,000 people. The majority of workers rely on rented rooms or stay with acquaintances—often sharing 12m² rooms among 2–3 people, which consumes 15–20% of their monthly income.
From 2021 to the present, Ho Chi Minh City has completed six social housing projects with 2,700 units and is building four more with 3,000 units. By April 30, the city aims to resolve legal hurdles and break ground on 5–6 additional social housing projects, totaling around 8,000 units.
Investing
Billionaire Trần Bá Dương’s VND 2,000 Billion, 200-Hectare Industrial Park in Thái Bình Could Begin Operations This Year
According to Statista Market Insights, the Vietnamese semiconductor market is forecast to see healthy growth with a compound annual growth rate of 9.62 per cent between 2024 and 2027, reaching a market volume of $26.20 billion.
 |
| Le Quan, Senior lecturer Faculty of Engineering Fulbright University Vietnam |
Vietnam also boasts over 30 foreign-led companies in integrated circuit (IC) design, including established players like Renesas, Synopsys, and Cadence alongside innovative startups like Ampere, ADTechnology, Inphi, FingerVina, Dolphin Technology. The sector also encompasses numerous smaller firms with around 100 or fewer employees.
By 2040, Vietnam is poised to become a crucial player in the global semiconductor ecosystem, encompassing all aspects of the industry, from design and manufacturing to assembly, test, and packaging (ATP) and equipment fabrication.
The strategy emphasises the importance of fostering a skilled workforce. Vietnam boasts a strong talent pool in the semiconductor industry, with 50,000 design engineers, 200,000 electronics engineers, 500,000 technical workers, and one million software engineers. To further enhance this workforce, the strategy aims to transition up to 30,000 personnel from the existing pool of 350,000 IT and telecommunications engineers.
The global semiconductor packaging landscape is undergoing a rapid transformation, driven by a surge in new facilities across Asia. The wave of semiconductor investment in Vietnam and the industry’s demand for personnel have driven educational institutions, from top universities to vocational colleges, to launch training programmes related to semiconductors.
Last year, major universities such as Hanoi University of Science and Technology, University of IT – Vietnam National University Ho Chi Minh, and the University of Engineering and Technology announced engineering programmes specialising in semiconductors. Younger universities like FPT and Phenikaa are also making significant investments in this area, not only in training initiatives but also in facilities and equipment.
However, to truly understand the current landscape of semiconductor training in Vietnam, it is essential to look at the regulations and current state of training schemes in this field from 2024 backward.
Firstly, the high costs associated with establishing chip fabrication facilities make it an impractical investment for Vietnam. The country’s resources would be better allocated towards sectors that promise more immediate returns, such as ATP and IC design. Advanced packaging technologies represent a feasible and profitable entry point in the global semiconductor value chain, aligning with Vietnam’s strengths in low-cost, adaptable labour.
Vietnam should focus on drawing overseas funding into ATP operations, leveraging its lower labour costs to attract foreign companies. The availability of a high-quality but affordable workforce makes Vietnam an attractive destination for packaging, testing, and assembly processes. Prioritising such investment with advanced packaging capabilities will allow Vietnam to build a competitive advantage in this sector.
Meanwhile, the IC design segment represents a high-value opportunity with significant global demand. To capitalise on this, Vietnam should proactively seek partnerships and outsourced projects from international IC design firms. Engaging Vietnamese firms in IC design outsourcing allows for skill transfer, builds local capacity, and positions Vietnam as a reliable partner in the global semiconductor value chain.
Collaboration between industry, educators, and government should be boosted. Building a cohesive semiconductor workforce will require closer partnerships between educational institutions, industry players, and the government.
By integrating real-world projects into academic programmes, Vietnamese graduates will better understand the industry’s practical requirements and be more prepared to transition directly into the workforce. Schemes that bring industry projects to academia will provide students with hands-on experience, making them job-ready upon graduation.
At the same time, establishing specialised training for semiconductor roles, particularly in ATP and IC design, will be essential to reduce the industry’s current reliance on costly in-house training. This should involve upskilling engineers from related fields through short, intensive courses designed to meet industry standards.
Partnerships with international organisations for curriculum development, as well as accreditation for training initiatives, will help elevate Vietnam’s semiconductor workforce to global standards.
Vietnam can also implement “train-the-trainer” programmes. Its academic institutions face a shortage of faculty members with practical experience in semiconductor technologies. By leveraging international partnerships, Vietnam can upskill its instructors, who can then transfer these skills to future generations of engineers.
Notably, several US institutions have expressed willingness to offer training to Vietnamese trainers, a vital step towards creating a sustainable, locally driven semiconductor education ecosystem.
Finally, effective workforce development in the semiconductor industry requires government involvement in fostering a supportive ecosystem. Policies that incentivise partnerships between academia and industry, such as funding for research and development and joint training programmes, are critical.
Top Industrial Park Stocks Drawing Investor Attention Amid Sector Boom
New Nearly 200-Hectare Industrial Park Approved Near Hanoi, Set to Employ 19,600 Workers
Vietnam–Singapore (VSIP) Industrial Parks Expand with Four New Projects Across the Country
HoREA Proposes Allowing Businesses to Build Worker Housing Inside Industrial Parks
Billionaire Trần Bá Dương’s VND 2,000 Billion, 200-Hectare Industrial Park in Thái Bình Could Begin Operations This Year
Carbon labels: a gateway to high-value global markets
Alma Unveils Alma Harmony: Advanced Aesthetic Platform for Next-Level Treatments
Roborock Debuts 2025 Smart Home Cleaner in Australia, Marking a New Era of Smarter Cleaning
Vietnam’s manufacturing revolution: unlocking smart factory potential with ABeam Consulting
Thanh Cong Group opens facility in Quang Ninh to build Skoda models
-
Activities5 months agoBac Giang Adds a New Industrial Park Worth VND 3,700 Billion
-
Activities5 months agoQuang Binh Invites Investment in the Expansion of Bac Dong Hoi Industrial Park
-
Infrastructure4 months agoDa Nang Adds a New 400-Hectare Industrial Park
-
Project4 months agoThai Conglomerate Invests VND 1,200 Billion in Industrial Park
-
Project4 months agoVinh Thanh Industrial Park Approved for Investment of Over VND 7,800 Billion
-
Activities3 months agoBac Ninh Accelerates Land Clearance for Two Industrial Parks
-
Activities3 months agoHo Chi Minh City’s Largest Industrial Park Set to Resolve Land Issues, Hundreds of Hectares Ready for Lease
-
Project3 months agoGood News for Vietnam Rubber Group (GVR): Approval Granted for Bac Dong Phu Industrial Park Phase 2