Successfully investing in Vietnam

Since the country´s ac­ces­sion to the World Trade Or­gan­iz­a­tion in 2007, Vi­et­namese mar­kets have been ex­tens­ively opened to for­eign in­vestors in many sec­tors. Sim­ul­tan­eously, the gov­ern­ment has is­sued vari­ous policies eas­ing busi­ness con­di­tions and re­lax­ing ad­min­is­trat­ive bur­dens. In ad­di­tion, Vi­et­nam has also signed sev­er­al new free trade agree­ments, such as EU-Vi­et­nam FTA and UK-Vi­et­nam FTA, which are prom­ising to boost trade flows and to cre­ate at­tract­ive and safe con­di­tions for busi­ness ven­tures in the coun­try.

For­eign in­vest­ment in­to Vi­et­nam is largely open and liberalised, save for very lim­ited areas sub­ject to for­eign in­vest­ment re­stric­tions (e.g., fin­an­cial ser­vices, cer­tain as­pects of lo­gist­ics, tele­com­mu­nic­a­tions and util­it­ies). Nevertheless, Vi­et­nam's lib­er­al mar­ket eco­nomy holds great po­ten­tial for for­eign in­vestors, par­tic­u­larly in the fields of man­u­fac­tur­ing, re­new­able en­ergy, high-tech and IT, the last be­ing sub­ject to at­tract­ive tax in­cent­ives. The coun­try's in­tern­al mar­ket also of­fers a good basis for for­eign in­vestors due to its rap­idly grow­ing middle class and a high num­ber of con­sumers. The fo­cus on tra­di­tion­al ag­ri­cul­tur­al and labor-in­tens­ive in­dus­tries, such as tex­tiles and tim­ber, is still there but is cur­rently shift­ing. Re­new­able en­er­gies are still very un­der­deve­loped in Vi­et­nam and of­fer good op­por­tun­it­ies – a fact that has been recognized by the coun­try's gov­ern­ment, which is pro­act­ively try­ing to at­tract in­vest­ment in this area.

Direct foreign investments were an important driving force and another example of the overall successful management of the pandemic in Vietnam. In December 2021, the Ministry of Planning and Investment released that the economic growth was boosted by a total capital of 19.74 billion US dollars Foreign Direct Investment (FDI).

The safe and stable situation of Vietnam attracted FDI from 106 countries and territories. Singaporean firms representing 10.7 billion US dollars of the invested capital, beating South Korea and its invested capital of 5 billion US Dollar.  

It is the processing and manufacturing sector that led the growth with an investment capital of 18.1 billion US dollars accounting for 58.2 per cent of total registered investment capital. 

However, Vietnam's success in attracting foreign investment can also be measured in the light of the effort made to improve the investment climate. Indeed, the government's incentives to support industries in the effectiveness of a supply chain successfully attracted an increasing number of firms to relocate their manufacturing operations in Vietnam. Such an approach aligns with effective steps taken to revise the law on Corporate Income Tax to open incentives not only to new investment projects but also to investment expansions.  

Des­pite no­tice­able de­fi­cits in the areas of le­gis­la­tion, reg­u­la­tions, bur­eau­cracy, cor­rup­tion, in­tern­al pro­cesses and in­fra­struc­ture, Vi­et­nam con­tin­ues to de­vel­op pos­it­ively. Backed by a stable and pre­dict­able polit­ic­al frame­work, the short­com­ings are gradu­ally be­ing re­duced in or­der to make the coun­try even more at­tract­ive – es­pe­cially for for­eign in­vestors.

Vi­et­nam will con­tin­ue to work hard on the de­vel­op­ment of its in­dustry and to­wards the coun­try´s modernization, ef­fect­ive­ness, and sus­tain­ab­il­ity, in or­der to gen­er­ate a high­er com­pet­it­ive­ness as a stable basis of an industrialised na­tion. The coun­try will be able to ex­ploit and take ad­vant­age of op­por­tun­it­ies from signed Free Trade Agree­ments to re­move trade bar­ri­ers which will, in turn, sup­port the do­mest­ic ex­port-ori­ented in­dus­tries and there­fore open new and ad­di­tion­al op­por­tun­it­ies for trade and for­eign dir­ect in­vest­ment.

One of the most current and innovative sectors is energy, following the implementation of the ASEAN Plan of Action for Energy Co-operation Phase II, where Southeast Asia countries have committed themselves to meet a target of 23 per cent of renewable energy by 2025. It is stating the obvious to say that there is an increasing need for investment in renewable energy capacity and in electricity networks to facilitate the flexibility needed to integrate renewables. 

Vietnam is an ideal place to invest in such progressive technologies as there is a current shift to a national im­plementation of programs rather than an ASEAN-led regional infrastructure through different models for attrac­ting private investment depending on the country (i.e. long-term concession; build own operate and transfer con­tracts, etc.). Particularly, Vietnam is leading the ASEAN sector in clean energy investment (34 per cent of ASEAN investment in 2021) and has plans to install more than 13 GW of new renewable energy from projects (50 GW capacity from wind and solar planned for 2030).