Foreign Direct Investment in Vietnam: A Comprehensive Overview Foreign Direct Investment in Vietnam: A Comprehensive Overview

Amidst the global economic upheavals caused by the pandemic, countries worldwide have been strategizing to revive their economies. Vietnam, aiming to position itself as one of the top countries best to invest in, has also been proactively adjusting its policies to attract foreign direct investment (FDI). In this context, it’s crucial to examine the trends of FDI inflows into Vietnam during and after the pandemic period.

foreign direct investment in vietnam an overview

Economic Landscape Post-Pandemic: Trends in FDI Inflows

Foreign direct investment (FDI) is a vital component of the capital market, particularly significant for emerging economies like Vietnam. The pandemic not only disrupted healthcare and education but also significantly impacted the global economic landscape, including FDI flows. According to the United Nations Conference on Trade and Development report, FDI experienced a 30% decline in 2020, even lower than during the economic crisis over a decade ago. However, there was a noteworthy recovery in FDI inflows in 2021, reaching nearly $1.6 trillion.

While FDI inflows into developing economies in 2021 grew slower than in developed countries, they still saw a 30% increase, largely driven by robust growth in Asian nations. Despite a 7% decrease in FDI inflows in the third quarter of 2022 compared to the previous quarter, the overall trend remained positive, with a 16% increase in the first nine months of 2022 compared to the same period in 2021.

During the pandemic, FDI projects in Vietnam predominantly focused on sustainable development industries, particularly real estate alongside electricity processing, production, and distribution.

Unlocking the Benefits of FDI for Vietnam

Since the 1980s, global capital flows, including FDI, have been instrumental in driving economic growth in many countries. FDI brings various benefits to host countries, including technological advancements, job creation, and long-term trade commitments. In Vietnam, FDI has played a crucial role in enhancing production and management capabilities, expanding export markets, and fostering economic growth.


Read more: Is Vietnam One of The Top 20 Best Countries to Invest In?

Current Foreign Direct Investment Landscape in Vietnam

Despite the pandemic’s challenges, Vietnam has demonstrated resilience, attracting significant FDI inflows in 2023. As of October 2023, a total of 2,608 new foreign direct investment (FDI) projects received an influx of over $15.29 billion, marking a significant increase of 54% and 66.1% year on year, respectively. This contributed to a total FDI of more than $25.76 billion during the period, reflecting a 14.7% rise, as reported by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

Additionally, over $5.33 billion was injected into 1,051 existing projects, despite a 39% decrease in additional capital.

An overview of foreign direct investment in Vietnam mainly focuses on big cities with many industrial parks and convenient infrastructure. In this regard, Ho Chi Minh City maintains its lead, accounting for 3.94 billion USD, or 14.2% of total foreign investment capital in Vietnam. Binh Duong comes in second with $3.14 billion, followed by Quang Ninh with $2.34 billion.

Ranking of Foreign Investment Capital into Vietnam by Country

During the 10-month period, Vietnam saw investments from 108 countries and territories. Singapore led the pack with nearly $4.65 billion, constituting over 18% of the total FDI despite a 13% decline. Following closely, the Republic of Korea (RoK) contributed nearly $3.93 billion (15.2% of the total) with a marginal 0.5% increase, while Hong Kong (China) invested nearly $3.54 billion (over 13.7% of the total) with an impressive almost 2.6-fold rise.

China spearheaded the number of new projects (21.7%), whereas the RoK took the lead in projects with additional capital (25.7%) and capital contribution/share purchasing transactions (28.2%).

Asian investors, including Singapore, China, Japan, the RoK, Hong Kong, and Taiwan, accounted for a substantial 81.7% of the total FDI inflows into Vietnam during this period.

Among the 55 provinces and cities that attracted FDI, Quang Ninh province secured the highest capital with nearly $3.09 billion, representing almost 12% of the total and marking a robust 41.3% increase from the previous year. Hai Phong city followed closely with over $2.8 billion (10.9% of the total) and a remarkable 2.14-fold surge. Hanoi, Ho Chi Minh City, and Bac Giang province also featured prominently.

Ho Chi Minh City outperformed in attracting new projects (38%), those with additional capital (25.3%), and capital contribution/share purchasing transactions (66.6%), as highlighted by FIA.

Current Status of FDI into Vietnam By Industry

During the first 10 months, FDI flowed into 18 out of the 21 economic sectors. Notably, the processing and manufacturing industry emerged as the top recipient, attracting nearly $18.84 billion, which accounted for approximately 73.1% of the total FDI and represented a significant increase of 45.8% compared to the previous year. Following closely behind were the real estate sector with nearly $2.14 billion (a decrease of 44.8%), finance and banking sector with nearly $1.54 billion (a staggering 61.4-fold increase), and the wholesale and retail sector with nearly $907 million (up 6.3%).


Read more: Which Is The Best Country to Invest in Real Estate According to Economists?

FDI in Vietnam Triumph: A Resilient Economy Attracts Global Investments, Setting the Stage for Sustained Growth

Despite the challenges posed by the pandemic, Vietnam has emerged as a preferred destination for FDI, with diverse sectors such as processing and manufacturing, real estate, finance-banking, and wholesale-retail witnessing substantial investments.

The contributions from countries like Singapore, the Republic of Korea, and Hong Kong have been instrumental in driving Vietnam’s FDI growth, highlighting the confidence of investors in the country’s economic prospects. Moreover, the dominance of Asian investors underscores the region’s strong ties with Vietnam’s economy.

Provinces and cities across Vietnam, particularly Quang Ninh, Hai Phong, Hanoi, and Ho Chi Minh City, have attracted significant FDI, signaling their potential for economic development and growth. Ho Chi Minh City’s performance in attracting new projects and capital further solidifies its position as a key investment destination.

Looking ahead, Vietnam’s proactive policies to improve its investment climate and attract FDI are expected to continue fueling economic growth and development. With ongoing efforts to enhance infrastructure, streamline regulations, and foster innovation, Vietnam remains poised to attract even greater investments and emerge as a leading destination for foreign investors in the region.