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'Bright door' for FDI capital flow into Vietnam

Việt NamViệt Nam03/02/2025

Although the world in 2025 is unpredictable, experts predict that FDI into Vietnam will remain stable but policies and infrastructure need to continue to be improved.

75% of European business leaders surveyed said they would recommend Vietnam as an ideal investment destination. This is the figure that the European Chamber of Commerce in Vietnam (EuroCham) rated as "most outstanding" in the Business Confidence Index (BCI) survey for the fourth quarter of 2024.

Mr. Bruno Jaspaert, Chairman of EuroCham Vietnam, said that sectors such as technology, manufacturing, tourism and renewable energy are of interest to European investors. "Despite global challenges, Vietnam's positive investment environment is creating many new opportunities for European businesses," he said.

Last year, total foreign direct investment (FDI) in Vietnam reached nearly 38.23 billion USD, 3% lower than in 2023, according to data from the Foreign Investment Agency (Ministry of Planning and Investment). The bright spot was that realized FDI capital increased by 9.4%, reaching 25.35 billion USD. Adjusted capital also increased in both the number of projects (11.2%) and value (50.4%).

The two largest partners, Singapore and South Korea, both increased their investment in Vietnam last year, by 31.1% and 37.5% respectively. China led in the number of new projects, accounting for 28.3%. The Foreign Investment Agency assessed that foreign investors continue to have confidence in Vietnam's investment environment.

In 2025, the global economy is forecast to grow by 2.7%, “not great news,” according to the World Bank. Although more optimistic, the United Nations’ estimate is only slightly higher, at 2.8%.

Along with that, many major factors influencing international investor sentiment such as geopolitical conflicts, policies of the US President Donald Trump administration and response policies of economies... are all difficult to predict.

However, research groups forecast that FDI inflows into Vietnam will remain stable. Two experts, Ngo Dang Khoa and Vu Binh Minh of HSBC Bank, in a recent analysis, said that foreign capital in production is likely to continue to grow.

This is the result of the leaders' diplomatic trips, opening up investment intentions from many global companies and corporations. In the first half of 2025 strategy report, the analysis team from VNDirect Securities Company said that Mr. Trump's return could disrupt short-term FDI flows, as investors cautiously reassess tariff risks.

DEEP C Hai Phong Industrial Park in January 2025. Photo by Tran Dat

However, in the medium and long term, capital flows will stabilize and grow sustainably. With the Republican Party in power in the US, Vietnam remains attractive thanks to its long-term planning for FDI, as well as its solid manufacturing base, skilled workforce and strategic geographic location.

"Mr. Donald Trump as President of the United States will speed up the translation process.
"Vietnam continues to be considered a strategic destination thanks to its many advantages," said Mr. Vu Minh Chi, Senior Manager of Industrial Services at Avison Young Vietnam.

Speaking further about the figure of 75% of European businesses considering Vietnam an ideal destination, the Chairman of EuroCham pointed out the growing confidence thanks to the S-shaped country having a solid foundation in trade and economic policy.

The Japanese investor community has a similar view, with more than 56% planning to expand their business in Vietnam in the next 1-2 years. This is the highest rate in Southeast Asia, according to a 2024 survey by the Japan External Trade Organization (Jetro).

The top three advantages in the eyes of Japanese businesses are market size, growth potential, low labor costs and stable socio-political situation. All are above the ASEAN average.

However, foreign investors point out that Vietnam needs to improve its administrative procedures and operations. Jetro lists the top three factors that are making Japanese businesses hesitate to invest more capital, including complicated administrative procedures, taxes, and an incomplete legal system with a lack of transparency in enforcement.

"Improving administrative procedures will be a driving force for investment capital in Vietnam," said Mr. Nobuyuki Matsumoto, Chief Representative of Jetro Office in Ho Chi Minh City.

Similarly, administrative burdens, unclear regulations and difficulties in obtaining permits are obstacles cited by European businesses. EuroCham Chairman Jaspaert compared building a legal framework to building a house, which needs a solid foundation to be stable.

"A transparent and clear legal process will help the country develop, improve trade and encourage investors to consider Vietnam as their new home," he said.

Many European businesses expect that the streamlining of the government apparatus will bring about significant improvements in administrative processes. "This is a huge and complex project, but the results such as a growing economy and increased FDI will make all efforts extremely worthwhile," said the Chairman of EuroCham Vietnam.

At the same time, 40% of European businesses said that improving infrastructure helps reduce transportation costs and increase foreign trade connections. Dr. Bui Thanh Minh, Deputy Director of the Office of the Private Economic Development Research Board (Board IV), said that the Northern expressway system is relatively good and needs to be further promoted in the South. "It is a fact that attracting FDI will be better when the infrastructure is synchronized," he said at a recent forum.

In addition, experts recommend that the effective way to promote is to take care of existing investors. At the Vietnam Industrial Park Forum in late 2024, Mr. Nguyen Dong Trung, Deputy Director of the Department of Foreign Affairs (Ministry of Foreign Affairs), said that businesses operating in Vietnam are ambassadors to attract investment.

Mr. Ha Duy Tin, General Director of Hoa Phu Industrial Park (Vinh Long), Vice President of Vietnam Real Estate Association (VIREA) recounted this practical experience. Accordingly, nearly 90% of investment projects in Hoa Phu Industrial Park are from foreign investors such as Japan, Korea, China, the US and Australia. Ten years ago, this place attracted FDI projects thanks to cheap labor and low land rental prices.

However, that advantage is now gone. Therefore, they now focus on supporting, proactively contacting active investors, increasing dialogue to resolve difficulties and connecting with local authorities.

"Four Japanese investors have called on two of their compatriots to invest in Vinh Long recently. This is a much more effective policy than promoting abroad," Mr. Tin said.

Nobuyuki Matsumoto of Jetro agrees. "Businesses will ask each other. If they say they are doing well, potential investors will come. But if they say there are challenges, their compatriots will hesitate," he said.


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