Attracting FDI in the New Context: Opportunities and Challenges for Vietnam

Foreign Direct Investment (FDI) is a critical driver for Vietnam’s economic growth, technology transfer, and international integration. However, in the new context, Vietnam faces both opportunities and challenges to maintain its appeal to FDI capital flows.

Opportunities for Attracting FDI in the New Context

1. Advantages of Political Stability and Geographic Location

Vietnam is considered an attractive destination due to its political stability and strategic geographic position in Southeast Asia. This positions Vietnam as a key hub in global supply chains, particularly for investors from Japan and South Korea.

2. Positive FDI Growth

In 2024, Vietnam’s registered FDI capital reached approximately USD 34-35 billion, with disbursed capital amounting to USD 24-25 billion, marking a significant increase from the previous year. High-tech sectors such as semiconductors and renewable energy are prioritized for investment.

3. Supportive Investment Policies

The Vietnamese government has implemented various incentive policies, including import tax exemptions, extended land tax exemptions, and special procedures (“green channel”) under the amended four laws effective from 01/01/2025. These measures have reduced project implementation timelines by approximately 260 days.

Challenges in Attracting FDI

1. Inadequate Infrastructure

Despite improvements, Vietnam’s infrastructure remains inconsistent, particularly in the Southwest region and the Southern Key Economic Zone. Issues such as traffic congestion, high transportation costs, and unstable electricity and water supplies hinder the attraction of high-tech projects.

2. Increasing Global Competition

Global FDI flows are projected to decline by 30-40% during 2020-2021. The trend of relocating production to domestic markets or nearby countries by major economies intensifies competition, requiring Vietnam to enhance its competitive investment policies.

3. Demands for Technology and Sustainability

FDI investors increasingly prioritize high technology and sustainable development. Vietnam must meet stringent environmental standards and improve the quality of its workforce to satisfy the demands of major corporations like Samsung, Intel, and LG.

Solutions to Enhance FDI Attraction Efficiency

1. Developing an FDI Attraction Strategy

The Ministry of Planning and Investment should collaborate with relevant ministries to formulate strategies targeting capital from major technology corporations, focusing on priority tech sectors and competitive incentive policies.

2. Advancing Administrative Reforms

Continue improving the investment environment by ensuring consistency in tax, land, and labor policies. Maintaining macroeconomic stability is also crucial to enhance resilience against global economic shocks.

3. Investing in Infrastructure and Human Resources

Developing synchronized infrastructure and training a high-quality workforce are key to attracting high-tech FDI, particularly in fields like semiconductors, AI, and clean energy.

Seizing Opportunities for Sustainable Growth

In the new context, Vietnam must leverage its inherent advantages and address challenges to maintain its position as an attractive FDI destination. W&A is ready to partner with Vietnamese enterprises to seize opportunities and promote sustainable growth!

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