Vietnam’s August 2023: An Overlook of Surging Top Industries’ FDI

Discover August 2023's FDI surge in Vietnam's top attractive industries. Explore a dynamic international economic growth of Vietnam.

In August 2023, Vietnam witnesses a surge in FDI across pivotal sectors, enhancing economic growth. Manufacturing, healthcare, and high-tech industries emerge as focal points, attracting substantial Vietnam’s FDI. This positive trend underscores Vietnam’s dynamic economic landscape.

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High-Tech Projects Drive Momentum Amid 

Due to significant investment projects in the post-COVID-19 recovery and general uncertainty around the world, the inflows of Vietnam’s FDI are increasing despite obstacles for European investors, such as infrastructure, bureaucracy, and taxes. Over US$2.8 billion in FDI was recorded in July alone, helping to bring the total amount received in the first seven months of the year to US$16.24 billion. 

Major gas and power projects, including the Son My electricity center and LNG terminal efforts, involving both Vietnamese and foreign investors have received licenses from the province of Binh Thuan. In addition, a sizable semiconductor project is being attracted to the province of Bac Ninh in the wake of the Amkor Group venture’s upcoming US$1.6 billion debut. These initiatives highlight the desire for FDI on a national level, which is represented by Nghe An province’s approval of a US$165 million project centered on aluminum alloys and renewable energy.

Vietnam’s FDI aims to attract more high-tech, large-scale projects by offering non-tax incentives to foreign investors in line with the global minimum tax rate application.

Read More: Vietnam’s FDI of Industries, Source Countries, and Geographical Regions in 2023

Electronics Industry Thrives: Major Players in Vietnam

Electronics giants like Foxconn, New Wing, and Luxshare are expanding operations in Vietnam, propelled by quick approval processes and strong profits. Foxconn earned US$317 million in after-tax profit from its Vietnamese plants, while New Wing made US$210 million from a revenue of US$1.43 billion. Luxshare’s facilities generated nearly US$4 billion in 2021, surpassing Goertek. Apple’s suppliers are growing in Vietnam, set to manufacture 65% of AirPods by 2025. Samsung plans to invest US$20 billion in the country, and LG aims for a US$4 billion investment, establishing Vietnam as a production hub. 

Amidst this growth, Chinese electronics companies are also exploring investment opportunities in Vietnam. BYD Electronics, Compal Electronics, and others are making substantial contributions to the Vietnam’s FDI.

Read More: What do Electronics Manufacturers See in Vietnam’s $116 Billion Industry?

Vietnam’s ICT Industry Sees New Development Opportunities 

Despite a small reduction in overall income for the month of July, the ICT industry in Vietnam has seen new opportunities for growth. According to the Ministry of Information and Communications report, industry income in July was US$11.8 billion, an 8% drop from June but a 2% gain from the previous year. 

The sector’s digital transformation, 4G and planned 5G networks, and new services are considered driving drivers for future growth even though its income contribution to the state budget decreased by 3% from the previous month. Vietnam’s commitment to technology advancement in different fields is demonstrated by its ranking as the eighth-highest country in the world in terms of mobile app downloads and ongoing initiatives, such as the Law on Electronic Transactions.

Read Related: A Dynamic ICT Industry in Vietnam for Foreign Investment

A Current Highlights for Cold Storage in Vietnam Market

In an effort to meet the country’s rising need for high-quality cold chain logistics, foreign businesses are becoming more and more interested in Vietnam’s cold storage industry. Nearly 400,000 square feet of additional cold storage space have been added in northern Vietnam by Lineage Asia Pacific in collaboration with SK Logistics. This action is in line with Lineage’s strategic plan to grow in the Asia Pacific region, where Vietnam is important. 

Another sign of the industry’s potential expansion is that Yokorei, a Japanese firm that specializes in refrigerated warehousing, recently acquired an investment certificate for a US$52 million cold-storage facility. Due to growing consumer demand, an uptick in seafood processing, and the need to store items like COVID-19 vaccines, the cold chain market in Vietnam is projected to experience an annual growth of approximately 12%.

Read More: Navigating Vietnam’s Logistics Market: How to Enter and Succeed

Next Levels for Vietnam’s Dairy Game

Despite obstacles, foreign businesses are enthusiastic about Vietnam’s dairy market. A South Korean bakery company called Orion Food Vina (OFV) has teamed up with a Thai dairy company called Dutch Mill to introduce products like Choco IQ milk and ProYo drinking yogurt. The Morinaga Milk Industry of Japan has entered with a target sales target of US$73 million. Domestic behemoths like Vinamilk and TH Group invest extensively in expansion and quality while foreign players arrive.

Vietnam’s dairy market has room to grow, with per capita demand projected to hit 40 liters by 2030. Foreign and local companies are competing by innovating, forming partnerships, and adopting modern tech. In the domestic market, Vinamilk and TH Group take the lead in investment, while market growth stems from heightened awareness, a expanding middle class, and increased demand for quality dairy products.

Read Related: Why Foreign Investors F&B Brands Should Expand to Vietnam?

Opportunities for Chinese: Investment from Big Companies

For this year, China has surpassed Japan to take third place among major investors in Vietnam. Between January and July, Chinese investors led all investors with nearly US$2.33 billion in investments and 325 new projects. China’s steady investment trend is evident with capital of US$2.46 billion in 2020, US$2.92 billion in 2021, and $2.5 billion in 2022. Notably, prominent Chinese battery and energy storage companies planning over $1B investments underscore China’s strong focus on the Vietnamese market.

Chinese conglomerate Boway Group will lease a 20-hectare plot in Vietnam’s Cong Hoa Industrial Park for a US$350 million solar manufacturing project, producing photovoltaic cells, energy conversion modules, and alloy strips starting in 2024. 

Chinese battery firm Gotion is investing US$150 million in VinFast. And Xiamen Hithium Energy Storage Technology is making substantial investments in high-tech in Hai Duong. It also invests in automotive electronic component production in this Vietnam province.

In order to strengthen its supply chain and satisfy customer demand, Wistron invested an additional US$24.5 million in its Vietnam business. This action follows Wistron’s earlier US$300 million investment in its Vietnamese operations. 

Read More: Top Industries for Chinese Investors to Start a Business in Vietnam

Singaporean Firms Expanding in Vietnam’s Healthcare Market 

Singaporean firms tap into Vietnam’s healthcare boom, propelled by a growing middle class, aging population, and expat surge. Thomson Medical Group‘s US$381.4 million acquisition of Far East Medical Vietnam extends its regional presence. SciGen and Doctor Anywhere expand healthcare, while other Singaporean companies diversify into property, renewable energy, and manufacturing. 

Singaporean investors are boosting development in Nam Dinh, Vietnam. Sanbang Pte., Ltd. secured approval for a US$28.7 million factory producing textiles and yarns. Sunrise Material partnered with Dai Phong Infrastructure Construction for a US$100 million high-tech packaging film plant. Singapore’s interests span property, renewable energy, manufacturing, healthcare, and technology in Vietnam, fostering innovation and tourism collaborations between the countries.

Read Related: Singapore’s MRA Grant – Market Expansion into Vietnam

Japan-Vietnam Partnership Boosts Strategic Investments

Vietnam’s ministries partner with Japan to boost funding in high-tech, energy, and production, integrating further into global supply chains. Japan will contribute to sustainable energy and use technology to support Vietnamese agriculture. Initiative confirms close ties between Japan and Vietnam. The eighth phase is concerned with improving the regulatory and investment climate. 

Bilateral trade reached US$20.8 billion in H1 2023 thanks to Japanese investment. A JETRO study confirms Vietnam’s appeal to Japanese investors, ensuring its position for Japanese companies’ global expansion.

Read Related: Understand the Fundamentals of Japan & Vietnam’s Trade Under the VJEPA

Attractive Economic Cities for Foreign Investment in August

Danang‘s tourism received a boost with the revival of the Danang International Fireworks Festival. Boosting tourism, Vietnam’s central region prioritizes marine economy growth and tourism sector enhancement. Khanh Hoa and Quang Binh target strategic development and investments to establish themselves as prominent tourism hubs.

Thai Nguyen has made remarkable strides in the digital economy, witnessing a surge in e-commerce, digital enterprises, and cashless transactions. The province targets a digital economy contribution of 20% by 2025 and 30% by 2030 to the regional GDP. For two years in a row, it holds the eighth spot in Vietnam’s digital transformation index, illustrating successful implementation of Resolution 01, which focuses on local digital transformation until 2030.

FDI spurs socio-economic growth in Hung Yen, attracting US$360 million in H1 2023. Hung Yen hosts 520 foreign-invested projects worth US$7.1 billion. It focuses on electronics, manufacturing, autos, boosting economy, exports, jobs, and workforce quality.

Thua Thien-Hue aims for a distinctive urban identity as it seeks city status under the central government, preserving heritage, and modern development. The plan is to develop Chan May-Lang Co into an industrial zone, seaport, trade center, and tourism hub. It emphasizes environmental protection, industry growth, sustainability, and urban quality.

Nam Dinh Vu Industrial Park in Haiphong, Vietnam, seeks strategic investors and recently hosted over 200 South Korean enterprises to showcase its support policies and infrastructure. With an internal seaport and a focus on green initiatives, the park aims to attract more Vietnam’s FDI, benefiting from its investment climate and partnerships.

Read More: Vietnam’s Industrial Hubs: A Key Player in Global Manufacturing

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Ian Robin Comandao

Ian Robin Comandao is the Head of the Business Consulting Department of Incorp Vietnam. He is a Sales and Marketing professional with 15+ years of experience in key accounts management.