In this article, we will discuss the evolution of the country’s FDI between 2016 and Q3 of 2021. This report was done in conjunction with our partners RSP-INTERNATIONAL.
FDI in Vietnam per year
While Vietnam has seen steady and increasing FDI inflows since 2011, particularly for larger infrastructure projects, FDI inflows have accelerated in recent years due to the country’s business-friendly environment, which has been aided by the US Administration’s shift in policies toward China and the subsequent addition of tariffs on Chinese goods.
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The Covid-19 pandemic, on the other hand, had a significant influence on FDI in Vietnam, with the number of newly registered capital dropping below that of 2017.
Every year, several FDI and associated projects stood out owing to their magnitude and significance for Vietnam’s economic growth. The majority of them were infrastructural projects, such as industrial parks, ports, and power plants, as well as the establishment of new enterprises.
To access the charts depicting the 5 largest FDI projects for each year from 2016 to 2020, download the Vietnam FDI Report (2016-2020).
Accumulated FDI per year
(registered capital in US$ million)
Aside from the present epidemic, Vietnam has seen a surge in FDI year after year, with FDI for finished projects not surpassing new investment, as seen in the graph of cumulative investment from 2016 to Q3 2021.
The current pandemic and the lockdown that Vietnam has undergone, particularly the southern half, has had a significant impact on global corporations’ supply chains.
FDI by Region
The distribution of FDI across manufacturing and service sectors can also be seen when looking at the top 10 destinations of investment in Vietnam. [Top 5 Listed Below] (In US Millions)
|TP. HÔ Chi Minh||3,428||6.506||5,949||8,295||4,356||2,352|
Due to plans to upgrade infrastructure over the next few years, Ba Ria is one province that is currently targeted for further FDI growth. Finally, some provinces such as Thanh Hoa and Nam Dinh have received substantial one-time expenditures for infrastructure projects, particularly new power plants to accommodate the growing demand for energy in Vietnam.
With currently over 390 industrial parks and more areas scheduled to be built, more provinces will see the benefits of FDI development in Vietnam. With the increasing demand for improved infrastructures, investment in the provinces of Mekong Delta and Highland is expected. Though some provinces like Cau Bang or Lai Chau will continue struggling to attract FDI, other provinces rely on receiving investment for creating tourist hotspots.
FDI by Countries
Vietnam has been a popular investment destination for investors, especially for countries in East Asia. The five nations mentioned below in the table accounted for almost 70% of all FDI received by Vietnam between 2016 and 2020. When Taiwan is combined with other ASEAN nations such as Cambodia, Laos, Indonesia, Thailand, and the Philippines, the percentage rises to above 80%. This is made possible because of regional relationships and support for initiatives, such as the Chinese investment in the Hanoi Subway, and Japan’s sponsorship of the subway in Ho Chi Minh City.
The European Union (EU), on the other hand, has grown in importance as a partner for Vietnam. From 2016 to 2017, FDI more than quadrupled and has continued to sustain that level. Surprisingly, the Netherlands was the largest FDI distributor in 2019 and 2020, accounting for more than half of all registered capital. With the signing of the FTA between Vietnam and the EU in 2020, it is expected that FDI from various EU countries would expand, making the EU a new major source of FDI for the country.
The amount of FDI from the United States has been stable, with 2017 seeing the largest investment round in the past five years. While more investors are providing financial support for Vietnamese start-ups, the amount invested in US dollars is still minimal in contrast to the larger infrastructure projects supported by other countries.
Vietnam has grown in importance as a global FDI destination, drawing attention not just from its neighbors but also from the rest of the world. FDI was reduced in 2020 because of a general lack of global investment, but the country remained one of the hot spots in the Southeast Asia Region even throughout the epidemic, and news of the pandemic’s handling piqued interest even more. Nevertheless, owing to extensive lockdowns caused by Covid in 2021, FDI investment began to seem good in comparison to 2020.
However, greater investment necessitates infrastructure upgrades, such as road, rail, and renewable energy infrastructure, as well as additional manufacturing and technology industrial zones. Vietnam will be unable to manage all of the essential projects on its own and will require international partners – as well as more FDI.
Such development requires Vietnam to continue to create a business environment with simple access to the market and work permits that will attract more international investment. If these conditions are satisfied, the country will emerge from the pandemic as one of the most significant FDI destinations for many multinational corporations.
To read the full report with infographics and illustrated graphs, download the Vietnam FDI Report (2016-2020).