In early July, Coca-Cola officially inaugurated its $136 million food and beverage (F&B) plant in southern Tay Ninh province; its first facility in Vietnam to secure the green building LEED Gold certification. The project not only underscores the beverage giant’s continued investment in the country but also reflects the growing appeal of Vietnam’s manufacturing and processing sector among foreign investors.

Beyond new capital injections and fresh project launches, foreign enterprises are also setting their sights on Vietnam’s manufacturing and processing sector. A notable example is JBS S.A., one of Brazil’s leading meat processing corporations, which has announced a $100 million investment to build two facilities in Vietnam as part of its broader strategy to expand across Southeast Asia.

Wealth of advantages

These latest developments from foreign investors further underscore why Vietnam’s manufacturing and processing sector continues to stand at the forefront of FDI inflows. According to figures from the Foreign Investment Agency at the Ministry of Finance, in the first seven months of this year Vietnam attracted 2,254 new FDI projects with total registered capital in excess of $24.09 billion, up 27.3 per cent year-on-year. Notably, the manufacturing and processing sector led the way in both project numbers and investment capital, accounting for 827 projects and over $13.72 billion in registered FDI.

According to Mr. Rizwan Khan, Managing Partner at corporate services provider Acclime Vietnam, Vietnam’s geographic advantage along key global shipping lanes is emerging as a powerful competitive edge in attracting high-tech manufacturing investment, thereby drawing more foreign investors to manufacturing and processing projects in the country. “Especially beyond its fundamentals, such as cost-effective labor, a favorable demographic structure, improving infrastructure, and proactive FDI incentive policies, Vietnam possesses a combination of strategic advantages that continue to attract foreign investors, even amid global economic and geopolitical uncertainty,” Mr. Khan said.

Moreover, Vietnam’s strategic geographic position at the heart of Southeast Asia provides a critical edge. The country shares land borders with China, Laos, and Cambodia, while boasting a 3,260-km coastline along some of the world’s busiest maritime corridors. This unique geography offers a dual advantage: seamless access to both the land-based Greater Mekong Subregion and maritime Indo-Pacific trade routes. As a result, Vietnam is not only a natural entry point to ASEAN markets but also an emerging transshipment and value-added logistics hub, connecting China, Northeast Asia, South Asia, and the Pacific Rim.

Additionally, its extensive network of free trade agreements (FTAs) significantly enhances its export competitiveness and reinforces its appeal among manufacturers and investors seeking integration into global supply chains. Despite external challenges and regional fluctuations, Vietnam has demonstrated significant resilience and adaptability. The government has shown strong leadership, pragmatic decision-making, and policy flexibility - qualities that foster confidence among foreign investors. “As global value chains continue to shift, Vietnam is well-positioned to remain a stable and strategic investment destination in Asia,” Mr. Khan believes.

According to the ‘Manufacturing & Supply Chain in Vietnam: Navigating Through Trade Crosswinds 2025-2026’ report, released by Acclime Vietnam and logistics and industrial developer BW Industrial, Vietnam’s rising workplace productivity reached $9,182 per worker in 2024, contributing to its advantage in attracting FDI projects in the manufacturing and processing sector.

Within ASEAN, Vietnam and Malaysia stand out as the most likely to achieve high-income status by 2050, provided they maintain a productivity growth rate of 4.5 per cent annually. Notably, what sets Vietnam apart is that it has already surpassed this productivity growth threshold in the past decade, maintaining a consistent surplus in workplace productivity. This not only signals the country’s readiness for more advanced industrial activities but also reinforces its appeal as a long-term investment destination for high-value manufacturing.

Removing bottlenecks

However, investors still face certain challenges when investing in Vietnam’s manufacturing and processing sector. One of the most common is navigating the complexity of legal and administrative procedures. One particularly well-known example is the investment registration certificate (IRC) process, which is often the first hurdle for new investors. “While this step is fundamental to establishing a business presence in Vietnam, it can be time-consuming and complicated due to varying interpretations of the law at the local level,” Mr. Khan said.

The Vietnamese Government is, however, aware of these issues and efforts are underway at the central level to streamline and simplify the investment framework, such as through the amended Law on Investment and administrative restructuring across cities and provinces.

Meanwhile, for investors aiming to enter the Vietnamese market efficiently and with minimal friction, Mr. Khan emphasized the importance of engaging local experts at the earliest stage of the investment process. These advisors possess not only in-depth knowledge of Vietnam’s regulatory and business landscape but also valuable relationships with provincial and national authorities, which is an essential advantage in navigating the country’s administrative procedures. By involving experienced local consultants, investors can proactively identify potential bottlenecks, anticipate regulatory hurdles, and receive strategic guidance that is both context-specific and aligned with their operational goals.

Beyond internal conditions, external global factors also play a role in influencing FDI inflows into the manufacturing and processing sector, requiring Vietnam to proactively adopt appropriate measures to maintain its favorable outlook.

According to Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), the global political, economic, trade, and investment landscape remains complex, which could impact growth rates and affect FDI flows into Vietnam in general and the manufacturing and processing sector in particular. “Therefore, to improve the quality of FDI inflows, Vietnam needs to increase public investment in research and development (R&D), promote innovation, and create favorable conditions for both domestic and foreign enterprises to establish R&D centers and transfer technology through effective tax incentives and financial support,” he added.

Bright outlook ahead

Despite the lingering challenges, experts remain optimistic that the wave of FDI into Vietnam’s manufacturing and processes sector will continue. The country is widely expected to sustain strong FDI inflows throughout the second half of 2025 and well into the years ahead, as it continues to strengthen its position in the global supply chain.

Tariff rates between Vietnam and other Southeast Asian countries are relatively comparable and are unlikely to significantly sway investment decisions. Today’s foreign investors are increasingly focused on long-term fundamentals rather than short-term cost advantages.

What truly bolsters investor confidence in Vietnam is a combination of structural and strategic advantages: a favorable geographic location at the heart of Southeast Asia; a rapidly improving infrastructure network; a cost-effective yet increasingly skilled workforce; and deep integration into global trade agreements. Together, these factors create a stable, predictable, and efficient environment for manufacturing operations, making Vietnam not just a low-cost alternative but a long-term strategic hub for global investors seeking resilience and reach in the region.

Moreover, Mr. Khan noted that manufacturers today are not merely seeking the lowest-cost production location. They are prioritizing long-term operational efficiency, supply chain resilience, human capital, and regulatory stability. When weighed against these factors, along with the high costs and risks of relocation, Vietnam remains a highly-attractive destination.

“I believe Vietnam will continue to secure large-scale, high-quality FDI projects, particularly in high-tech industries such as electronics, semiconductors, and supporting sectors,” he said. “Its growing ecosystem of local suppliers, expanding FTA network, and stable policy environment make it one of the most promising manufacturing hubs in the region.”