Despite the complexities unfolding in the global economy, Vietnam’s FDI performance in 2024 impressed yet again by maintaining a high level of investment flow. Also impressive was the record-breaking FDI disbursement figure, signaling growing confidence among foreign investors in Vietnam.

Though the total fell short of the $40 billion target and mirrored the level posted in 2023, the country remains a beacon of success in attracting investment. This is largely due to its improving investment climate and promising growth prospects, which rank among the highest in the region and the world, even amid the economic uncertainties.

Significant investment results

Figures from the Ministry of Planning and Investment reveal that Vietnam attracted nearly $38.23 billion in FDI last year through new registrations, additional capital, and capital contributions for share purchases. Though this represents a slight 3 per cent dip compared to 2023, the standout performer was additional capital, both in the number of projects increasing their investment, which rose 11.2 per cent to 1,539 projects, and the total additional capital, of $11 billion, a remarkable 50.4 per cent rise against 2023.

FDI disbursement surged to a record $25.35 billion in the year, up 9.4 per cent from 2023 and marking the highest level to date. This accounted for 16.5 per cent of Vietnam’s total social investment, a slight 0.5 percentage point increase from 2023, signaling that the country remains a top destination for global investors.

The rise in both additional and disbursed capital reflects the growing trust international investors have in Vietnam’s dynamic investment environment, seeing it as a crucial player in the global supply chain. As a result, both new projects and expansions of existing ventures are on the rise.

December saw the largest monthly investment flow of the year, with nearly $6.85 billion invested, representing 17.9 per cent of the total for 2024. It was also the month when the number of new projects and capital contributions hit record highs for the year.

The government implemented several key policies to attract FDI throughout 2024, especially in high-tech sectors. Among these was the Strategy for the Development of Vietnam’s Semiconductor Industry to 2030 and Vision to 2050, and the establishment of an Investment Support Fund.

As a result, significant investments poured into industries such as semiconductors, energy (battery production, photovoltaic cells, and silicon bars), electronics, and other high value added sectors. This influx of capital not only creates jobs but also drives technology transfer and boosts the capabilities of domestic enterprises.

The manufacturing and processing sector continued to lead, with nearly $25.58 billion in FDI, accounting for 66.9 per cent of the total and up 1.1 per cent from 2023. The real estate sector followed, with $6.31 billion, making up 16.5 per cent and an increase of 18.8 per cent. Other sectors, such as electricity production and distribution, wholesale and retail, construction, transportation, and communications, also saw notable investment growth. This surge is not only fueling job creation but also helping Vietnamese companies gain technological expertise and improve their production capacity.

Key cities and provinces such Hanoi, Ho Chi Minh City, Bac Ninh, Hai Phong, Quang Ninh, Binh Duong, Dong Nai, Nghe An, Ba Ria-Vung Tau, and Hung Yen have become hotspots for FDI due to their strong infrastructure, stable workforce, ongoing administrative reforms, and active investment promotion. These ten localities alone captured 79.2 per cent of new projects and 70.1 per cent of total foreign capital in 2024.

Vietnam’s leading investment partners remain familiar faces from Asia. Singapore, South Korea, China, Hong Kong (China), and Japan together accounted for 73.4 per cent of new investment projects and 78.1 per cent of total registered FDI. In particular, both Singapore and South Korea increased their investments, by 31.1 per cent and 37.5 per cent year-on-year.

Awaiting large-scale projects

Despite a global slowdown in investment flows over recent years, Vietnam remains a top choice for foreign investors, thanks to its favorable investment climate, young workforce, and promising long-term growth potential. The country has a growing opportunity to attract FDI in high-tech sectors such as semiconductors and AI, and its growing reputation has caught the attention of major global tech giants eager to explore investment prospects in these advanced fields.

A major development took place in December, when Nvidia signed a landmark agreement with the Vietnamese Government to establish an AI Research and Development Center and an AI Data Center. This collaborative endeavor is expected to be a significant catalyst for Vietnam’s technological advancement, particularly in AI, and is likely to inspire further interest from high-tech investors worldwide.

Apple also completed the relocation of eleven audio-visual manufacturing plants to Vietnam, and its key partners, including Foxconn, Luxshare, and Goertek, have raised their investment levels and expanded their operations in the country. Leading semiconductor companies like Intel, Marvell, and Infineon have also been actively exploring Vietnam’s investment potential.

To strengthen its competitive edge in attracting strategic investors, particularly in high-priority sectors, the Vietnamese Government has introduced a range of new policies and procedures. On November 29, the National Assembly passed Law No. 57/2024/QH15, which amended and supplemented key provisions in four investment-related laws: the Law on Planning, the Law on Investment, the Law on Public-Private Partnership Investment, and the Law on Bidding.

The new law, which will take effect on January 15, represents a major step towards refining the legal framework for bidding, planning, investment, and PPP investments. Notably, two important additions to the Law on Investment include the creation of an Investment Support Fund and the introduction of special investment procedures, also known as the “green lane”.

The Investment Support Fund will be financed by corporate income tax revenue and other legal sources to maintain a stable investment environment, attract strategic investors and multinational corporations, and support domestic businesses in sectors that require investment encouragement.

The “green lane” regulation, meanwhile, will change procedural requirements from pre-screening to post-screening, significantly reducing the time needed to complete investment procedures. This change will create a more favorable and competitive environment for attracting strategic investors, boosting the country’s ability to attract high-tech investments and other targeted sectors. Specifically, this includes investments in innovation centers, R&D facilities, semiconductor industries, flexible electronics, chip production, and semiconductor materials. The development and production of high-tech products, as outlined by a Prime Ministerial decision, will also receive priority.

These two initiatives, according to the General Statistics Office (GSO), will effectively tackle Vietnam’s previous challenges in drawing strategic investors, enhancing the country’s appeal for large-scale, high-impact projects. “With the ‘green lane’ policy for investment and the implementation of the Investment Support Fund starting in 2025, Vietnam is poised to remain an attractive destination for foreign investors, particularly strategic investors,” according to the GSO. “Based on these changes, FDI registration in Vietnam is expected to experience significant growth in 2025 and beyond.”