Foreign Investment in Vietnam: A Growing Gateway to Southeast Asia

Over the past two decades, foreign investment in Vietnam has grown significantly, positioning the country as one of the most dynamic and attractive economies in Southeast Asia. Its stable political environment, favorable business policies, and strategic location have made Vietnam a priority market for global investors seeking growth in Asia.

This article explores the drivers of foreign direct investment in Vietnam, highlights the top contributing countries and sectors, and outlines the opportunities and challenges foreign investors should consider in 2025 and beyond.

Why Foreign Investment in Vietnam Is Booming?

For the last two decades, Vietnam has gone through an economic transformation from a centrally planned to a market-oriented economy. This rapid change, together with robust government backing and prioritized international trade deals has put Vietnam in the global capital magnet.

Key factors driving foreign investment in Vietnam include:

• Stable political environment with a pro-business government.
• Competitive labor costs compared to regional peers like China and Thailand.
• Strategic location near major shipping routes and close to key markets.
• Free Trade Agreements (FTAs), such as the CPTPP and EVFTA, give Vietnam preferential access to global markets.

These conditions have created a fertile ground for FDI inflows, especially in manufacturing, real estate, and high-tech industries.

Key factors driving foreign investment in Vietnam

FDI in Vietnam by Country: Who’s Investing?

When analyzing FDI (Foreign Direct Investment) in Vietnam by country, a few key players dominate the landscape. The top contributors to Vietnam’s FDI stock include:

1. South Korea

South Korea remains the largest investor in Vietnam, with major corporations such as Samsung, LG, and Lotte establishing substantial manufacturing and retail operations. Samsung alone has invested billions of dollars, making Vietnam a global smartphone production hub.

2. Singapore

Singapore ranks consistently in the top three, with diversified investments in real estate, logistics, finance, and renewable energy. The Vietnam–Singapore Industrial Parks (VSIP) are a testament to the strong bilateral economic ties.

3. Japan

Japanese investors focus on high-tech industries, automobile components, and supporting industries. The quality and sustainability of Japanese investments have had a positive impact on Vietnam’s industrial standards.

4. China and Hong Kong

While competitors in manufacturing, recent trends show increasing FDI investment in Vietnam from Chinese and Hong Kong companies, particularly in response to the US-China trade tensions. Many businesses are tending to shift their production facilities to Vietnam.

5. European Union and United States

With the EVFTA in effect, European investors have shown a growing interest in Vietnam. American companies, particularly in tech and service sectors, are also expanding their presence.

Top FDI Contributors to Vietnam by Country

FDI in Vietnam by Sector: High-Performing Industries

When evaluating FDI in Vietnam by sector, manufacturing continues to dominate. However, recent years have seen the rise of service-oriented and technology-driven sectors.

Manufacturing and Processing

This remains the leading FDI sector, attracting over 50% of the total registered capital. Key sub-sectors include electronics, textiles, automotive components, and precision engineering. Vietnam has established itself as a global hub for the production of smartphones, semiconductors, and consumer electronics.

Real Estate

Vietnam’s urbanization rate and rising middle-class demand are driving foreign interest in residential, commercial, and industrial property developments. Major cities such as Ho Chi Minh City and Hanoi are central to real estate investments.

Renewable Energy

In line with Vietnam’s carbon neutrality targets by 2050, foreign investment in solar, wind, and liquefied natural gas (LNG) projects is growing rapidly. The regulatory environment is increasingly favorable for green infrastructure projects.

ICT and Digital Economy

Vietnam’s digital economy is among the fastest-growing in Southeast Asia. Foreign capital is flooding into fintech, e-commerce, cybersecurity and software services via the country's tech population & backed by government-led digitalisation strategies.

Logistics and Infrastructure

Vietnam’s central location in ASEAN makes it a strategic logistics hub. Foreign investors are developing modern ports, highways, warehouses, and intermodal transport facilities to support growing domestic and international trade volumes.

This sectoral diversification is part of the government’s long-term vision to reduce reliance on labor-intensive industries and move up the value chain.

Evaluating FDI in Vietnam by Sector

Legal Environment and Incentives for FDI Investment in Vietnam

Vietnam has restructured its legal framework to promote transparency, efficiency, and investor protection. The 2020 revisions of the Law on Investment and Law on Enterprises streamline processes for business registration, licensing, and foreign ownership. Key legal highlights:

• Most sectors allow up to 100% foreign ownership
• A defined negative list outlines restricted or conditional sectors
• Foreign investors benefit from tax incentives, including corporate income tax holidays and land lease exemptions, especially for projects in high-tech or underdeveloped regions
• Dispute resolution mechanisms include access to international arbitration, as Vietnam is a member of the ICSID and the New York Convention

Vietnam has made progress in digitizing investment procedures through the national portal, though implementation remains uneven across regions.

Legal Environment for FDI Investment in Vietnam

Challenges and Strategic Considerations

Despite its advantages, Vietnam is not without challenges. Key considerations for foreign investors include:

• Infrastructure constraints in some provinces
• Legal and regulatory inconsistencies between central and local authorities
• Vietnam has an abundant young workforce but still faces shortages in high-level technical and managerial roles
• Environmental and ESG compliance requirements
• Administrative processing delays in licensing and land use approvals

To mitigate risks, investors are advised to conduct thorough due diligence, work with experienced local partners, and monitor policy developments closely.

The Future of FDI in Vietnam: What to Expect

Looking ahead, Vietnam is poised to remain a hotbed for foreign investment. The government aims to attract more FDI in high-tech, green industries and digital infrastructure to move up the value chain and reduce reliance on low-cost labor industries.

Key future trends include:

• Smart manufacturing and Industry 4.0 integration.
• Expansion of green energy projects in line with Vietnam’s carbon neutrality goals.
• Enhanced data privacy and digital economy regulations to attract global tech players.
• Public-private partnerships (PPP) in infrastructure and transport.

Additionally, global companies seeking to diversify their supply chains amid geopolitical tensions are viewing Vietnam as a strong alternative to China.

Conclusion

In fact, foreign investment in Vietnam shows no signs of slowing as the country solidifies its perch as a major economic powerhouse in Asia. Vietnam continues to stand out as a compelling option for global capital, particularly in manufacturing, tech, and green energy.

Globally, anywhere in manufacturing or tech or sustainable energy: Vietnam is a strong and open investment location. For investors, keeping a dutiful eye out on FDI in Vietnam by country and FDI in Vietnam by sector will assist them in making decisions in a future-ready way.