FDI in processing and manufacturing sector: Opportunities for Vietnam

Processing and manufacturing sector attracts foreign investment

A recent report from the Foreign Investment Agency under the Ministry of Finance shows that foreign direct investment (FDI) in Vietnam reached 6.9 billion USD in the first two months of 2025, marking a 35.5% year-on-year surge. Of this, new registered capital amounted to over 2.19 billion USD, additional capital registered was over 4.18 billion USD, and capital from capital contributions and share purchases totaled 529.8 million USD.

Of the total 6.90 billion USD in FDI during the two-month period, the manufacturing and processing sector attracted the largest shares, with nearly 4.72 billion USD, representing 68.3% of the total registered FDI.

Vietnam aims to attract 40-50 billion USD in FDI each year during the 2026-2030 period

Giving assessment on FDI attraction in the processing and manufacturing sector, Vice Chairman of the Vietnam Association of Foreign-invested Enterprises (VAFIE) Nguyen Văn Toan noted that the processing and manufacturing sector has always been regarded as a ‘magnet’for foreign capital. “Notably, not only dominating in registered FDI capital, in the first two months of the year, FDI capital implemented in the processing and manufacturing sector also reached 2.42 billion USD, accounting for 82.1% of the total FDI capital implemented in Vietnam. This is a significant amount of capital, showing the attractiveness of the processing and manufacturing sector,” Toan stated.

According to the report, foreign investors have now invested in 19 out of the 21 industries in Vietnam’s national economic sectors with the processing and manufacturing sector holding the largest share of nearly 311.6 billion USD, accounting for 61.4% of the total FDI in Vietnam; followed by real estate with over 74.4 billion USD, and electricity production and distribution with over 41.9 billion USD, accounting for 14.7% and 8.3% of the total FDI respectively.

Toan said the reason why the processing and manufacturing sector attracts foreign investors is that Vietnam is still in its “golden population” period, with an abundant, highly-skilled workforce. Vietnamese workers are eager to learn and adapt quickly to new circumstances. In addition, the investment environment in Vietnam in recent years has attracted many of the world’s leading industrial corporations to invest, operate in production and business and achieve certain successes, for example: Samsung Group, LG, Canon, Honda, Toyota... These corporations have and will attract a large number of satellite enterprises operating in the processing and manufacturing industry to invest in Vietnam. In addition to these factors, Vietnam's open foreign investment policies in recent years have been assessed as open, creating favorable conditions for foreign investors to engage in production and business. This is also an important factor that has enabled Vietnam to attract numerous FDI projects in the processing and manufacturing sector.

Opportunities for Vietnam

“Attracting numerous FDI projects in the processing and manufacturing sector is considered a major success for Vietnam. This will provide a good opportunity for Vietnam to achieve its goal of becoming a developing country with modern industry and a high middle-income level by 2030. By 2045, Vietnam aims to be a developed country with high income, as set forth in the Resolution of the 13th National Party Congress,” Toan affirmed.

Although FDI capital in Vietnam in general, and specifically in the processing and manufacturing sector, is showing positive signs, the Politburo’s Resolution 50-NQ/TW sets a target of striving for registered FDI capital of around 200-300 billion USD during the 2026-2030 period, equivalent to about 40-50 billion USD per year. The disbursed FDI capital should reach about 150-200 billion USD, equivalent to 30-40 billion USD per year.

To achieve this goal, Prof., Dr. Nguyen Mai, Chairman of the VAFIE, stated that in the context of the shrinking global FDI, some exporting countries are adopting policies to encourage domestic corporations to invest back in their home countries. Meanwhile, FDI-receiving countries are competing by introducing policies to attract foreign capital.

FDI mainly concentrates on the processing and manufacturing sector

Although Vietnam has made considerable efforts to improve its investment and business environment, in reality, many foreign investors are still dissatisfied with the investment climate in Vietnam.

“Administrative procedures are still cumbersome, hindering business investment activities, and have not supported enterprises as in the spirit of a constructive government. Meanwhile, large foreign corporations in Vietnam need a supportive mechanism to reduce the time required for implementing procedures,” Prof. Dr. Nguyen Mai emphasized.

In order to achieve the above goal, in addition to completing transportation infrastructure, energy infrastructure, and investing in human resource quality, Vietnam needs to quickly cut unnecessary administrative procedures that are troublesomes to businesses, towards creating an investment environment with simplified, clear, and accessible procedures to support investors in implementing projects.