What is driving the strong FDI inflows into Vietnam?

Vietnam remains an attractive destination for global investment

According to the Ministry of Planning and Investment, Vietnam is among the top 15 developing countries attracting the most FDI worldwide. FDI plays a crucial role in Vietnam’s economy. Among the countries and territories investing in Vietnam, China led in the first two months of the year with US$679.8 million, accounting for 31% of total newly registered capital. It was followed by Singapore, Hong Kong (China), the British Virgin Islands, the US, and Japan. This highlights Vietnam’s continued appeal to global investors.

The cooperation agreement between the Vietnamese government and NVIDIA, a US-based multinational technology corporation, marks a major milestone, creating an opportunity for Vietnam to become a leading research and development (R&D) hub for AI in Asia. The wave of investment in high-tech projects and R&D centers is also driving demand for infrastructure and industrial facilities, boosting the growth of the industrial real estate market.

The National Financial Supervisory Commission forecasts that FDI inflows into Vietnam will remain strong, particularly in high-value sectors such as semiconductor manufacturing, artificial intelligence, digital transformation, and logistics. FDI disbursement in 2025 is expected to exceed US$30 billion.

Doan Huu Hau, director of digital transformation and AI application services at FPT Digital, said that Vietnam’s economy continues to grow steadily due to sound macroeconomic policies, robust export growth, and the sustainable development of key industries and the domestic consumer market.

Economist Vo Tri Thanh noted that statistics from the first two months of the year indicate continued FDI inflows into Vietnam, with investment commitments and disbursements improving. He pointed out two key factors behind this trend.

First, despite global supply chain shifts and rising geopolitical tensions, Vietnam remains a preferred destination for major corporations and companies across various sectors, particularly in technology. Second, this is closely linked to Vietnam’s ongoing economic reforms, efforts to maintain its position, and macroeconomic stability.

Accelerating reforms and improving the investment climate

According to business community assessments, the government’s commitment to streamlining the administrative apparatus has enhanced efficiency and reduced bureaucratic burdens for enterprises.

Growing business confidence is attributed to Vietnam’s consistent economic reforms and its leading role in the global trend toward sustainable development. The government is also maintaining strong FDI incentives, such as a corporate income tax rate of only 10% for 15 years or 5% for 37 years for special projects.

However, in a rapidly evolving technological landscape with increasing transparency requirements, challenges remain. Administrative procedures are not yet fully streamlined, the tax system lacks uniformity, visa issuance for foreign experts remains complicated, and limitations in infrastructure development, governance capacity, and information technology continue to pose significant obstacles to Vietnam’s financial market.

Hau emphasized the need for Vietnam to reform its education system, focus on fundamental research, and enhance English language training to develop a high-quality workforce, particularly in AI and semiconductor industries.

Vo Tri Thanh cautioned that the early months of 2025 are marked by uncertainty as the US government carries out policies that could impact trade and investment flows. Some investors remain cautious, while assessing the situation before making decisions. However, if Vietnam skillfully manages partnerships, advances economic reforms, and improves its business environment, FDI inflows are projected to continue as expected.