Successfully investing in Vietnam

Since the country's accession to the World Trade Organization in 2007, Vietnamese markets have been exten­sively opened to foreign investors in many sectors. Simultaneously, the government has issued various policies easing business conditions and relaxing administrative burdens. In addition, Vietnam has also signed several new free trade agreements, such as EU-Vietnam FTA and UK-Vietnam FTA, which are promising to boost trade flows and to create attractive and safe conditions for business ventures in the country.

 

Foreign investment into Vietnam is largely open and liberalised, save for very limited areas subject to foreign in­vestment restrictions (e.g., financial services, certain aspects of logistics, telecommunications and utilities). Ne­vertheless, Vietnam's liberal market economy holds great potential for foreign investors, particularly in the fields of manufacturing, renewable energy, high-tech and IT, the last being subject to attractive tax incentives. The country's internal market also offers a good basis for foreign investors due to its rapidly growing middle class and a high number of consumers. The focus on traditional agricultural and labor-intensive industries, such as textiles and timber, is still there but is currently shifting. Currently we are witnessing a development away from shoe and garment production to more complex assembly and production of machines and electronic and electrical equipment. Renewable energies are still very underdeveloped in Vietnam and offer good op­por­tunities – a fact that has been recognized by the country's government, which is proactively trying to attract in­vest­ment in this area.

 

Direct foreign investments were an important driving force and another example of the overall successful man­age­­ment of the pandemic in Vietnam. The Ministry of Planning and Investment announced for the current year 2023, the registered capital from foreign direct investment in Vietnam rose to slightly more than 3.4 billion US dollars in April, the highest monthly increase this year. This brings Vietnamese FDI in 2023 to a total of 8.88 billion US dollars, up 82.1 percent year-on-year.

Despite noticeable deficits in the areas of legislation, regulations, bureaucracy, corruption, internal processes and infrastructure, Vietnam continues to develop positively. Backed by a stable and predictable political frame­work, the shortcomings are gradually being reduced in order to make the country even more attractive – espe­cial­ly for foreign investors.

 

Vietnam will continue to work hard on the development of its industry and towards the country's modern­iza­tion, effectiveness, and sustainability, in order to generate a higher competitiveness as a stable basis of an industrialised nation. The country will be able to exploit and take advantage of opportunities from signed Free Trade Agreements to remove trade barriers which will, in turn, support the domestic exportoriented industries and therefore open new and additional opportunities for trade and foreign direct investment.

 

One of the most current and innovative sectors is energy, following the implementation of the ASEAN Plan of Action for Energy Co-operation Phase II, where Southeast Asia countries have committed themselves to meet a target of 23 percent of renewable energy by 2025. It is stating the obvious to say that there is an increasing need for investment in renewable energy capacity and in electricity networks to facilitate the flexibility needed to integrate renewables. 

 

Vietnam is an ideal place to invest in such progressive technologies as there is a current shift to a national implementation of programs rather than an ASEAN-led regional infrastructure through different models for attracting private investment depending on the country (i.e. long-term concession; build own operate and transfer contracts, etc.). Particularly, Vietnam is leading the ASEAN sector in clean energy investment (34 percent of ASEAN investment in 2021) and has plans to install more than 13 GW of new renewable energy from projects (50 GW capacity from wind and solar planned for 2030).