Vietnam’s economy has seen rapid growth in recent years, making it an attractive destination for foreign investment. In 2020, despite the COVID-19 pandemic, Vietnam still witnessed strong inflows of foreign direct investment (FDI). According to the Vietnam investment review 2020 pdf published by the Ministry of Planning and Investment, as of December 20th, 2020, Vietnam attracted about $28.5 billion in registered FDI capital, equivalent to over 90% of the figure in 2019. The manufacturing industry continued to lead with registered capital of $13 billion, followed by electricity production and distribution. In terms of source countries, Asian economies led by Singapore and South Korea were the biggest investors. With trade deals such as EVFTA and RCEP taking effect, Vietnam’s participation in global supply chains is expect to expand further. The underlying strength of the economy, young demographics and government support for investment should lead to sustainable growth in foreign investment inflows over the coming decade.
Manufacturing sector receives majority of FDI
The manufacturing sector has been a major beneficiary of FDI into Vietnam over the past decade. In 2020, $13 billion out of the total $28.5 billion registered FDI went into manufacturing, which includes large projects by companies like Samsung, LG, Foxconn and others. Key manufacturing industries that attracted investment include electronics, textiles, food processing, furniture, plastics and chemicals. Vietnam has emerged as an alternative manufacturing hub to China, with competitive labor costs, a young population and stable government. Its proximity to major shipping routes is an added advantage.
FDI sources continue to diversify
While Asian countries like South Korea, Japan, Singapore and China account for majority of FDI into Vietnam, the sources of investment are becoming more diverse. In 2020, investors from Europe and the Americas contributed over 18% of registered capital in Vietnam. As the country integrates further with the global economy, investors from Western countries are being attracted by the growth potential. Sectors such as financial services, retail, education and healthcare are expected to benefit.
Government rolls out red carpet for investors
The Vietnamese government has identified attracting FDI as a key priority to aid the country’s development process. Successive administrations have introduced reforms to improve the investment climate, including simplifying administrative procedures for project approvals, reducing corporate taxes and allowing greater foreign ownership across industries. Special Economic Zones with tax breaks and custom exemptions have been established to facilitate export-oriented manufacturing. Bilateral and regional free trade deals also provide Vietnam access to major world markets.
In summary, Vietnam offers an appealing environment for foreign investors due to its political stability, cost competitiveness and growth prospects across industries like manufacturing, real estate and consumer services. The trends seen in 2020 Vietnam investment review pdf highlight the economy’s resilience and potential, making Vietnam a promising FDI location for the next decade.