Since the implementation of the Đổi Mới (Renovation) campaign in 1986, Vietnam has been considered a successful model in attracting foreign direct investment (FDI) due to its attractive investment environment, stable political landscape, and relatively high economic growth potential. Despite the global economic challenges in the post-COVID-19 era, foreign investors continue to invest in Vietnam, viewing it as an attractive destination with geographical advantages, improved regulatory frameworks, and an increasingly favorable investment environment. Vietnam investment opportunities abound for those seeking to capitalize on the country's growth and potential.

Classification of Foreign Investment Policies in Vietnam:

According to the State Bank of Vietnam (SBV), the Vietnamese government has introduced various policies and measures to support foreign corporations to invest in Vietnam, creating significant Vietnam investment opportunities. These include tax incentives and different tax benefits for investment projects in key industries such as information technology, manufacturing, and renewable energy. These measures have attracted many large-scale investment projects from international corporations. Specifically, according to the Ministry of Finance, foreign investment policies can be categorized into three types: FDI attraction policies, FDI upgrade policies, and policies encouraging partnerships between multinational corporations and domestic enterprises.

FDI Attraction Policies

FDI attraction policies are formed through incentives related to taxes, land, favorable capital transfer mechanisms, import-export activities, domestic market operations, and legal protections for investors' ownership of capital, assets, and intellectual property. This strategy includes reducing land leasing fees, granting tax exemptions or reductions for specific periods, and other incentives within defined timeframes for foreign corporations investing in Vietnam.

FDI Upgrade Policies

FDI upgrade policies are shaped in alignment with priorities for attracting FDI, such as high-tech projects, modern services, and the development of special economic zones with higher incentives compared to standard FDI projects. In some cases, governments may provide subsidies to investors to invest in Vietnam via large-scale projects with broad ripple effects, falling under the highest-priority categories.

Policies Encouraging Partnerships between Multinational Corporations and Domestic Enterprises

Policies encouraging partnerships between multinational corporations and domestic enterprises are developed as part of each country's industrial and service policies. These policies aim to ensure that domestic businesses benefit from FDI through cooperative relationships and technology transfer, as well as access to broader markets alongside multinational corporations. This policy also encourages multinational corporations to collaborate with local educational institutions (especially universities and high-level vocational training centers) and domestic research organizations to further enhance the capabilities and competencies of these institutions.

In summary, Vietnam's foreign investment policies encompass a range of strategies aimed at creating Vietnam investment opportunities and nurturing foreign investment. These policies include incentives for FDI attraction, prioritization of specific sectors for FDI upgrades, and measures to encourage collaboration between multinational corporations and domestic enterprises. These policies reflect the government's commitment to promoting a favorable investment climate and driving economic development through foreign investment.

Foreign Investment in Vietnam in the First 8 Months of 2023:

Vietnam investment opportunities remain one of the most attractive destinations for foreign direct investment (FDI), and in 2023, this market continues to capture the attention of global investors. This is largely attributed to Vietnam's open-door policies and the ongoing efforts of the Vietnamese government to create favorable conditions for FDI projects. According to the latest data from the Ministry of Planning and Investment, as of August 20, 2023, the total registered capital for new projects, adjustments, and contributions to purchase shares and capital contributions by foreign investors reached nearly $18.15 billion, representing an 8.2% increase compared to the same period last year and a 3.7 percentage point increase compared to the first 7 months of the year. While adjusted investment capital decreased, new investment and capital contributions continued to rise compared to the same period last year.

Vietnam's proactive approach to attracting FDI, coupled with its strategic location and improving investment climate, positions it as a promising destination for foreign investors in the years leading up to 2030.

Foreign Investment Structure in the First 8 Months of 2023 by Month and Investment Method

Source: Ministry of Planning and Investment

In terms of structure, foreign investors have invested in 18 out of the total 21 national economic sectors in Vietnam, opening significant Vietnam investment opportunities. The highest market share belongs to the processing and manufacturing industry, reaching nearly $13 billion USD, accounting for nearly 67.8% of the total registered investment capital and increasing by 14.7% compared to the same period last year. The real estate business sector ranks second with a total investment capital of over $1.76 billion USD, accounting for more than 9.7% of the total registered investment capital but decreasing by 47.2% compared to the same period last year. The finance and banking sector, professional activities, and scientific and technological activities rank third and fourth with total registered capital reaching nearly $1.54 billion USD (nearly 63.7 times increase) and nearly $800 million USD (increasing by 28.9%), respectively.

This reflects the trend of intelligent investment flow from all around the world. In the first 8 months of 2023, investments were made by entities from 100 countries and territories in Vietnam. Among them, Singapore stands out as the leader with a total investment capital of over $3.83 billion USD. Despite a 15.4% decrease compared to the same period in 2022, it still accounts for over 21.2% of the total investment capital in Vietnam. China ranks second with nearly $2.69 billion USD, accounting for 14.8% of the total investment capital, a 90.8% increase compared to the same period; it also leads in terms of new projects. Japan ranks third with a total registered investment capital of over $2.58 billion USD, accounting for more than 14.2% of the total investment capital, increasing by 73.1% compared to the same period. Next key investors who invest in Vietnam are South Korea, Hong Kong, Taiwan...

Among the total of 54 provinces and cities that received foreign investment in the first 8 months of 2023, Hanoi takes the lead with a total registered investment capital of over $2.34 billion USD, accounting for nearly 12.9% of the total registered investment capital and increasing 2.89 times compared to the same period in 2022. Hai Phong ranks second with a total registered capital to invest in Vietnam of over $2.08 billion USD, accounting for nearly 11.5% of the total investment capital nationwide, increasing by 72.2% compared to the same period. Next in line are Ho Chi Minh City, Bac Giang, Binh Duong... In terms of the number of projects, Ho Chi Minh City leads the country in terms of new projects (39.6%), project adjustments (23.4%), and capital contribution acquisitions (67%). Thus, both Hanoi and Ho Chi Minh City maintain their leading positions in the country in attracting foreign investment, further enhancing Vietnam investment opportunities.

As of August 20, 2023, it is estimated that FDI projects have disbursed approximately $13.1 billion USD, a 1.3% increase compared to the same period in 2022, and a 0.5 percentage point increase compared to the first 7 months of 2023. The region's exports (including crude oil) from foreign-invested enterprises (FDI) are estimated to reach nearly $165.69 billion USD, marking an 11.4% decrease compared to the same period, accounting for 73.7% of the total export turnover. Excluding crude oil, exports are estimated at nearly $164.38 billion USD, also experiencing an 11.4% decrease and representing 73.1% of the nation's total export turnover. However, the FDI sector still maintains a trade surplus of over $32 billion USD, including crude oil, and a trade surplus of over $30.7 billion USD, excluding crude oil. In contrast, the domestic enterprise sector runs a trade deficit of more than $14.7 billion USD. These upd ated and positive figures demonstrate that the FDI sector continues to play an important role in Vietnam's economic structure.

Foreign Investment Cooperation Strategy for the 2021-2030 Period

In June 2022, the Vietnamese government announced the foreign investment cooperation strategy for the period of 2021-2030 to establish a stable and predictive business environment for investors, thereby creating Vietnam business opportunities. The objective of this strategy is to attract foreign investment projects that utilize advanced, new, and high-tech technologies of the Fourth Industrial Revolution, modern management practices, high value-added contributions, positive ripple effects, and global production and supply chain connections.

The strategy is outlined to achieve the objectives se t in Resolution 50/NQ-TW issued by the Politburo on August 20, 2019, which outlines the direction for improving the institutional framework, policies, and enhancing the quality and effectiveness of foreign investment cooperation until 2030. Accordingly, the goal is to increase the registered investment capital ratio of certain countries and territories within specific regions to over 70% in the period from 2021 to 2025 and to 75% in the period from 2026 to 2030 of the total foreign investment capital nationwide. The focus will be on attracting FDI from Asian countries such as South Korea, Japan, Singapore, China, Taiwan, Malaysia, Thailand, India, Indonesia, and the Philippines; from European countries such as France, Germany, Italy, Spain, Russia, and the United Kingdom; and from the Americas, including the United States, thereby creating substantial Vietnam investment opportunities.

Furthermore, the strategy aims to increase by 50% the number of multinational corporations among the world's top 500 largest corporations ranked by Fortune Magazine (U.S.) that actively invest in Vietnam. The subsequent goal of the strategy is for Vietnam to be among the top 3 leading ASEAN countries and among the top 60 countries globally in terms of the World Bank's business environment ranking by the year 2030. Simultaneously, the strategy seeks to build and develop innovative and creative centers, and financial hubs of regional and international scale, and to generate momentum for economic and social development in the coming period.

Another important goal of the strategy is to enhance comprehensive efficiency and quality in attracting and utilizing foreign corporations to invest in Vietnam, increasing the contribution ratio of foreign investment in the socio-economic development, commensurate with the assistance and incentives received. The state will facilitate expanding markets, utilizing foreign investment regions to leverage capital, technology, management knowledge, and corporate culture. This will enhance the competitiveness of the economy, domestic enterprises, and products, promote domestic industries, agriculture, and services, and establish and strengthen the role of Vietnamese enterprises in the international community, thus creating more Vietnam investment opportunities.

However, Mr. Nguyen Minh Cuong, Chief Economist at the Asian Development Bank (ADB), points out, "We should not be surprised by the decrease in FDI, as this is a natural trend amid the ongoing global trade restructuring. It's time for Vietnam to reconsider its FDI attraction strategy to adapt to the new context." According to Cuong, the focus should be on improving project quality rather than merely concentrating on quantity. This implies the necessity of investing in high-quality human resources, infrastructure, and technology to attract high-value-added investors.

Recently, the Vietnamese government has also formulated plans to amend the strategy to attract more foreign investors to invest in Vietnam and create more Vietnam investment opportunities. These revision measures are expected to concentrate on creating a more favorable business environment, enhancing transparency in investment management, and promoting business environment improvements. In 2023, Vietnam remains an attractive destination for foreign investment, driven by supportive investment policies, foreign investment cooperation strategies, and government efforts to adjust strategies to attract FDI.

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