Focus revealed for attracting top-tier Foreign Direct Investment
In the past decade, Foreign Direct Investment (FDI) has significantly shaped Vietnam's economy, particularly its industry and services sectors. Between 2011 and 2024, the share of these sectors in Vietnam's GDP rose from 73.5 to 79.9 per cent, thanks to FDI.
Recent years have seen a surge in FDI, with the processing and manufacturing sector attracting the largest number of projects. In the first seven months of 2025 alone, around $12.1 billion was invested, accounting for about 61 percent of total foreign investment. This trend has been driven by sectors like manufacturing and real estate.
However, the potential of FDI to contribute more broadly and deeply in Vietnam is still limited due to factors such as labour shortages, infrastructure bottlenecks, and uneven policy enforcement.
Despite these challenges, FDI has had a transformative impact on Vietnam. It has played a crucial role in building a robust industrial sector, facilitating urban infrastructure growth, and advancing workforce quality. The textile and garment industry, for example, has attracted over $30 billion in FDI, far surpassing other sectors in export value, investment, and employment.
Vietnam's industrial competitiveness index has also risen significantly, from rank 95 in 1990 to 31 in the 2019-2022 period, driven by strong manufacturing capacity and exports.
Yet, productivity growth in FDI-involved industries remains slow and unstable. Over 72.1 per cent of related workers have no formal training, indicating a need for skill development.
In an effort to maximise FDI's contribution to industrialisation, experts propose a strategic policy overhaul. This includes shifting from broad-based incentives to a selective, performance-based approach, and strengthening domestic enterprises and developing genuine supporting industries.
One area where foreign investors often bypass activities is fabric production and dyeing due to local environmental regulations and unclear policies. This presents an opportunity for Vietnam to address these issues and attract more investment in these areas.
As FDI continues to shape Vietnam's economy, it is clear that a balanced approach, addressing both challenges and opportunities, is key to ensuring sustainable growth and development.
