Vietnam Fdi Report: Foreign Direct Investment in Vietnam - Comprehensive Insight From 2016 Until 2021

VIETNAM
FDI REPORT
Foreign Direct Investment in
Vietnam – comprehensive
insight from 2016 until 2021
CEKINDO BUSINESS INTERNATIONAL RSP INTERNATIONAL

Market Entry Consulting Project & Process Management
www.cekindo.vn www.rsp-intl.com
[email protected] [email protected]
+84 28 3535 0019 +84914878310
Vietnam FDI Report. Comprehensive Insight from 2016 until 2021
Introduction
or the last decade, Vietnam has become one of the most

interesting investment locations for Foreign Direct Investment
in Southeast Asia, which coincides with the impressive
economic growth that the country has witnessed.
The potential of a very young population (current median age is 32.5

years), improving education, growing wealth of the population and
the demand for infrastructure projects has attracted investors to
fund these projects or establish new production facilities.
In this article we will present the development of the country’s FDI

between 2016 and Q3 of 2021, covering the overall FDI investment &
projects as well as the development by sector and regions that
received the investment.
2 www.cekindo.vn | www.rsp-intl.com
Table
of Contents
SECTION PAGE
FDI Development 2016 - 2021 4
FDI By Industries 12
FDI By Region 16
FDI By Countries 20
Conclusion & Prediction 24
CLICK TO
JUMP TO SLIDE
FDI Development
2016 – 2021
FDI per year (in US$ million)
While Vietnam experienced a steady and ever-increasing growth of

FDI since 2011, especially for larger infrastructure projects, the FDI
development since 2016 got even a further push due to its
business-friendly environment helped by the change of policies by
the US Administration regarding China and the subsequently added
tariffs on Chinese products.
However, the global Covid-19 pandemic had a severe impact on FDI

in Vietnam, with the newly registered capital falling below the
numbers of 2017.
The increase of FDI is also reflected in the number of projects that

have started each year in Vietnam, with the exception of 2020 and
most likely 2021 as per the figures for the first 9 months.
Key FDI Projects (2016-2020)
With the FDI and related projects, some stood out every year due to
their size and importance for Vietnam.
Most of them were infrastructure projects for industrial parks, ports,
and power plants, as well as the creation of new factories in Vietnam.
This is reflected in the large investments in provinces with larger

industrial zones.
There were also some larger investments of international companies

to establish a base in Vietnam, mainly in Ho Chi Minh City and Hanoi.
The diagrams in the following pages show the 5 largest FDI

projects for each year from 2016 to 2020.
Projects in 2016 (in US$ million)
Accumulated FDI per year

(registered capital in US$ million)
Besides the impact of the current pandemic, Vietnam has

experienced a year-by-year increase of FDI, with FDI for completed
projects not exceeding new investment, as the following graph about
accumulated investment from 2016 to Q3 2021 highlights.
During the current pandemic and the lockdown that Vietnam,

especially the southern part, has experienced, the supply chain of
global companies was severely impacted. Abercrombie & Fitch
announced that the stop of production of factories in Vietnam was
one of the reasons that the sales target for 2021 has not been met,
which caused a 15% fall of their share price. Other businesses like
Nike also published their concerns about supply chain disruptions in
Vietnam.
So it will show how the development of the FDI for Vietnam will pick
up from 2022. But this is heavily dependent on the COVID pandemic
& the actions taken out by the government to control it without
disrupting supply chains.
FDI by
Industries
This is even more significant when highlighting the number of new

projects split by Industries, which has seen a steeper increase for
service industries than Manufacturing. Although, this is not reflected
in the capital due to the more capital-intensive projects for
Manufacturing and other Infrastructure projects.
The Manufacturing Industry is still the most important area receiving

foreign direct investment, the percentage of the overall FDI
investment has actually decreased from over 60% in 2016, while
other industries have increased total investments received.
FDI by Industry (registered capital in US$ million)
Number of new Projects by Industry
With the rise of the Start-Up scene to a prominent position in

Vietnam, overtaking Singapore for the overall received funding for
Tech Start-Ups, to become the second most popular destination in
SEA behind Indonesia, the FDI in technology-based companies has
increased. It is predicted that the number of projects in Education,
E-Commerce, Financial Services and Healthcare will continue to
increase, which will reflect in a higher total FDI investment. This was
shown even during Q3, when Vietnamese start-up like Bizzi, Loship,
Rever, VN Life or KiotViet continued to receive seven-figure funding
from foreign investors.
FDI by
Region
The distribution of FDI across manufacturing and service sectors can

also be seen when looking at the top 10 destinations of investment in
Vietnam. While Hanoi and Ho Chi Minh City were the top 2
destinations for FDI for the last five years, other provinces benefited
from investment in Manufacturing and other infrastructure projects.
Binh Duong and Dong Nai, located next to TP Ho Chi Minh City
received large amounts of FDI due to the various Industrial Parks
established, with many large international brands having their
operational base in Vietnam there. Hai Phong in North Vietnam also
benefited from the creation of large industrial zones and access to
the sea.
These three provinces are good examples of creating the right

infrastructure for foreign investors while receiving regular high-value
investments. Ba Ria is one province which is now earmarked for more
FDI development due to plans to improve the infrastructure over the
next few years. Finally, there are other provinces like Thanh Hoa or
Nam Dinh which also received larger investments as a one off for
infrastructure projects, especially new power plants required to meet
the increasing demand of electricity across Vietnam.
FDI by Region (registered capital in US$ million)
2016 2017 2018 2019 2020

Q1-3
Q1-3949
2021
2019
8455 2020
3586 2021
TP. Hồ Chí Minh 3,428 6,506 5,949 8,295 4,356 2,352
Hà Nội 2,794 2,499 7,519 8295

8,454 4356
3,585 2352
949
Bình Dương 2,367 2,798 2,327 3,412 1,884 1,790
Hải Phòng 2,990 885 3,093 1,383 1,511 2,705

3413 1884 1790
Đồng Nai 2,239 1,764 1,456 2,143 928 575
Bắc Ninh 900 3,405 1,124 2143

1,583 928
901 840
Long An 823 511 688 798 819 3,635
Bà Rịa - Vũng Tàu 532 245 2,115 1583

1,085 901
2,174 840
246
Bắc Giang 1,010 856 543 1,102 895 773

1384 1511 2705
Tây Ninh 701 1,009 837 1,253 548 648
1253 548 648

With currently over 390 industrial parks and more1 areas scheduled
8 to
be built, more provinces will see the benefits102
of FDI development
95 773 in
Vietnam. With the increasing demand for improved infrastructures
investment in certain Mekong Delta and10855 Highland
2174provinces
246 is
forecasted. Though some provinces like Cau Bang or Lai Chau will
continue struggling to attract FDI, other provinces rely on receiving
investment for creating tourist hotspots. 843 730 188
FDI by
Countries
Over the last decade, Vietnam became a popular destination for

investors from around the world. Not surprisingly, the majority of
investment comes from the East Asia region. Over the last five years
and also the first 9-month of 2021, South Korea, Hong Kong,
Singapore, Japan, and China were continuously the top 5 countries
for investing in Vietnam. In fact, between 2016 and 2020 over 70% of
the FDI originated from these 5 countries. If you take Taiwan and the
other ASEAN countries like Cambodia, Laos, Indonesia, Thailand, and
the Philippines, this number actually goes over 80%. This is certainly
based on the relationship built in the region, and support for some of
the projects like the Chinese investment for the Hanoi Tram and
Japan funding of the tram in Ho Chi Minh City.
However, the European Union has become a more important partner

for Vietnam. The FDI has doubled from 2016 and 2017 and remained
on that level. Surprisingly, the biggest FDI distributor was actually not
France or Germany, but the Netherlands, which provided more than
50% of the total registered capital in 2019 and 2020. With the FTA
between Vietnam and the EU signed in 2020, there are expectations
that the FDI from various EU nations will increase, becoming a new
key FDI provider for Vietnam.
FDI by Countries (registered capital in US$ million)
2016 2017 2018 2019 2020 Q1-3

Q1-3 2021
2021
South Korea 7,036 8,494 7,212 7,917 3,949 3,912
Singapore 2,419 5,308 5,071 4,502 8,994 6,283
Japan 2,590 9,112 8,599 4,138 2,368 3,266
Hong Kong 1,640 1,486 3,232 7,869 2,000 1,924
China 1,875 2,168 2,465 4,063 2,459 2,406
Taiwan 1,860 1,460 1,074 1,842 2,058 1,102
European Union 806 1,507 1,567 1,517 1,374 672
British Virgin island 858 1,651 1,866 1,372 903 393
Thailand 706 713 762 868 1,785 248
USA 400 869 550 460 360 426
The FDI from the US remained constant, with the biggest investment
round over the last 5 years being in 2017. While more investors
provide funding for Vietnamese start-ups, the volume in US$
remains small in comparison to larger infrastructure projects the
other countries support.
Number of new Projects by Country
The same picture emerges when comparing the number of new

projects by countries. Again, most new projects over the last 5 years
were funded from South Korea, Hong Kong, Singapore, Japan, and
China. Projects from the European Union have been increasing over
the last few years but remain behind the other five countries. When
considering the amount of new projects and the funding provided, it
becomes clear that China and Japan were involved in larger projects,
requiring a bigger investment per project.
Conclusion &
Prediction
What will be the future of FDI in Vietnam?
Vietnam has become a key destination for global FDI, with increasing
attention not just from neighboring countries, but also from the
Western World. The development not just over the last 5 years
highlighted in this paper, but the long journey the country has
managed over the last decade. Even during the pandemic, Vietnam
remained as one of the hot spots in the Southeast Asia Region, and
reports about the handling of the pandemic helped raise the interest
even more, though the FDI was reduced in 2020 due to the general
lack of global investment. However, 2021 became a challenging year
for Vietnam due to Covid causing widespread lockdowns, the FDI
investment started to look positive in comparison to 2020.
The signing of the 3 major Free Trade Agreements with the EU, the
UK, and the Regional Comprehensive Economic Partnership (RCEP)
in 2020 created a great opportunity for Vietnam, as it became even
more interesting for international organizations that want to take
advantage of the FTAs. Add the very young, educated population and
the impressive technology start-up scene, and there is no doubt that
Vietnam remains a key focus of global FDIs.
What will be the future of FDI in Vietnam?
The increased investment also requires modernization of

infrastructure as for road, rail, clean energy, and more industrial
zones for manufacturing and technology. Vietnam will not be able to
handle all the required projects on its own and requires global
partners – and is looking for even more FDI. The recent signing of an
Investment Cooperation Agreement between Beijing Urban
Development and Saigontel (both located in Vietnam) with US
investment firm Quantum Group to raise to $30bn is a great sign. This
investment should help with projects like Long Son Port, a logistical
center in Ba Ria, and a new railway connecting Bai Rai with TP Ho Chi
Minh City, Dong Nai, and Binh Dung. Similar cooperation between
Vietnamese firms and global investors should happen in the near
future to continue Vietnam’s economic development, which really
started over 10 years ago.
The requirement for this development is that Vietnam continues to

provide a business landscape with easy access to the market and
work permits that will attract more global investment firms to
increase FDI in Vietnam. If these requirements are met, Vietnam will
bounce back from the pandemic and should become one of the most
important FDI destinations for many global companies. This will be
critical for Vietnam to fully recover from the Covid-Impact in Q3,
which is currently predicted to happen by 2023.
CEKINDO BUSINESS
INTERNATIONAL
Market Entry Consulting
Shark building - 3rd and 8th Floor

29 Nguyen Van Mai Street, Ward 8
District 3, Ho Chi Minh City 72408,
Vietnam
[email protected]
+84 79 618 1621
RSP International
Project & Process Management
Level 46, Bitexco Financial Tower

02 Hai Trieu Street, Ben Nghe
Ward, D1
Ho Chi Minh City, Vietnam.
[email protected]
+84 914 878 310
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VIETNAM

CEKINDO BUSINESS INTERNATIONAL RSP INTERNATIONAL

or the last decade, Vietnam has become one of the most

The potential of a very young population (current median age is 32.5

In this article we will present the development of the country’s FDI

FDI Development 2016 - 2021 4

Conclusion & Prediction 24

FDI per year (in US$ million)

While Vietnam experienced a steady and ever-increasing growth of

However, the global Covid-19 pandemic had a severe impact on FDI

The increase of FDI is also reﬂected in the number of projects that

Key FDI Projects (2016-2020)

This is reﬂected in the large investments in provinces with larger

There were also some larger investments of international companies

The diagrams in the following pages show the 5 largest FDI

Projects in 2016 (in US$ million)

Projects in 2017 (in US$ million)

Projects in 2018 (in US$ million)

Projects in 2019 (in US$ million)

Projects in 2020 (in US$ million)

Accumulated FDI per year

Besides the impact of the current pandemic, Vietnam has

During the current pandemic and the lockdown that Vietnam,

This is even more signiﬁcant when highlighting the number of new

The Manufacturing Industry is still the most important area receiving

FDI by Industry (registered capital in US$ million)

Number of new Projects by Industry

With the rise of the Start-Up scene to a prominent position in

The distribution of FDI across manufacturing and service sectors can

These three provinces are good examples of creating the right

FDI by Region (registered capital in US$ million)

2016 2017 2018 2019 2020

Hà Nội 2,794 2,499 7,519 8295

Bình Dương 2,367 2,798 2,327 3,412 1,884 1,790

Hải Phòng 2,990 885 3,093 1,383 1,511 2,705

Bắc Ninh 900 3,405 1,124 2143

Long An 823 511 688 798 819 3,635

Bà Rịa - Vũng Tàu 532 245 2,115 1583

Bắc Giang 1,010 856 543 1,102 895 773

1253 548 648

Over the last decade, Vietnam became a popular destination for

However, the European Union has become a more important partner

FDI by Countries (registered capital in US$ million)

2016 2017 2018 2019 2020 Q1-3

Singapore 2,419 5,308 5,071 4,502 8,994 6,283

Japan 2,590 9,112 8,599 4,138 2,368 3,266

Hong Kong 1,640 1,486 3,232 7,869 2,000 1,924

China 1,875 2,168 2,465 4,063 2,459 2,406

Taiwan 1,860 1,460 1,074 1,842 2,058 1,102

European Union 806 1,507 1,567 1,517 1,374 672

British Virgin island 858 1,651 1,866 1,372 903 393

Thailand 706 713 762 868 1,785 248

USA 400 869 550 460 360 426

Number of new Projects by Country

The same picture emerges when comparing the number of new

What will be the future of FDI in Vietnam?

What will be the future of FDI in Vietnam?

The increased investment also requires modernization of