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FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam’s economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from experts, leaving a strong impression on the global economic community. Today, let’s take a comprehensive look back at Vietnam’s journey in attracting FDI, from its early stages to the remarkable achievements it has accomplished in recent years.
The Journey from Ground Zero
Taking the 1980s as a starting point, Vietnam at that time was still one of the most underdeveloped countries in the world. The economy was struggling, as it was closely following the Soviet Union’s centralized economic model while also facing sanctions from the U.S. and its allies. This led Vietnam into a severe economic crisis.
In 1986, Vietnam’s “Đổi Mới” economic reforms marked a shift towards a more open economy. The 1987 Foreign Investment Law, one of the most attractive in the region, allowed 100% foreign-owned enterprises with a minimum 30% foreign investment. This led to 213 investment licenses and nearly $1.8 billion in registered FDI within just over two years.
The government prioritized certain sectors for investment, particularly those deemed high-tech or socially important, as well as those in disadvantaged areas.
By 1988, the first FDI licenses were granted to Hochimex from Hong Kong and Bà Rịa-Vũng Tàu Tourism Company. Soon after, Vietnam attracted major industrial groups such as Taiwan’s PouChen and Feng Tay, specializing in footwear manufacturing. The manufacturing industry benefited from Vietnam’s large, young workforce and competitive wages, leading many businesses to relocate operations to the country. Honda’s official entry into the Vietnamese market in March 1996 marked the beginning of a new era for FDI in Vietnam.
The first wave of FDI companies in Vietnam began taking shape in the late 1980s. Between 1988 and 1990, Vietnam attracted $1.6 billion in foreign investment. This figure surged to $17 billion during 1991–1995. A major milestone came in 1996 when the country drew in $10 billion of FDI, accounting for nearly 58% of the total FDI in the previous five years. The influx of FDI had a significant impact on the country’s GDP, contributing to an average growth rate of 8.2% during this period.
The Boom Period
After a period of slowdown in foreign investment due to the Asian financial crisis from 2001 to 2005, a second wave of FDI companies in Vietnam began to form from 2005 to 2008.
According to Dr. Nguyen Tan Vinh – Regional Academy of Politics II, Vietnam experienced notable FDI growth beginning in 2006, especially after joining the WTO in 2007. In 2006, FDI exceeded $10 billion, primarily from American and South Korean investments, totaling $12 billion. By 2008, Vietnam attracted 1,171 projects with a registered capital of $71.7 billion, nearly matching the cumulative FDI from 1988 to 2007, despite the global financial crisis. This surge underscored Vietnam’s rising appeal as an investment destination and set the groundwork for ongoing economic growth. Tax incentives, including preferential tax rates and tax holidays, played a crucial role in attracting FDI during this period, highlighting the Vietnamese government’s commitment to fostering an open and appealing investment landscape.
In 2007, India revamped its investment strategy in Vietnam by launching two key projects: a $527 million hot-rolled steel plant in Ba Ria – Vung Tau from the ESSAR Group and the Hà Tĩnh steel complex by the TATA Group. As a result, India emerged as a top ten FDI source in Vietnam, making it the largest recipient of Indian investment in Southeast Asia. Compared to other countries in the region, Vietnam’s competitive labor costs and favorable business conditions made it an attractive destination for foreign investors.
Notably, in 2008, Samsung officially invested in Vietnam by establishing a mobile phone manufacturing plant in Bac Ninh province, marking the entry of one of the largest players in the FDI market in Vietnam.
These developments built on two initial waves of FDI, strengthening Vietnam’s position as a growing hub for foreign investment and multinational companies in the region.
Establishing Vietnam’s Position in the Foreign Direct Investment Landscape

From 2015 to 2019, Vietnam’s diplomatic standing and reputation in economic cooperation improved, making it a top destination for foreign direct investment (FDI) in Southeast Asia. In 2015, registered capital reached $22.757 billion, up 12.5%, while realized capital hit $14.5 billion, a 17.4% increase from 2014. Disbursed FDI also reached a record $14.5 billion, reflecting significant growth despite economic challenges and inadequate infrastructure.
The Vietnamese business landscape plays a crucial role in attracting FDI, shaped by government incentives, streamlined banking processes, and the necessity for understanding local laws and structures to establish a successful business presence.
2015 also witnessed significant investment projects from leading investors, including:
- Samsung Display Vietnam: Increased its registered capital from $1 billion in 2014 to $3 billion in 2015 at Yen Phong 1 Industrial Park, focusing on screen production and assembly.
- Duyen Hai 2 Thermal Power Plant: A 1,200 MW facility with a $2.4 billion investment from Janakuasa Sdn. Bhd. (Malaysia) in Tra Vinh province.
- City of Kings Joint Venture: A $1.2 billion project in Ho Chi Minh City developed by Tien Phuoc Real Estate and Tran Thai Real Estate in partnership with Denver Power Ltd. (UK).
- Cheng Loong Binh Duong Paper: Established a $1 billion paper manufacturing plant in Binh Duong Industrial Park, funded by Samoa.
From 2016 to 2019, foreign investment in Vietnam remained strong, with a record FDI disbursement of $20.38 billion in 2019, up 6.7% from 2018. FDI’s contribution to economic growth increased from 15.04% between 1986 and 1996 to approximately 18% from 2010 to 2019. The debt collection services sector is included in a newly established negative list within the Law on Investment, prohibiting foreign investors from entering this area.
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A Promising Future for the Vietnamese Market in Southeast Asia

Following the third investment boom, optimism is high for a potential fourth wave of foreign direct investment (FDI) in Vietnam. Since 2020, FDI inflows have declined compared to the impressive figures of 2015-2019, influenced by the COVID-19 pandemic and global political tensions. Nevertheless, the achieved numbers remain noteworthy.
In 2021, newly registered capital reached $14.1 billion, a 3.76% increase from the previous year, with 34,424 active FDI projects totaling $405.9 billion. By November 2022, total FDI inflows hit $25.14 billion, a 5% decrease from 2021, but the number of new projects rose by 14.9% to 1,812, despite an 18% decline in registered capital to $11.52 billion.
The 2023 FDI report shows a significant increase in registered FDI to $36.61 billion, up 32.1% from 2022, while global FDI growth only reached 3%. However, disbursed capital increased modestly by 3.5%, totaling $23.18 billion. This trend indicates that Vietnam remains a strong contender for future foreign investments. Tax holidays and incentives are available for a certain period, providing tax exemptions to investors in prioritized sectors, which further promotes investment in strategically important industries or regions.
At the September 2024 press conference, the Vietnamese government announced a 6.8% increase in total social investment for the first nine months of the year. Foreign Direct Investment (FDI) reached $24.78 billion, up 11.6%, with actual total investment at $17.3 billion—a rise of 8.9%, marking the highest level in many years. During this period, 183,000 new FDI companies in Viet Nam were registered or resumed operations. As of September 2024, Vietnam hosts 41,314 FDI projects with total registered capital of $491.71 billion and actual investment of $314.5 billion. The FDI Companies include Singapore, Japan, Hong Kong, China, South Korea, and the U.S., with Singapore leading at 18.6% of total FDI.
Looking ahead, BIDV Securities Company (BSC) forecasts continued FDI growth through 2024-2025 as manufacturing shifts from China. The Vietnamese government aims to strengthen strategic partnerships with the U.S. and Japan, anticipating a fourth wave of FDI focused on high technology and renewable energy. Establishing a Vietnamese company offers significant advantages, including an easier banking process for companies that have received their ERC. Navigating the local business landscape can be complex, so consulting local experts is essential to ensure compliance with regulations.
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Vietnamese Government Policies and the Future Investment Landscape of the Vietnamese Market
To enhance Foreign Direct Investment (FDI), Vietnam’s Politburo issued Resolution No. 50-NQ/TW on August 20, 2019. This resolution sets directions for improving investment policies by 2030, focusing on five guiding viewpoints, five specific goals, and 36 measures.
Key government policies provide opportunities for investors, such as Circular No. 78/2014/TT-BTC, which grants certain FDI enterprises a four-year corporate income tax exemption and a 50% reduction for the next nine years for projects in disadvantaged areas or focused on research and environmental protection. The 2020 Investment Law and various reforms further enhance the investment environment through tax exemptions and administrative simplifications.
For foreign investors, the key is to carefully assess and adopt the right market approach. A measured entry and long-term vision are essential. It’s crucial to have a comprehensive view of the market and seek insights from experts regarding the trends and developments in Vietnam’s FDI landscape. This deeper understanding will help shape strategies for successful foreign direct investment and the way forward.
With these efforts, Vietnam has strong opportunities to attract new investors, particularly from European countries. The Vietnamese government is evolving its approach to capital attraction by implementing strategies to distribute investment capital more equitably across sectors, developing new investment zones, and opening promising markets for investors.
Overview
Despite starting from a significantly disadvantaged position, Vietnam has effectively charted its development path. Transitioning from an economically isolated country, the Vietnamese market has emerged as an attractive destination for many leading international investors, thanks to appropriate strategies and policies. Not only has Vietnam established a strong reputation with FDI companies currently operating in Viet Nam, but it has also carved out a unique position in the context of global foreign direct investment (FDI) for the future, making Vietnam an appealing prospect for international investors.
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