Outlook for FDI Vietnam in 2021

Outlook for FDI Vietnam in 2021

Located in the heart of South East Asia and along the coastline of the Pacific Ocean, Vietnam has been a rising star for FDI opportunities.

Trường Lăng

July 7, 2021

Located in the heart of South East Asia and along the coastline of the Pacific Ocean, Vietnam has been a rising star for FDI opportunities. With its rapid economic growth and comparative advantages of providing incentive policies to improve the investment climate, it is optimistic that there will be a huge shift of big and small foreign investors to Vietnam for the year ahead. In this article, we’re going to show an outlook of business opportunities in Vietnam and the country’s prospects for FDI in 2021.  

Opportunities for Vietnam FDI in 2021

The wave of investing in Vietnam is likely to continue into 2021 when recent years witnessed a significant number of FDI projects under trade agreements Vietnam has signed. However, it is important to note that there will be changes in the structure and investment patterns. Some factors that could contribute to the changes are the growth of consumer-facing FDI, Vietnam’s digital economy, and agreements with nations beyond Asia. 

The growth outlook for consumer spending could impact foreign investors in the consumer-facing sector. Consumer-facing FDIs inflow is also dependent on the return of Vietnam’s mobility and consumer behaviour changes to digital products. Along with this, the rapid expansion of Vietnam’s digital business landscape could affect consumption trends. 

While the consumer remains a driver of FDI, the routes foreign firms need to take when doing business in Vietnam is likely to change. With the boom of smartphones, the internet, and social networks, Vietnam’s digital economy is akin to “a dragon being unleashed” with great potential. According to the e-Conomy SEA 2019 report by Google, Temasek and Bain & Company, the country’s digital economy is expected to top US$52 billion in value by 2025. Investors could consider pouring money into the sub-sectors of the digital economy that represent nascent and high-growth areas of consumer demand such as e-commerce, digital banking, and online gaming. 

As investors could expect further improvements in doing business in Vietnam, the trade intensity of FDI is likely to expand. On top of the positive economic benefits of the high-quality processing and cost competitiveness, Vietnam’s export and import industries both in the goods and services sectors are lucrative targets that no foreign investors want to overlook. Additionally, Vietnam has used its participation in free trade agreements with countries beyond Asia as an instrument to encourage a new range of FID in terms of geography and sectors. For example, EuroCham’s report revealed that 72 per cent of members believed that the number of European firms investing in Vietnam will increase thanks to the effect of EVFTA. 

Opportunities for Vietnam FDI in 2021
Opportunities for Vietnam FDI in 2021

Key fields and provinces to invest in Vietnam

Attracting foreign direct investment has always been a focus of Vietnam’s external economic affairs. As a part of the process, the Ministry of Planning and Investment suggest investors who want to set up a company in Vietnam pay attention to key industries. The prioritized manufacturing sectors include electronics and components manufacturing; supporting industries in these industries; pharmaceutical manufacturing; medical equipment; digital technology, digital banking; processing industries (for agriculture products) and automobiles. Furthermore, heavy industries including steel, oil and gas; renewable energy, electrochemical oil, and LNG are other key contributors to the nation’s export share. In addition to the existing business opportunities in Vietnam, the government is working hard to boost the innovative ecosystem. At the Vietnam venture submit conference, US$800 Million pledged to support startups and projects with innovative ideas. 

There are four key economic regions in Vietnam. In which, the Southeast Delta and the Red River Delta cover the majority of economic and investment hubs in the country. Investors who are interested in the Red River Delta should probably consider Hanoi, Bac Ninh, Hai Phong, Hai Duong, Bac Giang, Hung Yen, Vinh Phuc, Ha Nam. Otherwise, some localities have advantages of good infrastructure conditions, favourable locations in south-east Vietnam are HCM City, Dong Nai, Binh Duong, Vung Tau, Da Nang, and Quang Nam. 

Given the attractiveness of investor-friendly regulations, stable socio-political environment, cost-competitive labour force, and consumer demand prospects, FDI opportunities in Vietnam in 2021 and in the forthcoming years look promising. Therefore, it is confident that Vietnam will remain an appealing hub of investment in ASEAN. 

If you are a foreign investor and businessman who seek investment opportunities in Vietnam, please contact Viettonkin consultant team via email or contact page to get support. With our specialized knowledge and experience in helping foreign enterprises’ getting into the Vietnamese business environment fruitfully and economically, we can provide detailed advice on procedures, stages, and documents required to prepare for the application of a Vietnam business registration certificate. 

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