Future FDI trends and forecasts for Vietnam 2025

Although foreign direct investment (FDI) flows into Vietnam in 2024 will grow slowly, positive signals from strategic sectors such as high technology and renewable energy are creating a solid momentum for a breakthrough in 2025. Let’s dive into current FDI landscape and major investors in Vietnam, and see how future FDI trends and forecasts for 2025 look like with Faro Vietnam in this article!

1. Definition and importance of FDI in Vietnam

1.1 Definition of FDI in Vietnam

Foreign Direct Investment (FDI) is a form of investment in which an organization or individual from one country invests in an organization or enterprise in another country. This investment usually includes purchasing shares of a foreign enterprise, owning or controlling part or all of that enterprise.

Since the reform from a centrally planned economy to a socialist-oriented market economy model with state management and regulation, Vietnam has become a potential destination for foreign investors due to its open and business-friendly foreign policy, political stability, and increasingly developed infrastructure.

The main sectors attracting FDI in Vietnam include industrial production and processing, financial services, real estate, and renewable energy. In particular, large cities such as Hanoi and Ho Chi Minh City are becoming the main destinations for many large projects from international investors.
 

Exploring FDI in Vietnam: 2023-2024 Insights

1.2 The importance of FDI to Vietnam's economic development

1.2.1 Supplementing the total social investment capital
Statistics show that FDI capital accounts for a significant proportion of the total development investment capital of the whole society. FDI enterprises often originate from developed countries, bringing not only large capital but also advanced technology. This has helped improve the efficiency and competitiveness of the Vietnamese economy.

Modern production processes and advanced technology have contributed to promoting production capacity and reshaping the way industries operate. The increase in disbursed FDI capital will expand the production scale of economic sectors, thereby creating conditions to promote Vietnam's economic growth.

1.2.2. Improving Vietnam's export capacity
It can be seen that exports from the FDI sector always account for over 50% of the country's total export value, proving that FDI plays an important role in improving Vietnam's export capacity.

Direct investment from foreign countries not only brings important capital but also brings into the country modern quality, management and technology factors. In addition, FDI also helps expand export markets through integration into the global supply chain, helping Vietnamese products and services access many new markets.

1.2.3 Creating jobs for workers
Direct investment from foreign countries is often accompanied by the expansion of production and business scale. To meet the increasing demand for production and export, FDI enterprises often increase their workforce, which helps create new job opportunities for local workers, reduce unemployment pressure and increase the ability of newcomers to the labor market.

In addition, definition and importance of FDI in Vietnam is that it often carries projects with high technology and management. This not only requires training and improving skills for local workers, but also expands their career development opportunities. Training and apprenticeship programs are often established to meet the demand for quality human resources, thereby providing workers with professional and modern skills, helping them to be more confident when participating in the international working environment.
 

Current FDI landscape and major investors

1.2.4 Promoting production improvement and innovation

One of the great contributions of FDI capital to Vietnam is the ability to transfer technology, promote production improvement and improve the research and development capacity of the entire economy.

Some industries that have acquired advanced technology with the world's modern level include: post and telecommunications, oil and gas, construction, bridges and roads, hotels, etc. That promotes the improvement of domestic production capacity, helping many businesses to innovate or upgrade equipment to meet the increasingly competitive requirements of the market economy.

As a result, Vietnam has produced many new products that did not exist before; At the same time, many domestic enterprises, under the pressure of increasingly competitive markets brought about by FDI enterprises' products, have constantly strived to innovate, especially in the production stage, to create good products with diverse designs.

2. Current FDI landscape and major investors

According to Mr. Pham Duc Anh, Head of Scientific Research Department at the Institute of Scientific Research, Banking Academy, historical FDI growth in Vietnam in 2024 will only increase slightly (1%, as of November 2024) compared to the same period in 2023.

3. Future FDI trends and forecasts for 2025

Although only slightly increased compared to the same period in 2023, in the context of declining global FDI flows, Vietnam's FDI attraction is considered quite positive. International experts and business leaders believe that Vietnam has many key factors that will help Vietnam maintain the current FDI landscape and major investors.

To effectively attract future FDI trends and forecasts for 2025, Vietnam needs to promote the digitalization of administrative procedures and improve its capacity to resolve trade disputes. Improving infrastructure and training human resources are also important factors for Vietnam to maximize opportunities in the semiconductor, electronic components and renewable energy industries.

Above is the analysis of Historical FDI growth in Vietnam and Future FDI trends and forecasts for 2025. Are you a foreign entrepreneur looking to establish your business in Vietnam? We specialize in helping international businesses navigate the complexities of Foreign Direct Investment (FDI), ensuring a smooth and hassle-free setup. With our expert guidance, you can focus on growing your business while we handle the paperwork and regulations. Let us help you make Vietnam your next success story!
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