(PetroTimes) - "We need to understand the criteria that Vietnam selects for offshore wind power (OWP) project investors. These criteria include technical capabilities, financial strength, experience, etc. In addition, we hope to have opportunities to share experiences between international and domestic investors to develop the supply chain as well as the OWP industry in Vietnam." This is one of the proposals from foreign investors looking to enter the OWP sector in Vietnam.

Opportunities and Challenges for Foreign Investors

According to the World Bank, the total technical potential of offshore wind power (OWP) in our country reaches 600 GW. With this attractive potential and the specific objectives outlined in the Power Development Plan VIII, foreign investors have expressed their desire to participate in the initiation and development of the OWP sector in Vietnam.

Foreign investors assess that Vietnam has excellent offshore wind power potential, especially in the southern region. They also recognize favorable conditions for developing offshore wind power based on existing services and supply chains. The recently approved Power Development Plan VIII has set specific targets for offshore wind power, aiming to achieve a capacity of 6 GW by 2030, accounting for 4% of the total electricity structure. By 2050, the capacity could reach 70 - 91.5 GW, making up 14.3 - 16% of the total electricity structure. Additionally, Vietnam aims to develop offshore wind power in conjunction with other renewable energy sources to produce new forms of energy such as hydro and green ammonia, as well as to export offshore wind power to other countries. These opportunities are opening up for international investors to participate in this sector.

To achieve the 6 GW offshore wind power target by 2030, foreign investors believe that Vietnam needs mechanisms to accelerate offshore wind power development, and these mechanisms should be specific and transparent. Since it takes 7 - 10 years to implement an offshore wind power project, there is significant pressure on Power Development Plan VIII. However, issues related to mechanisms and policies in this field are still under consideration. For example, the investor selection process for offshore wind power projects has not been standardized, approval authorities for investment decisions are not clearly defined, and there is no electricity purchase price mechanism for offshore wind power projects.

There needs to be a mechanism for pioneering projects. 

Mr. Stuart Livesey, General Director of COP Vietnam & La Gan Wind Power Project, shared his perspective: "For an international developer in implementing offshore wind power projects, we need to see a clear roadmap to access the market. This roadmap includes legal mechanisms, commercial mechanisms, as well as mechanisms to ensure that projects are implemented on schedule. Similar to other renewable energy projects, the development of offshore wind power requires a power purchase agreement with a clear and transparent roadmap, along with grid development to ensure that electricity production is absorbed. When looking at the Vietnam market and other markets worldwide, we consider the cost equation, along with risks. To minimize costs and risks, foreign investors need the support of the government through mechanisms for implementation."

Mr. Stuart Livesey also added that international investors need to know the criteria that Vietnam selects for investors in offshore wind power projects. In this regard, Vietnam needs to establish clear criteria for screening investors to ensure that projects are implemented on time, with the right technology, and at competitive costs. These criteria may include project implementation plans, technical capabilities, development conditions, expert teams, financial capabilities, experience, and may require evidence of these capabilities as well as implementation plans.

Mr. Jacques – Etienne MICHEL: Vietnam has a well-developed oil and gas supply chain, and this can be leveraged for the development of offshore wind power. Like many other companies and major oil and gas conglomerates worldwide, Equinox has transitioned from oil and gas to renewable energy, particularly offshore wind power. It can utilize its experience and existing resources for this purpose.

Mr. Jacques – Etienne MICHEL, the Country Representative Director of Equinor in Vietnam, shared, "When we invest in a country, we look at the long-term prospects. First and foremost, we consider the legal framework and policies, and we need strong political support. In addition, the project scale must be substantial enough to warrant investment, and there must be a supply chain and suppliers to ensure project progress. Good coordination with local authorities is essential, and there needs to be a sizable market demand ready for investment."

Equinor, like other foreign investors, is ready to share its experience in offshore investments, supply chain development, and recognized offshore wind technologies. They are also willing to collaborate with other global companies to develop the offshore wind industry in Vietnam.

Regarding the supply chain, Mr. Jacques – Etienne MICHEL believes that Vietnam's well-developed oil and gas supply chain can be utilized for the development of offshore wind power. Like many other major oil and gas companies worldwide, Equinor has transitioned from the oil and gas sector to renewable energy, particularly offshore wind power, and can leverage its experience and existing resources.

The mechanism for pilot projects is also a topic that many foreign investors have proposed, with the requirement to have a process for the first projects to be implemented quickly. In this regard, foreign investors hope to have a pricing mechanism for the initial projects because revenue is a crucial condition. Access to international capital with low-interest rates requires having a power purchase agreement (PPA) in place. In this context, a special pricing mechanism could be considered for the short term, alongside the development of a pricing mechanism for the future, such as moving towards direct power purchase agreements.

Regarding the implementation of pilot projects, Mr. Stuart Livesey, General Director of COP Vietnam & La Gan Wind Power, believes that state-owned enterprises with experience and capacity in the renewable energy sector and the electricity sector, such as PetroVietnam and EVN, should participate in this process to learn and lead the industry. Additionally, it is essential to encourage experienced private investors and project developers to participate in providing knowledge and capital for the implementation process.

Based on their global experience, foreign investors have provided four key recommendations: Licensing offshore surveys and providing guidance for offshore surveying for project developers. Considering a pilot offshore wind power mechanism. Establishing clear criteria for selecting investors. Ensuring the availability of a power purchase agreement that can mobilize international capital and guarantee each project's viability. These efforts would provide investors with confidence to invest billions of dollars in surveying and project development.

Based on their global experience, international investors have provided four key recommendations for participating in the offshore wind power sector:

Assigning project development survey areas: The ongoing marine spatial planning will serve as the basis for selecting project areas. The first projects should be urgently assigned survey areas through a specific mechanism. Updating regulations and granting survey licenses (Decree 11).

Implementing a pilot mechanism: Combining state-owned enterprises and private project developers; the proposed goal is to pilot 3 GW (combining projects of 500 MW and 1 GW), while the remaining 3 GW will be deployed through competitive bidding.

Clear investor selection process: Establish a more robust, transparent process to remove barriers for investors, upgrade port infrastructure, and understand the jurisdiction of relevant ministries. A stable support mechanism will encourage steady development.

Power purchase agreements (PPAs) capable of mobilizing international capital with assurance of project connection capacity: The objective is to ensure that projects can attract capital and guarantee significant investments (2-3 billion USD for a 500 MW project).

Dr. Hoàng Xuân Quốc, Director of Energy at VinaCapital Group and Independent Member of the Board of Directors at PetroVietnam Technical Services Corporation (PTSC), emphasizes the unique nature of offshore wind power projects. They require large investments to be effective, typically ranging from 1 GW and above. Therefore, the role of foreign investors in this field is crucial. Given the substantial capital required for offshore wind power investments, often in the billions of USD, arranging significant funding, especially foreign capital with reasonable financing costs, is essential.

Additionally, foreign investors bring expertise in operating, maintaining, repairing wind power clusters, selecting the most suitable technologies, and managing risks during project implementation. Therefore, Dr. Hoàng Xuân Quốc believes that Vietnam needs appropriate policies to strongly attract foreign investments in offshore wind power. Many large companies and investment funds are currently highly interested in renewable energy development in general and offshore wind power in Vietnam in particular. 

Final thoughts

There is no doubt that Vietnam is at the best stage for investors to to develop Offshore Wind Power projects. Thus, it is an ideal time for every investor to look into and seize the opportunities! Reach out to us if you are also eager about such a field and in need of support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don't miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.

In the ever-evolving landscape of global investment, Vietnam has been steadily emerging as a beacon of opportunity. As of the first eight months of 2023, the country has seen a remarkable influx of Foreign Direct Investment (FDI), signaling a growing confidence among international investors. 

In this comprehensive exploration, Viettonkin Consulting unravels the story behind Vietnam's FDI success, offering insights into what to expect in the nation's dynamic economic landscape. Join us on this journey as we uncover the highlights of FDI flow into Vietnam, shedding light on the opportunities that lie ahead for investors and the nation's sustainable growth.

FDI projects

According to the Ministry of Planning and Investment, Vietnam has seen a notable surge in FDI during the first eight months of 2023. As of August 20, FDI registered in the country stood at nearly USD 18.15 billion, marking an impressive 8.2% increase compared to the same period in the previous year. Notably, this growth is attributed to an upswing in new investments and capital contributions, despite a decrease in adjusted investment capital.

During this period, Vietnam attracted 1,924 new investment projects that received official investment registration certificates. These ventures collectively accounted for over USD 8.87 billion in registered capital, signifying a substantial increase of 69.5% in the number of projects and a significant boost of 39.7% in capital compared to the corresponding period in the previous year. This surge underscores the country's appeal as an attractive destination for foreign investors.

Furthermore, a total of 830 projects pursued capital adjustments, amounting to an additional USD 4.53 billion in capital. While there was a 22.8% increase in the number of projects adjusting their capital, the total capital involved experienced a decrease of 39.7% when compared to the same timeframe. Additionally, foreign investors engaged in 2,268 transactions, which included capital contributions and share purchases, totaling USD 4.47 billion. This signifies a 6.5% decrease in transaction volume but a noteworthy 62.8% increase in capital flow compared to the corresponding period.

Destinations of FDI attractions

According to the Foreign Investment Agency, FDI flowed into 54 provinces and cities across Vietnam during the first eight months of 2023. Hanoi led this surge with a total registered investment capital of over USD 2.34 billion, accounting for nearly 12.9% of the total registered investment capital and experiencing a remarkable 2.89-fold increase compared to the same period in 2022. Following closely was Hai Phong, ranking second with a total registered investment capital of over USD 2. (https://www.maceradrinks.com/) 08 billion. Subsequent to these cities were Ho Chi Minh City, Bac Giang, Binh Duong, and more.

Notably, when considering the number of projects, Ho Chi Minh City emerged as the nationwide leader in terms of new projects (39.6%), project capital adjustments (23.4%), and capital contributions through share purchases (67%).

Top FDI attracting Sectors

In terms of sectors, foreign investors directed their investments into 18 out of the country's 21 national economic sectors during the first eight months of 2023. The manufacturing and processing industry took the lead, with a total investment capital of nearly USD 13 billion, representing approximately 67.8% of the total registered investment capital and witnessing a notable 14.7% increase compared to the same period.

The real estate business sector secured the second position with a total investment capital of over USD 1.76 billion, constituting more than 9.7% of the total registered investment capital, despite experiencing a 47.2% decrease compared to the corresponding period. The financial and banking sectors, as well as professional activities and scientific and technological sectors, ranked third and fourth, with total registered capital reaching nearly USD 1.54 billion (an increase of nearly 63.7 times) and nearly USD 800 million (a 28.9% increase), respectively.

When considering the number of new projects, the manufacturing and processing industry also led in terms of new projects (31.2%) and capital adjustments (56.5%). Wholesale and retail trade topped the list in terms of capital contribution through share purchases, accounting for 42.4%.

Top FDI investors 

During the first eight months of 2023, Vietnam witnessed investments from a total of 100 countries and territories. Among them, Singapore led the way with a total investment capital of over USD 3.83 billion, commanding more than 21.2% of the total investment capital into Vietnam, despite a 15.4% decrease compared to the same period in 2022.

China secured the second position with nearly USD 2.69 billion, accounting for 14.8% of the total investment capital, and experiencing a significant 90.8% increase compared to the same period.

Japan claimed the third spot with a total registered investment capital of over USD 2.58 billion, representing more than 14.2% of the total investment capital, and witnessing a notable 73.1% increase compared to the corresponding period. Following these countries were South Korea, Hong Kong, Taiwan, and more.

In terms of the number of projects, China led in the category of new projects (20.7%), while South Korea took the lead in capital adjustment projects (27.6%) and capital contributions through share purchases (28.7%).

Behind the figures

The influx of USD 18.15 billion in Foreign Direct Investment (FDI) into Vietnam for the first eight months of 2023 can be attributed to several key factors. In August 2023, Vietnam welcomed the Innovation Precision Factory project, valued at USD 165 million, located in VSIP Nghe An. 

This venture, funded by Green-wich Management Limited from China, is set to produce aluminum alloys for the electronics and green energy sectors. It serves as a vital support industry, providing essential inputs for the production of various electronic products such as phone casings, laptop covers, power banks, chargers, and smartwatches, with a designed capacity of 100,000 tons per year. 

The project, spanning 11.78 hectares, is expected to commence operations in October 2024 and is estimated to generate employment opportunities for approximately 1,500 workers.

Additionally, Runergy PV Technology (Thailand) CO.,LTD embarked on a project to manufacture single crystal silicon bars and semiconductor wafers at the Hoang Mai I Industrial Zone, Southeastern Economic Zone of Nghệ An, with a total investment of USD 293 million. The project boasts a designed capacity of 14,635 tons of silicon bars per year and 995 million 182mm semiconductor wafers per year. Their service offerings include silicon bars, semiconductor wafers, and factory space rentals.

Savills Vietnam's latest report highlighted the appeal of Vietnam as an ideal destination for moving manufacturing facilities beyond China. The report underscored Vietnam's geographical proximity, skilled workforce, competitive costs, and robustly developing infrastructure. Moreover, investors from South Korea, Japan, Europe, and the United States have affirmed Vietnam's status as their top investment choice.

During the Vietnam Industrial Property Forum (VIPF) held on August 24, 2023, Deputy Minister of Planning and Investment, Mr. Tran Quoc Phuong, emphasized that despite the rapidly changing, complex, unpredictable global and regional economic context, coupled with numerous difficulties and challenges, Vietnam continues to shine as a beacon on the map of foreign direct investment attraction, thanks to its numerous advantages and incentives.

Over time, more investors will want to come to Vietnam to invest. The reason is that the Vietnamese government has set new standards for industrial zones, particularly in carbon emissions reduction commitments. Vietnam can go even further because these commitments are attracting new investments to Vietnam. For example, Vietnam is implementing a global minimum tax, which is advantageous in attracting new investors.

Bruno Jaspaert, CEO of the DEEP C Industrial Zones complex

What to expect?

At the end of August, Prime Minister Lee Hsien Loong of Singapore paid a visit to Vietnam as part of a series of events organized by both nations to celebrate the 50th anniversary of diplomatic relations and the 10th anniversary of the Strategic Partnership between Vietnam and Singapore. This recent visit has injected fresh momentum into the economic cooperation between the two countries.

Vietnam and Singapore are already engaged in various economic collaborations, spanning infrastructure development, education and training, trade, and investment. In the foreseeable future, Vietnam and Singapore are poised to further intensify their economic cooperation in emerging fields such as climate change mitigation, green economy initiatives, digital transformation, and innovation.

Prime Minister Pham Minh Chinh has signed Decision No. 912/QD-TTg to establish an inter-agency working group to implement the Memorandum of Understanding on Vietnam-Singapore Economic Partnership. This decision is anticipated to provide strong impetus for the agreement's implementation from the Vietnamese side.

Regarding the digital economy, both countries are set to bolster collaboration in developing and connecting digital governments, digital economies, and digital societies. This includes sharing and linking national databases.

In the realm of green economy, Vietnam and Singapore share common goals, aiming to achieve net-zero emissions by 2050. Both nations are committed to focusing on clean energy and green energy cooperation in the near future.

These are promising areas with substantial potential for collaboration, offering ample room to support the development objectives of both countries.

Final thoughts

The story of FDI in Vietnam for the first eight months of 2023 is one of resilience, innovation, and collaborative spirit. From impressive FDI figures to the diverse sectors drawing investors' attention, and the strategic partnerships shaping the nation's future, Vietnam's economic landscape is in a state of transformation.

As investors from around the world increasingly recognize Vietnam's potential, the nation continues to pave the way for sustainable development. The strategic initiatives between Vietnam and Singapore in green and digital economies signal an exciting journey toward a more interconnected, innovative, and sustainable future.

In the wake of this FDI surge, one thing is clear: Vietnam's rise as a global investment hub is not a fleeting moment but a sustained trajectory. For businesses seeking to expand their horizons and investors in search of vibrant opportunities, Vietnam beckons with open arms.

Now, it's your turn to be a part of this promising future. Seize the opportunity to explore, invest, and grow with Viettonkin Consulting. Our team of experts is here to guide you through the intricate world of international investments, ensuring your journey is marked by success and prosperity.Ready to embark on your investment journey? Contact us today and let's shape the future together!

Vietnam and the United States have an interesting history of trade-economic cooperation. The two countries have a mutually beneficial trade relationship, and they are committed to working together to promote economic growth and prosperity in the region. The future of trade-economic cooperation between Vietnam and the United States is bright, and it is likely to continue to grow in the coming years.

The evolution of Vietnam-US relations

The United States is a major investor in FDI in Vietnam. Over the past 30 years, the situation of FDI from the United States in Vietnam has undergone significant changes, which can be classified into 4 stages:

• Stage 1: From 1994 to 1999: The beginning of Vietnam - US trade relations

In February 1994, President Bill Clinton announced the complete lifting of the embargo against Vietnam. From then on, the foundation for trade between the two countries began to be established and prospered. On July 11, 1995, Vietnam and the United States normalized relations. Prime Minister Vo Van Kiet stressed that this decision was in line with the trend of international developments and would contribute positively to the cause of peace, stability, and development in Southeast Asia, as well as in the world. Vietnam and the United States opened embassies in each other's countries in August 1995 and exchanged ambassadors in May 1997. As of 1995, the total amount of US FDI in Vietnam reached $759.92 million..

• Stage 2: From 2000 to 2006: The turning point in Vietnam - US bilateral relations

In 2001, the Vietnam–United States Bilateral Trade Agreement came into effect, marking a strong recovery and resurgence of trade between the two countries. The agreement came into effect in December 2001. All goods exported from Vietnam to the United States are granted most-favored-nation (MFN) tariff treatment, also known as unconditional normal trade relations (NTR). Thanks to the positive impacts that this agreement brought, US FDI in Vietnam from 2001 to 2006 changed dramatically, reaching $1.826.18 billion.

• Stage 3: From 2007 to 2014: Strengthening Vietnam - US economic cooperation

The next period, from 2007 to 2010, FDI grew at an astonishing rate, reaching $9.625.6 billion, despite the global financial crisis of 2008 that cast a dark cloud over the world economy. The prominent event that opened this period was Vietnam's accession to the WTO in early 2007, marking a turning point in the flow of investment from the United States with investment capital concentrated in the areas of production and application of modern science and technology.

Notably, in July 2013, during President Truong Tan Sang's visit to the US at the invitation of his counterpart Barack Obama, the two sides established the Vietnam-US comprehensive partnership, which shaped a framework for bilateral relations for the new period as well as the development direction of the relationship in the coming years.

• Stage 4: From 2015 until now: Leveraging bilateral cooperations between Vietnam - US governments

Vietnam-US relations have entered a new phase of development in recent years. This is evidenced by the fact that high-level visits between the two countries have become more frequent. Notable were the visits by Vietnamese Party General Secretary Nguyen Phu Trong in 2015, US President Barack Obama in 2016, Vietnamese Prime Minister Nguyen Xuan Phuc in 2017. Later in 2017, President Trump visited Vietnam and attended the Asia-Pacific Economic Cooperation (APEC) forum in Đà Nẵng. Recently, US Vice President Kamala Harris visited Vietnam in 2021, and Vietnamese PM Pham Minh Chinh attended U.S.-ASEAN Special Summit in May 2022. These visits have helped deepen the Vietnam-US comprehensive partnership, promote the development of the relationship on the basis of mutual benefits, equality and respect for each other's independence, sovereignty, and political institutions.

The characteristics of US FDI in Vietnam

Foreign direct investment (FDI) from the United States has played an important role in the economic development of Vietnam. In recent years, US FDI has become increasingly important, with the United States becoming the second-largest source of FDI in Vietnam. There are a number of characteristics that distinguish US FDI in Vietnam from FDI from other countries.

First, US FDI has a high research and development (R&D) intensity. This means that US investors are more likely to invest in projects that involve the development of new technologies. This is in contrast to FDI from other countries, which is often focused on more traditional industries. Foreign direct investment (FDI) from the United States is primarily for the production of sophisticated products that are based on high-tech, exclusive, and capital-intensive technologies that serve the host country's market.

Second, US investors have different goals and motivations than investors from other countries. US investors are more likely to be interested in the long-term potential of Vietnam, rather than simply looking to exploit short-term opportunities. They are also more likely to be interested in transferring technology and know-how to Vietnam. A study by the US-ASEAN Business Council found that 70% of US investors in Vietnam are interested in the long-term potential of the country, compared to only 40% of investors from other countries. Another study by the Vietnam Chamber of Commerce and Industry found that US investors are more likely to invest in projects that involve the transfer of technology and know-how to Vietnam, compared to investors from other countries.

Third, the level of technology absorption and the willingness to protect intellectual property rights in Vietnam are important factors that attract US FDI. In terms of the level of willingness to protect IP (PERC), Vietnam is only at an average level. Vietnam's legal system for establishing and enforcing intellectual property rights is still complex and unstable; there are still cases of copyright infringement, counterfeit and pirated goods. However, Vietnam has made significant progress in improving its business environment in recent years, and this has helped to attract more US FDI. These improvements are likely to continue in the future, as Vietnam seeks to attract even more foreign investment.

The emerging trends of US FDI in Vietnam

The year 2023 is an important milestone in Vietnam-US relations as it marks the 10th anniversary of the establishment of their comprehensive partnership (2013-2023). Twenty-eight years after the diplomatic ties were set up, and 10 years since the establishment of the comprehensive partnership, the Vietnam - US relationship has enjoyed all-round and substantive development, contributing to peace, security, cooperation and development in the region and the world.

Over the last decade, Vietnam has emerged as a major manufacturing center and has risen to become one of the top 10 trading partners for the United States. Based on U.S. Census Bureau data, bilateral trade in goods was nearly $139 billion in 2022, up 22% from 2021. The United States’ bilateral trade deficit in goods with Vietnam in 2022 ($116 billion) was the United States’ third largest. Vietnam is a major source for consumer electronics, furniture, mechanical appliances, apparel, and footwear imports. Notably, it is the second-largest source of U.S. clothing imports, after China. Top U.S. goods exports to Vietnam are cotton, civilian aircrafts and parts, semiconductors, soybeans, and various agricultural goods. The United States maintains a surplus in bilateral services trade, which in 2022 was around $1.6 billion.

Analysts predict that the United States will soon become the leading investor in Vietnam. In particular, at the Vietnam-US Summit, Under Secretary of Commerce for International Trade Marisa Lago stated that health care, digital trade, energy, and climate change will be the three priority areas for US businesses to cooperate with Vietnam in 2023. This is also in line with Vietnam's new FDI attraction strategy, which is to place a greater priority on attracting high-tech projects, digital transformation, and especially clean energy investment projects.

Conclusion

Vietnam and the US are continuing to strengthen the Vietnam-US Comprehensive Partnership. There is no doubt that Vietnam-US relations are at the best stage since the end of the Vietnam War. Vietnam is the only Southeast Asian country in the top 10 of U.S. trading partners, and American manufacturers increasingly consider Vietnam as an alternative destination to China.

Thus, it is an ideal time for the US investors to seize the opportunities! Reach out to us if you need support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don't miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.

Over the past decades, the UK has been a reliable partner in supporting Vietnam's socio-economic development goals and promoting trade and investment between the two countries. The UK has also been a strong supporter of Vietnam's integration into the global economy and its efforts to tackle climate change and promote sustainable development.

Diplomatic relations between UK and Vietnam

The United Kingdom and Vietnam are celebrating the 50th anniversary of their diplomatic relations in 2023. This is a time to reflect on the past half-century of friendship and cooperation between the two countries, and to look ahead to the future.

The UK and Vietnam established diplomatic ties on September 11, 1973. In 2010, Vietnam and the United Kingdom (UK) signed a Joint Declaration to establish the Vietnam – UK Strategic Partnership. In the late 2020, the UK and Vietnam signed the UK-Vietnam Free Trade Agreement, which aims to boost trade and investment between the two countries and create new opportunities for businesses and consumers. The two countries have also pledged to cooperate more closely on issues such as climate change, sustainable development, and human rights.

Over 50 years, the two countries have built a strong cooperative relationship in a wide range of areas, including politics and diplomacy, global and regional issues, trade and investment, development cooperation, sustainable socio-economic development, education and training, security and defense, and people-to-people exchanges. The two sides have also been coordinating closely in multilateral fora, including the United Nations (UN), Asia-Europe Meeting (ASEM), Association of Southeast Asia Nations (ASEAN) - led fora and the World Trade Organisation (WTO). Here are the key sectors that the two countries have laid a strong foundation of cooperation:

1.        Political-diplomatic co-operation

2.        Trade, investment and the business environment

3.        Sustainable growth, development co-operation

4.      Education, vocational training, English language training, higher education, science and education technology

5.        Defence, security and serious organised crime

6.        People-to-people links and equal rights

7.        Global and regional issues

A thriving partnership in trade and economics

With the UK - Vietnam Strategic Partnership being signed as well as the UK-Vietnam free trade agreement (UKVFTA), the economic-trade relation between two countries are being at its strongest ever. Trade volumes increased 17 per cent in 2021, and total trade in goods and services (exports plus imports) between the UK and Vietnam was £6.4 billion ($8 billion) in the four quarters to the end of Q3 2022, an increase of 20.5 per cent, or £1.1 billion ($1.37 billion) from the four quarters to the end of Q3 2021.

Of this, total UK exports to Vietnam amounted to £950 million ($1.18 billion) in the period, an increase of 13.6 per cent, or £114 million ($142.46 million), compared to the same period the previous year. Total British imports from Vietnam amounted to £5.4 billion ($6.75 billion), in current prices, an increase of 21.8 per cent, or £974 million ($1.21 billion) compared to the four quarters to the end of Q3 2021.

Regarding investments, as of the end of 2021, there were 447 UK-invested projects in Vietnam, which accounted for 1.3 percent of a total number of foreign direct investment (FDI) projects, with total investment capital of $4 billion. Meanwhile, Vietnam has had nine projects with total registered capital of $11.5 million in the UK. The UK is Vietnam’s third largest trade partner in Europe and the ninth largest export market for Vietnam.

These figures clearly demonstrate Global Britain in the Age of Competition, the strategy announced by the British Prime Minister in the context of post-Brexit and Covid-19. The UK is determined to shift its strategic focus to the Indo-Pacific region, prioritizing Southeast Asia in finding new partners and markets.

According to economists, the space for trade cooperation between the UK and Vietnam remains large, especially because Vietnam is considered a market with high potential when entering the new economic development period with targeted income per capita of $3,500 by 2025 and $7,000 by 2030.

The Vietnamese side can take advantage of UK supply chains and technology, while large corporations in Vietnam can take advantage of business fields such as aviation, tourism, real estate and farm-forestry-seafood products.

UK Investment in Vietnam: Upcoming plans and opportunities

With the UK's recent inclusion in the CPTPP, there is a great opportunity for the UK and Vietnam to increase their bilateral trade and reach their target of US$10 billion. The agreement is a gateway for the UK into the wider Indo-Pacific, which is set to account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come. Vietnam's agro-aquatic products, such as fruits and vegetables, coffee, and cashew nuts, are expected to benefit the most, with several export items to the UK receiving more favorable tax exemptions under the CPTPP agreement.

In addition to the traditional sectors of financial and professional services and insurance, education has also been of interest to UK companies, with the British International School in Vietnam celebrating its 25th anniversary this year. Moreover, bilateral ties have expanded to include pharmaceuticals, technology, digital transformation, climate change response, and green growth. The pharmaceutical sector is expected to see more investment, facilitated by the UKVFTA. Last year, British global healthcare company GSK has launched its new legal entity in Viet Nam – GSK Pharma Viet Nam Company Limited (GSK Vietnam) – with an investment capital of US$200 million.

As part of this initiative, BritCham has taken on the role of Co-Chair of the Vietnam Business Forum, which is a platform for businesses to engage with the Vietnamese government and other stakeholders on issues related to economic development. By taking on this leadership role, BritCham is helping to ensure that UK companies have a greater say in the development of policy and regulation in Vietnam.

Challenges

"Vietnam is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, otherwise known as the New York Convention. Its provisions are incorporated into Vietnamese law. However, unofficial statistics suggest that international arbitration awards are recognised in only approximately 50% of cases within the country. The UK is working with Vietnam to improve this, including through better legislation and legal training."

"However, concern is rising among rights holders that Vietnam’s IP enforcement system has not yet developed sufficiently to control the rapid growth of piracy and counterfeiting despite the substantial legislative work completed over the past several years"

Conclusion

The diplomatic relationship between the United Kingdom and Vietnam has grown significantly over the past 50 years. From a modest beginning, today, the two countries enjoy a strong and mutually beneficial partnership.

In 2023, the UK and Viet Nam celebrate 50 years of diplomatic relations between the two

countries. The 50th anniversary is a chance to celebrate half a century of deepening friendship between the UK and Viet Nam, as well as to look ahead to the next 50 years. Therefore, this is an ideal time for UK investors to take advantage of the many opportunities available in Vietnam. Viettonkin Consulting is here to provide support to UK investors with establishing a company or starting investments in Vietnam’s thriving economic landscape. With our extensive knowledge and experience in both the Vietnamese and global markets, we are well-equipped to guide you through the complexities of setting up a business in Vietnam. We have expertise across multiple sectors and can assist with legal procedures, making the process as smooth as possible for you. Reach out to us if you are looking for new opportunities in Vietnam. With us by your side, you can focus on what matters the most!

Since the establishment of diplomatic ties on June 19, 1975, Vietnam and New Zealand have fostered a positive and sustainable bilateral relationship. In 1995, New Zealand opened an embassy in Hanoi and a consulate general in HCM City, while Vietnam opened an embassy in New Zealand in 2003 and a commercial affairs office in Auckland in 2005, which was subsequently relocated to Wellington in 2007.

A long-term partnership between Vietnam - New Zealand

The bilateral relationship has progressed rapidly over the years, culminating in the establishment of a comprehensive partnership in September 2009, which has been a pivotal milestone in promoting bilateral ties across various fields in a more comprehensive, pragmatic, and effective manner.

Over the years, the two sides have achieved several significant milestones, including the development of an action program for the period 2013-2016 aimed at implementing the comprehensive partnership, and the issuance of a joint statement in March 2015, in which they agreed to foster and deepen the comprehensive partnership towards a strategic partnership. Another action program for the period 2017-2020 was signed on the sidelines of APEC 2017. The two countries officially upgraded the relationship to a Strategic Partnership during the online high-level talks between Prime Minister Nguyen Xuan Phuc and New Zealand Prime Minister Jacinda Ardern (7/22/2020). Later, both countries signed the Action Program to implement the Strategic Partnership for the period 2021-2024 (12/2021).

High-level exchanges and delegation meetings have been regularly held between the two countries, with visits to Vietnam by Governor-General Jerry Mateparae in August 2013, Prime Minister John Key in July 2010 and November 2015, and Prime Minister Jacinda Ardern during the APEC Economic Leaders’ Meeting in 2017. Visits to New Zealand were made by Party General Secretary Nong Duc Manh in September 2009, Prime Minister Nguyen Tan Dung in March 2015, and Prime Minister Nguyen Xuan Phuc in March 2018. Recently, at their meeting on the sidelines of the 14th Annual Meeting of the New Champions (AMNC) of the World Economic Forum (WEF) in Tianjin, China, on June 27, 2023, Prime Minister Pham Minh Chinh met his New Zealand counterpart Chris Hipkins.

Trade, economic and investment relations between Vietnam and New Zealand

Trade & economic relations

Vietnam is the 13th largest trading partner (5th within ASEAN) of New Zealand. The bilateral trade turnover between Vietnam and New Zealand continued to grow strongly in 2022, reaching $1.2 billion, a 14% increase compared to 2021. The trade exchange between Vietnam and New Zealand has shown positive growth with an average growth rate of 14.2% per year, reaching $1.4 billion in 2022.

Trade between New Zealand and Vietnam is governed by three key regional agreements:

• The Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)
• ASEAN – Australia – New Zealand (AANZFTA)
• Regional Comprehensive Economic Partnership (RCEP)

Thanks to these key regional agreements, Vietnam - New Zealand trade has noticeably accelerated in the past few decades. In the March 2023 quarter New Zealand exported $332.35 million of total goods and services to Viet Nam and imported $381.81 million, representing a trade balance of $-49.47 million and a total trade value of $714.16 million.  For trade in total goods and services Viet Nam ranked 15 of 232 for highest export value, 16 of 240 for highest import value, and 14 of 245 for highest total trade value.

The top exports from Vietnam to New Zealand were electrical machinery and equipment, footwear, mechanical machinery,  textiles and textile articles, furniture,. Meanwhile, the top imports from New Zealand to Vietnam were dairy products, meat and edible meat offal, wood and wood products, vegetables and fruits, and fish and seafood.

Investment relations

Regarding investment, as of May 2023, New Zealand has 39 valid direct investment projects in Vietnam with a total registered capital of USD 209.75 million. This places New Zealand at the 39th position out of 143 countries and territories with foreign direct investment in Vietnam. In contrast, Vietnam has 11 investment projects in New Zealand with a total registered capital of USD 38.4 million, focusing on processing and manufacturing industries, wholesale and retail, automobile repair services, and accommodation services.

In terms of official development assistance (ODA), New Zealand has been providing stable and increasing ODA to Vietnam, from NZD 3.2 million (equivalent to USD 2.3 million) in the 2003-2004 fiscal year to NZD 10.5 million (about USD 7.4 million) in the 2012-2013 fiscal year, and NZD 26.66 million (equivalent to USD 18.6 million) in the 2015-2018 period, focusing on developing human resources, education and training, and sustainable agriculture and rural development. New Zealand has committed to providing Vietnam with NZD 26.7 million non-refundable ODA for the period of July 1, 2017, to June 30, 2024.

Developing stronger trade ties between Vietnam - New Zealand

On May 23, 2023, the 8th session of the Vietnam - New Zealand Joint Trade and Economic Committee (JTEC) was held at the Ministry of Industry and Trade. During the session, Deputy Minister of Industry and Trade Phan Thi Thang emphasized the potential for the two countries to strengthen cooperation in trade, industry, and investment. Both sides agreed to continue to enhance cooperation activities and strive to achieve a bilateral trade turnover of $2 billion by 2024. At the session, both sides also welcomed the completion of the market-opening process for Vietnamese lemons and pomelos, and New Zealand's blueberries and strawberries at the end of 2022.

To carry out the next steps in promoting the export of Vietnamese lemons and pomelos, Vietnam proposed that the two agencies (the Ministry of Agriculture and Rural Development of Vietnam and the Ministry of Primary Industries of New Zealand) closely coordinate and widely disseminate information to the business communities of both countries about this import-export opportunity, while providing detailed guidance on the procedures and facilitation measures for businesses of both countries to exploit these new opportunities.

On July 16, 2023, Minister of Industry and Trade Nguyen Hong Dien had a meeting with Mr. Damien O'Connor, Minister of Trade and Export Growth of New Zealand, to discuss the enhancement of exports between the two countries. During the meeting, the Minister emphasized the importance of removing unnecessary import procedures and technical barriers to trade, and continuing negotiations to open up the market for new agricultural products, which would help increase the scale of bilateral trade.

Recently, in the latest meeting of the Vietnam-New Zealand Joint Economic and Trade Committee on June 2023, Vietnamese Deputy Minister of Industry and Trade Phan Thi Thang and Vangelis Vitalis - New Zealand’s Deputy Secretary of Foreign Affairs and Trade focused on practical things that will benefit both countries’ businesses, promised to boost cooperation in trade and reduce trade barriers. Vangelis Vitalis said that: “We have expedited customs procedures so that products that arrive in Vietnam will be cleared within six hours of customs. For Vietnam, we also have additional fast track certification requirements, which means that Vietnamese producers can sell more quickly into our market.” It clearly indicates that both countries are working towards the goal of reaching a bilateral trade turnover of $2 billion by 2024.

Conclusion

In conclusion, the bilateral relationship between Vietnam and New Zealand has been built on a long-term partnership that has shown positive growth in trade, economic, and investment relations. The two countries have great potential to strengthen their cooperation in various fields, including agriculture, education, tourism, infrastructure, and transportation. With the commitment of both sides to continue to enhance cooperation activities, Vietnam and New Zealand are striving to achieve a bilateral trade turnover of $2 billion by 2024. As such, the future looks bright for the development of stronger trade ties between these two nations, and it is expected that this partnership will continue to grow and prosper in the years to come.

If you are a New Zealand investor looking to expand your business into Vietnam, Viettonkin Consulting can help. We have extensive experience in the Vietnamese market and can provide you with the support you need to succeed. Contact us today to learn more. With our help, you can take advantage of the many opportunities available in Vietnam and build a successful business. Don’t hesitate to reach out to us!

The bilateral relationship between Vietnam and China has a long history of cultural and economic exchanges, and the two countries have maintained a close and enduring friendship over the years. As one of Vietnam's largest trading partners and foreign investors, China has played a crucial role in Vietnam's economic growth. With the increasing flow of foreign direct investment (FDI) into Vietnam over the years, China has emerged as a significant player in the FDI industry in Vietnam.

The enduring friendship between Vietnam - China

Over the past 70 years, Vietnam-China relations have seen ups and downs, but friendship and cooperation remain the main trends. The friendship cultivated by President Ho Chi Minh and President Mao Zedong and generations of leaders of the two countries, has become a valuable common asset of the two nations, contributing to maintaining the trend of stable development of the traditional friendship between Vietnam and China, as well as bringing practical benefits to the two peoples.

On January 18, 1950, China established the world's first diplomatic relations with the Democratic Republic of Vietnam, marking a significant moment in the two countries' relationship. In 1999, the 16-character principle was established during a visit by General Secretary Le Kha Phieu to China, outlining the guiding principles for bilateral cooperation in the 21st century.

The spirit of "four goods" was later agreed upon during President Hu Jintao's visit to Vietnam in 2005, emphasizing the aim of making the two countries "good neighbors, good friends, good comrades, and good partners." In 2008, the framework of a "comprehensive strategic cooperative partnership" was established based on the "16-character" principle and the spirit of "four goods" during General Secretary Nong Duc Manh's visit to China.

General Secretary Nguyen Phu Trong's official visit to China in January 2017 helped to deepen the comprehensive strategic cooperative partnership between the two countries, enhance mutual trust, and promote peace, stability, cooperation, and development in the region and the world.

Overall, the Vietnam-China relationship has maintained a stable and positive trend; the leaders of both sides have achieved important common understandings, contributing to elevating the bilateral relationship to new heights.

Advancing bilateral cooperation between Vietnam - China

At the state-level dialogues and exchanges between the governments of Vietnam and China, the Vietnamese Government engages in sharing, interacting, and acquiring knowledge from the successful experiences and valuable lessons of the Chinese Government in formulating and implementing strategies aimed at attracting foreign direct investment (FDI). The underlying objective of this initiative is to promote the economic growth of China over the last forty years. Additionally, the Vietnamese Government seeks to gain insights into the policy implications and practical experience of FDI attraction, which can be applied to their own economic development endeavors.

In May 2022, China and Vietnam released a joint statement on further strengthening and deepening the comprehensive strategic cooperative partnership between the two countries during the visit of General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong to China. It emphasized their commitment to enhancing the comprehensive strategic cooperative partnership between the two countries from a strategic and long-term perspective amidst the global changes. The joint statement also included the agreement to maintain the China-Vietnam Steering Committee for Bilateral Cooperation mechanism and to promote cooperation in various fields, such as foreign affairs, defense, security, and law enforcement. Both countries also vowed to work together to resist "peaceful evolution" and "color revolutions" and strengthen counter-terrorism efforts.

On July 13, 2023,  Vietnamese Minister of Foreign Affairs Bui Thanh Son met with Politburo member and Director of the Communist Party of China Central Committee’s Foreign Affairs Commission Wang Yi in Jakarta. The two officials affirmed that their countries will keep attaching importance to each other’s roles and the bilateral comprehensive strategic cooperative partnership. They will continue to effectively implement the joint statement issued in October 2022, and the concrete outcomes of the trip to the Northeast Asian nation by Prime Minister Pham Minh Chinh in June 2023. The two countries will assist each other with national modernisation while enhancing high-quality connectivity between the “Belt and Road” initiative and the “Two Corridors, One Belt” framework.

Overall, China and Vietnam continue to deepen their cooperation and strengthen their relationship in the new era, while also addressing challenges and maintaining stability in the region.

Three stages of trade, economic, and investment cooperation between Vietnam and China

Since 2016, Vietnam has remained the biggest trade partner of China in the Association of Southeast Asian Nations (ASEAN), and China has been Vietnam’s largest trade partner for many years. Hence, China’s direct investment in Vietnam has continued to rise through the years.

China's FDI investment process in Vietnam is divided into three stages with the following results:

• Stage 1: From 1991 to 2001: China’s first FDI in Vietnam was in 1991 when a Guangxi enterprise (China) joint ventured with a Vietnam group to open Hoa Long restaurant in Hanoi. The period is considered as ‘the exploratory phase’, which resulted in modest achievements as China launched 110 investment projects in Vietnam with a total registered capital of 221 million USD.
• Stage 2: From 2001 to 2010: China increased both quantity and the amount of capital scale of FDI projects in Vietnam (about 2.5 million USD/project), with many projects ranging from 1-10 million USD.
• Stage 3: From 2010 to present: Chinese FDI in Vietnam has undergone significant changes, continuously rising in the ranking position, increasing in scale, changing in form and fields, and expanding into new geographical areas. By the end of 2019, the total FDI capital invested in Vietnam from China continued to increase sharply, nearly doubling the level of 2018 (with 683 newly registered investment projects and a total capital of 2.3 billion USD).

Despite COVID-19, Chinese FDI still increased through the years. In 2022, China invested approximately USD 2.52 billion in Vietnam with 283 newly licensed projects, ranking 4th among the total countries investing in Vietnam, of which newly registered capital reached USD 1.35 billion and adjusted capital was over USD 1 billion with 283 projects.

In the first five months in 2023, China's total investment capital in Vietnam reached over USD 1.608 billion, up 41.9% compared to the same period in 2022. Of which, newly registered capital reached over USD 1.086 billion and adjusted capital was USD 451.76 million with a total of 156 projects. In terms of total investment capital, China ranks 3rd among the total countries and territories investing in Vietnam, after Singapore and Japan. The total number of China's investment projects still in effect in Vietnam is 3,720 with a total registered capital of over USD 24.87 billion.

Prospects for future cooperation between China and Vietnam

The flow of investment capital from China to Vietnam has significantly changed in recent years with a diversity of industries and sectors. In previous periods, China's investment capital only focused on sectors such as restaurants, hotels, and consumer goods. However, recently, industries such as textiles, leather shoes, textile fibers, mineral exploitation, and industrial zones are attracting FDI from China.

Vietnam's appeal to Chinese investors can be attributed to its strategic geographical location bordering China and its active participation in a series of new-generation free trade agreements, including EVFTA, CPTPP, and RCEP. These factors have established a strong foundation for attracting foreign investment capital, particularly from China. Additionally, Vietnam's low labor costs and an extensive system of industrial parks and factories established by major corporations further enhance its attractiveness as a destination for foreign investment.

Final thoughts

The trade and economic cooperation between Vietnam and China has thrived in recent years. The two countries have complementary economies, a long history of trade and economic relations. This cooperation has the potential to benefit both countries, and is likely to continue to grow in the years to come. The Vietnamese business environment is dynamic and fertile, but Chinese SMEs can face challenges due to property access and policy amendments.

To navigate through these challenges, investors are advised to consult top leaders in the industry. Viettonkin, with our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, can be your trustworth companion along  this inspecting and adapting process. Reach out to us if you are looking for new opportunities in Vietnam. With us by your side, you can focus on what matters the most!

Vietnam's economic transformation since the implementation of the Doi Moi policy (or "Renewal") has been nothing short of remarkable. Central to this transformation has been the introduction of foreign direct investment (FDI), which has played a pivotal role in propelling the nation's growth and development. In this article, we embark on a retrospective exploration of Vietnam's FDI journey, uncovering its defining milestones, acknowledging its challenges, and outlining improvement areas for a prosperous future.

The Historical Background of Doi Moi

In 1986, Vietnam's economic landscape underwent a revolutionary transformation thanks to the "Doi Moi" initiative initiated by the Communist Party of Vietnam. This fundamental reform was necessitated by both internal and external obstacles. Until the advent of the "Doi Moi" era, the country's economic environment encountered complexities that discouraged foreign direct investment. Despite efforts to attract investment through the Foreign Investment Charter of 1977, complex domestic and international conditions limited the effectiveness of these early endeavors.

Embarking on the "Doi Moi" path, Vietnam aimed to unlock the nation's full economic potential by embracing market forces and integrating into the global economy. Accordingly, the "Doi Moi" policy outlined key economic changes as follows:

• Implement a multi-component commodity economy including state-owned, collective, individual small-scale ownership, private capital, state capital, and foreign-invested economy, in which the state-owned economy plays a leading role. 
• Abolish the centralized bureaucratic management mechanism and move towards a market mechanism under the management of the State according to the socialist orientation. 
• Shift from a closed to open economy, integrating with the world.

Notably, the government thus enacted multiple policy changes that not only facilitated foreign investment accessibility but also encouraged the influx of foreign capital and expertise. These transformative measures marked the beginning of Vietnam's journey as an alluring foreign direct investment destination.

Navigating Vietnam's FDI journey since Doi Moi: Key Milestones Unveiled

With the advent of Doi Moi transforming Vietnam's economic landscape, a series of pivotal moments emerged, intricately shaping the nation's FDI journey. 

Forging the Path: Early Initiatives towards FDI

By adopting the Doi Moi policy, Vietnam set sail on a transformative voyage. The nation's willingness to accept FDI was a central tenet of this new strategy. During this time period, the enactment of the "Law on Foreign Investment" (Luật đầu tư nước ngoài) in 1987 paved the way for FDI's entrance onto Vietnamese soil, becoming a landmark in the nation's economic history. 

During the first 3 years of 1988-1990, the results of attracting FDI were still limited, with only 211 projects and a total registered capital of USD 1,603.5 million.

The Dawn of Change in the 1990s

As the 1990s progressed, Vietnam began to attract FDI with greater momentum. During the period of 1991-1995, direct investment into Vietnam increased dramatically with 1,409 business ventures, with a total registered capital of USD 18,379.1 million. Notably, the year 1995 saw a total of 415 FDI investment projects, with a sum of registered capital at USD 7,925.2 million, an increase of 85.95% compared to the registered capital in 1994. The year 1995 also marked the beginning of diplomatic relations between Vietnam and the United States, fostering the development of an economic relationship. 

This era also saw Vietnam's active participation in regional economic organizations, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), demonstrating its commitment to global integration. 

However, during the period of 1996-2000, FDI decreased both in terms of registered capital and project scale. The highest growth rate of annual FDI capital during this period was in 1996, increasing by 21.58% compared to 1995. In the next 3 years (1997-1999), the rate of attracting FDI decreased, with the largest decrease being in 1997 at 38.19%.

Emerging Horizons in the 2000s

During the period of 2001-2005, FDI inflows into Vietnam began to recover but at a slow pace. In 2005, the General Investment Law (Luật đầu tư chung) was enacted, marking a significant milestone in this era. This comprehensive legislation reaffirmed Vietnam's dedication to nurturing an investor-friendly environment, streamlining investment procedures, and ensuring foreign investors' legal protection. The year 2006 witnessed an increase of 75.5% in the total registered capital compared to 2005, reaching USD 12,004 million. In 2007 and 2008, FDI poured into Vietnam rapidly thanks to Vietnam becoming an official member of the World Trade Organization (WTO) in 2007, serving as a landmark achievement. 

Besides, Vietnam also actively participated in regional economic organizations such as the Asia-Pacific Economic Cooperation (APEC), driving the momentum of Vietnam's global integration. 

Rising as a Manufacturing Hub in Recent Years

Vietnam has risen in prominence as a manufacturing hub in recent years, particularly for technology products and electronics. The electronics, textiles, and automobile industries have flourished, strengthening Vietnam's position as a strategic production center. 

In the face of the challenges posed by the Covid-19 pandemic, Vietnam demonstrated resilience. The country emerged as a beacon of stability, luring businesses in search of a secure operating environment. As foreign investors recognized Vietnam's robust response to the crisis, FDI inflows increased significantly. In 2019, FDI inflows reached an all-time high of $38 billion. 

The momentum continued, with 2022 bearing witness to a notable volume of FDI disbursement, the highest in the past five years, at nearly $22.4 billion. Also, in 2022, big multinational corporations such as Samsung, LG, and Lego poured significant FDI into the nation, reaffirming their commitment to Vietnam's development. Not only did these high-profile investments inject capital, but they also fueled employment creation and technological advancement, propelling Vietnam toward becoming a manufacturing powerhouse. 

The momentum of Vietnam's FDI journey remains unceasing as we proceed into 2023. A comprehensive analysis of Vietnam's FDI in the first seven months of 2023 reveals a sustained increase in investment, highlighting the nation's attractiveness to international investors. The continuing influx of FDI is evidence of Vietnam's enduring investment potential, propelling the country to even greater heights on the international investment landscape.

Paving the Way Forward: Addressing Challenges and Unleashing Vietnam's FDI Potentials

Vietnam has made significant progress in FDI since the Doi Moi era, but it still faces unique obstacles in optimizing its FDI landscape. Despite these challenges in Vietnam’s FDI landscape, the country is positioned as an attractive destination for international investors thanks to its vast investment opportunities.

Challenges and Areas of Improvement in Vietnam's FDI Landscape

• Bureaucratic Processes: Streamline administrative procedures for greater market entry support and faster business registration in Vietnam.
• Infrastructure: Invest in modern transportation, utilities, and renewable energy for efficiency.
• Skilled Workforce: Promote education, vocational training, and industry collaboration.
• Regulatory Clarity: Enhance predictability, transparency, and effective dispute resolution.
• Intellectual Property Protection: Strengthen intellectual property enforcement for innovation security.

Vietnam's FDI Potentials

Vietnam's ability to attract FDI remains robust, underpinned by a number of factors:

• Strategic Location: Hub for trade and production with manufacturing clusters near key markets.
• Economic Stability: Consistent growth, prudent fiscal policies attract stable investments.
• Young Workforce: Adaptable talent pool, especially in technology and engineering.
• Abundant Resources: Diverse sectors benefit from agriculture to renewable energy.
• Trade Agreements: Participation like CPTPP widens market access and export opportunities.
• Growing Consumer Base: Rising middle class fuels retail and e-commerce growth.

Final Thoughts

In tracing Vietnam's FDI voyage since the inception of Doi Moi, we've uncovered a path marked by strategic turning points that have transformed the country into a dynamic FDI destination. Vietnam has emerged as an international player from challenging beginnings, attracting investments in diverse sectors.

As we look ahead, Vietnam's potential for sustained growth through FDI remains compelling. Its strategic location, robust workforce, and evolving manufacturing capabilities position it for continued prosperity. The nation's commitment to reform and participation in international trade agreements also paves the way for even greater possibilities.

Are you ready to be part of this flourishing narrative? To embark on this journey and explore the realm of opportunities Vietnam offers, contact Viettonkin now - your trusted partner in navigating the complex landscape of Vietnamese business and investment.

Vietnam, a rising economic powerhouse in Southeast Asia, has witnessed an unprecedented surge in foreign direct investment (FDI) during the first seven months of 2023. This remarkable growth has caught the attention of global investors seeking new business opportunities in the region. In this article, we will explore the highlights of Vietnam's FDI inflow, examine the upcoming trends that promise lucrative prospects, and offer insights for foreign investors to seize the opportunities in this flourishing market.

Highlights of FDI inflows into Vietnam in the first 7 months of 2023

The year 2023 has seen Vietnam's economy soar to new heights, marked by a remarkable influx of foreign direct investment (FDI) in the first seven months. This period has been a turning point for the country's economic landscape, with FDI reaching an astounding total of over $16 billion, a notable 4.5% increase compared to the same period in the previous year. 

FDI projects

There were 1,627 new projects that received investment registration certificates in the first 7 months of 2023, marking a significant 75.5% growth compared to the same period. The overall registered capital for these projects reached nearly 7.94 billion USD, representing a notable 38.6% increase over the same period in 2022. 

Moreover, there have been 736 projects since the beginning of 2023 that registered capital adjustments, increasing by 27.1%. Additionally, foreign investors contributed 1,852 capital contribution and share purchase projects, totaling over 4.14 billion USD, demonstrating a remarkable 60.7% surge.

These impressive figures have ignited a wave of optimism among global investors, making Vietnam an enticing destination for those seeking lucrative business opportunities in Southeast Asia.

Destinations of FDI attractions

Among the cities shining bright in attracting FDI, Hanoi, the capital city of Vietnam, has emerged as a top contender. During the first seven months of 2023, Hanoi attracted a substantial 2.282 billion USD in foreign investment, showcasing its growing significance in the nation's economic development. This trend reflects the city's increasing appeal to investors as it offers a conducive business environment and a thriving ecosystem for businesses to flourish.

Securing the second spot, Hai Phong achieved a significant milestone with over 2 billion USD registered investment capital. This impressive figure constituted more than 12.3% of the entire national investment capital, displaying an exceptional surge of 96.5% when compared to the same period. Following were Ho Chi Minh City, Bac Giang, Binh Duong, and others.

Regarding the number of FDI projects, Ho Chi Minh City was the frontrunner nationwide. It took the lead in terms of the number of new FDI projects (39.5%), the number of adjusted FDI projects (24.7%), and the number of projects with capital contribution and share purchases (69%).

Top FDI attracting Sectors

Leading in attracting foreign capital was the processing and manufacturing sector, with an impressive total investment capital surpassing 10.93 billion USD. This constituted over 67.3% of the overall registered investment capital. Following closely, the real estate industry took the second position, contributing over 1.61 billion USD, equivalent to more than 9.9% of the total registered investment capital.

The finance and banking sector, along with professional and scientific and technological activities, secured the third and fourth spots. Their combined total registered capital amounted to over 1.53 billion USD, signifying a remarkable increase of nearly 63.9 times and around 737.6 million USD compared to the same period last year.

Top FDI investors 

Taking the lead, Singapore surged ahead with a substantial investment of nearly 3.64 billion USD, contributing more than 22.4% to the cumulative investment inflow into Vietnam.

Of notable importance was South Korea's FDI trajectory, which witnessed an escalation from 1.2 billion USD in the first 6 months to a commendable 2.34 billion USD after 7 months. This rapid surge indicated a remarkable 1 billion USD investment from South Korean enterprises within just a month. Thus, South Korea became the second-largest FDI investor in the past 7 months, outpacing both Japan and China with the registered capital comprising 14.4% of the total investment. 

A standout project came from LG Innotek, a South Korean giant, which has committed an additional 1 billion USD (spanning 2023-2025) to establishing a new V3 factory in Hai Phong. This strategic investment is estimated at 2,600 jobs created and an annual profit of 400 million USD.

Retaining its position, China held third place, amassing an impressive 2.33 billion USD in registered investment capital. This figure constituted almost 14.4% of the entire investment, reflecting a remarkable growth of 77.8% compared to the same period. 

Behind the figures

The surge in FDI capital can be attributed to several factors that have positioned Vietnam as an ideal investment choice.

After the routine economic evaluation in June, Paulo Medas, the leader of the IMF's Article IV mission, highlighted that Vietnam, like many countries worldwide, is confronting complex external conditions including a global growth slowdown and escalating interest rates. However, the gradual implementation of monetary strategies, such as lowering interest rates, reducing taxes, and expanding public investments, has effectively mitigated the adverse effects of these challenges.

DBS Bank identified Vietnam as a prime destination for foreign investors due to its transition in production trends, multiple Free Trade Agreements (FTAs), a promising medium-term growth projection of 6-7%, and a rapidly advancing digital ecosystem.

In line with this perspective, credit rating agency S&P Global Ratings suggestd that Vietnam's youthful, highly educated workforce with competitive skills is a significant attraction for international investors. They also predicted a revival in Vietnam's economy over the next two years, driven by rising global demand and the country's gradual resolution of domestic challenges.

The first seven months of 2023 have also showcased the resilience and adaptability of Vietnam's economy amidst global challenges. Despite uncertainties caused by the pandemic and fluctuations in the global market, Vietnam has demonstrated its capacity to maintain stability and growth, further solidifying its status as an attractive investment destination for foreign investors.

The Upcoming Trends of FDI Inflow into Vietnam: Opportunities for Investors in Promising Sectors

The robust FDI inflow into Vietnam in the first seven months of 2023 has unveiled several promising trends that are expected to shape the investment landscape in the coming years. As the nation continues to attract foreign investors, specific sub-sectors stand out as hotspots for FDI inflow, offering lucrative opportunities for global entrepreneurs seeking to establish a foothold in Vietnam's flourishing market.

Manufacturing and Export Industries

Vietnam's manufacturing sector remains a top draw for FDI, driven by its competitive production costs and strategic trade partnerships. The country's participation in major trade agreements such as the CPTPP and EVFTA has significantly enhanced its export capabilities, attracting investments from global corporations seeking to establish regional production centers. Notably, multinational companies like Samsung, LG, and Foxconn have already made significant FDI commitments in Vietnam, investing in large-scale electronic manufacturing plants. 

In addition, Intel will continue to invest billions of dollars in Vietnam in the near future, after having succeeded with a 1.5 billion USD project in Ho Chi Minh City. Intel is in the process of negotiating with the Vietnamese Government on mechanisms and policies for this project.

At the end of this year, Amkor - a "big player" in the semiconductor industry, with its head office in Arizona (USA) will put a new factory in Bac Ninh into operation. This project has an investment capital of phase I of 500 million USD.

Quanta Computer Corporation (Taiwan - China) has signed an agreement with the People's Committee of Nam Dinh Province on the development of a large-scale computer manufacturing project.

With an investment of about 120 million USD, Quanta Computer plans to build a factory specializing in manufacturing and processing laptops and desktop computers. This is Quanta's 9th factory globally, but its first factory in Vietnam. More importantly, Quanta is Apple's MacBook manufacturing partner. Therefore, their appearance means that Apple is continuing the trend of shifting production to Vietnam.

As Vietnam continues to emerge as a prominent manufacturing hub, sub-sectors like electronics, textiles, and automobile components are expected to witness a surge in FDI projects.

Technology and Innovation

Vietnam's tech-savvy population and rapid digital transformation have spurred a surge in investments within the technology sector. Startups and tech-based businesses in e-commerce, fintech, and software development have been attracting substantial FDI. For instance, Grab, Southeast Asia's leading ride-hailing and food delivery platform, has invested heavily in expanding its services in Vietnam. In the upcoming 5 years (2019-2023), Grab plans to inject an extra 500 million USD into Vietnam, aiming to introduce new services and extend its reach in mobility, food delivery, and digital payment solutions. The company also intends to pioneer advancements in mobile technology, financial innovation, and logistics.

The country's growing middle-class population, coupled with the government's focus on promoting a digital economy, opens up tremendous opportunities for investors looking to capitalize on the technology-driven growth in Vietnam.

Renewable Energy and Sustainability

Vietnam's commitment to sustainable development has led to a surge in FDI within the renewable energy sector. The government has been actively promoting renewable energy projects to reduce its dependence on fossil fuels and address environmental concerns. Investments in solar and wind power projects have gained momentum, with several international firms expressing interest in contributing to Vietnam's green energy initiatives. Notably, the Tokyo Gas Group from Japan has invested in a $250 million wind power project in Tuy Phong, Binh Thuan province. With favorable government policies and a growing emphasis on sustainability, the renewable energy sector holds tremendous potential for foreign investors.

Infrastructure and Real Estate

Vietnam's rapid urbanization and economic growth have resulted in a surge in demand for infrastructure and real estate development. The government's focus on expanding transportation networks, modernizing urban areas, and developing smart cities has attracted substantial FDI commitments. Notable projects include the expansion of Tan Son Nhat International Airport in Ho Chi Minh City and the construction of the North-South High-Speed Railway. Foreign investors seeking stable and long-term returns can find promising prospects in Vietnam's infrastructure and real estate sectors.

Healthcare and Pharmaceutical Industries

As Vietnam's middle-class population expands, there is a growing demand for improved healthcare services and pharmaceutical products. The government's efforts to enhance the healthcare system and reduce reliance on imported medicines have created opportunities for FDI in the healthcare and pharmaceutical sectors. Investments in hospital infrastructure, medical equipment manufacturing, and research and development facilities are expected to gain traction.

Final Thoughts

The first seven months of 2023 have proven to be a turning point for FDI inflow into Vietnam, showcasing the country's immense potential as an investment destination. As we look towards the future, the trends in key sectors such as manufacturing, technology, renewable energy, and infrastructure signal a promising landscape for those who wish to establish a strong foothold in the country. By leveraging market insights, embracing cultural nuances, and collaborating with local partners, investors can unlock the full potential of their ventures in Vietnam.

If you are an ambitious global investor seeking growth and prosperity, Vietnam beckons with open arms. Seize the opportunity, and let Vietnam be the next chapter in your success story!

Ready to embark on your journey to success in Vietnam? Reach out to us today and explore the myriad possibilities that await you in this flourishing Southeast Asian market. Together, we can build a brighter future for your business in Vietnam.

Vietnam and the United States have an interesting history of trade-economic cooperation. The two countries have a mutually beneficial trade relationship, and they are committed to working together to promote economic growth and prosperity in the region. The future of trade-economic cooperation between Vietnam and the United States is bright, and it is likely to continue to grow in the coming years.

The evolution of Vietnam-US relations

The United States is a major investor in FDI in Vietnam. Over the past 30 years, the situation of FDI from the United States in Vietnam has undergone significant changes, which can be classified into 4 stages: 

Stage 1: From 1994 to 1999: The beginning of Vietnam - US trade relations

In February 1994, President Bill Clinton announced the complete lifting of the embargo against Vietnam. From then on, the foundation for trade between the two countries began to be established and prospered. On July 11, 1995, Vietnam and the United States normalized relations. Prime Minister Vo Van Kiet stressed that this decision was in line with the trend of international developments and would contribute positively to the cause of peace, stability, and development in Southeast Asia, as well as in the world. Vietnam and the United States opened embassies in each other's countries in August 1995 and exchanged ambassadors in May 1997. As of 1995, the total amount of US FDI in Vietnam reached $759.92 million.

Stage 2: From 2000 to 2006: The turning point in Vietnam - US bilateral relations

In 2001, the Vietnam–United States Bilateral Trade Agreement came into effect, marking a strong recovery and resurgence of trade between the two countries. The agreement came into effect in December 2001. All goods exported from Vietnam to the United States are granted most-favored-nation (MFN) tariff treatment, also known as unconditional normal trade relations (NTR). Thanks to the positive impacts that this agreement brought, US FDI in Vietnam from 2001 to 2006 changed dramatically, reaching $1.826.18 billion.

Stage 3: From 2007 to 2014: Strengthening Vietnam - US economic cooperation

The next period, from 2007 to 2010, FDI grew at an astonishing rate, reaching $9.625.6 billion, despite the global financial crisis of 2008 that cast a dark cloud over the world economy. The prominent event that opened this period was Vietnam's accession to the WTO in early 2007, marking a turning point in the flow of investment from the United States with investment capital concentrated in the areas of production and application of modern science and technology.

Notably, in July 2013, during President Truong Tan Sang's visit to the US at the invitation of his counterpart Barack Obama, the two sides established the Vietnam-US comprehensive partnership, which shaped a framework for bilateral relations for the new period as well as the development direction of the relationship in the coming years.

Stage 4: From 2015 until now: Leveraging bilateral cooperations between Vietnam - US governments

Vietnam-US relations have entered a new phase of development in recent years. This is evidenced by the fact that high-level visits between the two countries have become more frequent. Notable were the visits by Vietnamese Party General Secretary Nguyen Phu Trong in 2015, US President Barack Obama in 2016, Vietnamese Prime Minister Nguyen Xuan Phuc in 2017. Later in 2017, President Trump visited Vietnam and attended the Asia-Pacific Economic Cooperation (APEC) forum in Đà Nẵng. Recently, US Vice President Kamala Harris visited Vietnam in 2021, and Vietnamese PM Pham Minh Chinh attended U.S.-ASEAN Special Summit in May 2022. These visits have helped deepen the Vietnam-US comprehensive partnership, promote the development of the relationship on the basis of mutual benefits, equality and respect for each other's independence, sovereignty, and political institutions.

The characteristics of US FDI in Vietnam

Foreign direct investment (FDI) from the United States has played an important role in the economic development of Vietnam. In recent years, US FDI has become increasingly important, with the United States becoming the second-largest source of FDI in Vietnam. There are a number of characteristics that distinguish US FDI in Vietnam from FDI from other countries.

First, US FDI has a high research and development (R&D) intensity. This means that US investors are more likely to invest in projects that involve the development of new technologies. This is in contrast to FDI from other countries, which is often focused on more traditional industries. Foreign direct investment (FDI) from the United States is primarily for the production of sophisticated products that are based on high-tech, exclusive, and capital-intensive technologies that serve the host country's market. 

Second, US investors have different goals and motivations than investors from other countries. US investors are more likely to be interested in the long-term potential of Vietnam, rather than simply looking to exploit short-term opportunities. They are also more likely to be interested in transferring technology and know-how to Vietnam. A study by the US-ASEAN Business Council found that 70% of US investors in Vietnam are interested in the long-term potential of the country, compared to only 40% of investors from other countries. Another study by the Vietnam Chamber of Commerce and Industry found that US investors are more likely to invest in projects that involve the transfer of technology and know-how to Vietnam, compared to investors from other countries. 

Third, the level of technology absorption and the willingness to protect intellectual property rights in Vietnam are important factors that attract US FDI. In terms of the level of willingness to protect IP (PERC), Vietnam is only at an average level. Vietnam's legal system for establishing and enforcing intellectual property rights is still complex and unstable; there are still cases of copyright infringement, counterfeit and pirated goods. However, Vietnam has made significant progress in improving its business environment in recent years, and this has helped to attract more US FDI. These improvements are likely to continue in the future, as Vietnam seeks to attract even more foreign investment.

The emerging trends of US FDI in Vietnam

The year 2023 is an important milestone in Vietnam-US relations as it marks the 10th anniversary of the establishment of their comprehensive partnership (2013-2023). Twenty-eight years after the diplomatic ties were set up, and 10 years since the establishment of the comprehensive partnership, the Vietnam - US relationship has enjoyed all-round and substantive development, contributing to peace, security, cooperation and development in the region and the world.

Over the last decade, Vietnam has emerged as a major manufacturing center and has risen to become one of the top 10 trading partners for the United States. Based on U.S. Census Bureau data, bilateral trade in goods was nearly $139 billion in 2022, up 22% from 2021. The United States’ bilateral trade deficit in goods with Vietnam in 2022 ($116 billion) was the United States’ third largest. Vietnam is a major source for consumer electronics, furniture, mechanical appliances, apparel, and footwear imports. Notably, it is the second-largest source of U.S. clothing imports, after China. Top U.S. goods exports to Vietnam are cotton, civilian aircrafts and parts, semiconductors, soybeans, and various agricultural goods. The United States maintains a surplus in bilateral services trade, which in 2022 was around $1.6 billion. 

Analysts predict that the United States will soon become the leading investor in Vietnam. In particular, at the Vietnam-US Summit, Under Secretary of Commerce for International Trade Marisa Lago stated that health care, digital trade, energy, and climate change will be the three priority areas for US businesses to cooperate with Vietnam in 2023. This is also in line with Vietnam's new FDI attraction strategy, which is to place a greater priority on attracting high-tech projects, digital transformation, and especially clean energy investment projects.

To wrap up ...

Vietnam and the US are continuing to strengthen the Vietnam-US Comprehensive Partnership. There is no doubt that Vietnam-US relations are at the best stage since the end of the Vietnam War. Vietnam is the only Southeast Asian country in the top 10 of U.S. trading partners, and American manufacturers increasingly consider Vietnam as an alternative destination to China. 

Thus, it is an ideal time for the US investors to seize the opportunities! Reach out to us if you need support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don't miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.

The bilateral relationship between Vietnam and China has a long history of cultural and economic exchanges, and the two countries have maintained a close and enduring friendship over the years. As one of Vietnam's largest trading partners and foreign investors, China has played a crucial role in Vietnam's economic growth. With the increasing flow of foreign direct investment (FDI) into Vietnam over the years, China has emerged as a significant player in the FDI industry in Vietnam.

The enduring friendship between Vietnam - China

Over the past 70 years, Vietnam-China relations have seen ups and downs, but friendship and cooperation remain the main trends. The friendship cultivated by President Ho Chi Minh and President Mao Zedong and generations of leaders of the two countries, has become a valuable common asset of the two nations, contributing to maintaining the trend of stable development of the traditional friendship between Vietnam and China, as well as bringing practical benefits to the two peoples.

On January 18, 1950, China established the world's first diplomatic relations with the Democratic Republic of Vietnam, marking a significant moment in the two countries' relationship. In 1999, the 16-character principle was established during a visit by General Secretary Le Kha Phieu to China, outlining the guiding principles for bilateral cooperation in the 21st century. The spirit of "four goods" was later agreed upon during President Hu Jintao's visit to Vietnam in 2005, emphasizing the aim of making the two countries "good neighbors, good friends, good comrades, and good partners." In 2008, the framework of a "comprehensive strategic cooperative partnership" was established based on the "16-character" principle and the spirit of "four goods" during General Secretary Nong Duc Manh's visit to China. General Secretary Nguyen Phu Trong's official visit to China in January 2017 helped to deepen the comprehensive strategic cooperative partnership between the two countries, enhance mutual trust, and promote peace, stability, cooperation, and development in the region and the world.

Overall, the Vietnam-China relationship has maintained a stable and positive trend; the leaders of both sides have achieved important common understandings, contributing to elevating the bilateral relationship to new heights.

Advancing bilateral cooperation between Vietnam - China

At the state-level dialogues and exchanges between the governments of Vietnam and China, the Vietnamese Government engages in sharing, interacting, and acquiring knowledge from the successful experiences and valuable lessons of the Chinese Government in formulating and implementing strategies aimed at attracting foreign direct investment (FDI). The underlying objective of this initiative is to promote the economic growth of China over the last forty years. Additionally, the Vietnamese Government seeks to gain insights into the policy implications and practical experience of FDI attraction, which can be applied to their own economic development endeavors.

In May 2022, China and Vietnam released a joint statement on further strengthening and deepening the comprehensive strategic cooperative partnership between the two countries during the visit of General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong to China. It emphasized their commitment to enhancing the comprehensive strategic cooperative partnership between the two countries from a strategic and long-term perspective amidst the global changes. The joint statement also included the agreement to maintain the China-Vietnam Steering Committee for Bilateral Cooperation mechanism and to promote cooperation in various fields, such as foreign affairs, defense, security, and law enforcement. Both countries also vowed to work together to resist "peaceful evolution" and "color revolutions" and strengthen counter-terrorism efforts. 

On July 13, 2023,  Vietnamese Minister of Foreign Affairs Bui Thanh Son met with Politburo member and Director of the Communist Party of China Central Committee’s Foreign Affairs Commission Wang Yi in Jakarta. The two officials affirmed that their countries will keep attaching importance to each other’s roles and the bilateral comprehensive strategic cooperative partnership. They will continue to effectively implement the joint statement issued in October 2022, and the concrete outcomes of the trip to the Northeast Asian nation by Prime Minister Pham Minh Chinh in June 2023. The two countries will assist each other with national modernisation while enhancing high-quality connectivity between the “Belt and Road” initiative and the “Two Corridors, One Belt” framework.

Overall, China and Vietnam continue to deepen their cooperation and strengthen their relationship in the new era, while also addressing challenges and maintaining stability in the region.

Three stages of trade, economic, and investment cooperation between Vietnam and China

Since 2016, Vietnam has remained the biggest trade partner of China in the Association of Southeast Asian Nations (ASEAN), and China has been Vietnam’s largest trade partner for many years. Hence, China’s direct investment in Vietnam has continued to rise through the years.

China's FDI investment process in Vietnam is divided into three stages with the following results:

• Stage 1: From 1991 to 2001: China’s first FDI in Vietnam was in 1991 when a Guangxi enterprise (China) joint ventured with a Vietnam group to open Hoa Long restaurant in Hanoi. The period is considered as ‘the exploratory phase’, which resulted in modest achievements as China launched 110 investment projects in Vietnam with a total registered capital of 221 million USD.

• Stage 2: From 2001 to 2010: China increased both quantity and the amount of capital scale of FDI projects in Vietnam (about 2.5 million USD/project), with many projects ranging from 1-10 million USD.

• Stage 3: From 2010 to present: Chinese FDI in Vietnam has undergone significant changes, continuously rising in the ranking position, increasing in scale, changing in form and fields, and expanding into new geographical areas. By the end of 2019, the total FDI capital invested in Vietnam from China continued to increase sharply, nearly doubling the level of 2018 (with 683 newly registered investment projects and a total capital of 2.3 billion USD). 

Despite COVID-19, Chinese FDI still increased through the years. In 2022, China invested approximately USD 2.52 billion in Vietnam with 283 newly licensed projects, ranking 4th among the total countries investing in Vietnam, of which newly registered capital reached USD 1.35 billion and adjusted capital was over USD 1 billion with 283 projects. In the first five months in 2023, China's total investment capital in Vietnam reached over USD 1.608 billion, up 41.9% compared to the same period in 2022. Of which, newly registered capital reached over USD 1.086 billion and adjusted capital was USD 451.76 million with a total of 156 projects. In terms of total investment capital, China ranks 3rd among the total countries and territories investing in Vietnam, after Singapore and Japan. The total number of China's investment projects still in effect in Vietnam is 3,720 with a total registered capital of over USD 24.87 billion.

Prospects for future cooperation between China and Vietnam

The flow of investment capital from China to Vietnam has significantly changed in recent years with a diversity of industries and sectors. In previous periods, China's investment capital only focused on sectors such as restaurants, hotels, and consumer goods. However, recently, industries such as textiles, leather shoes, textile fibers, mineral exploitation, and industrial zones are attracting FDI from China.

Vietnam's appeal to Chinese investors can be attributed to its strategic geographical location bordering China and its active participation in a series of new-generation free trade agreements, including EVFTA, CPTPP, and RCEP. These factors have established a strong foundation for attracting foreign investment capital, particularly from China. Additionally, Vietnam's low labor costs and an extensive system of industrial parks and factories established by major corporations further enhance its attractiveness as a destination for foreign investment.

Chinese conglomerates are showing increasing interest in the Vietnamese market. In May, following a meeting between Deputy Prime Minister Tran Hong Ha and the Chairman and Founder of BYD, Mr. Wang Chuanfu, the largest electric vehicle manufacturer in China announced its plans to produce electric cars in Vietnam and expressed a desire to receive support from the government. In the near future, BYD will be expanding its investment in the manufacturing and assembly of electric cars, utilizing state-of-the-art technologies to serve the Vietnamese market and export to the Southeast Asian region.

Final Thoughts

The trade and economic cooperation between Vietnam and China has thrived in recent years. The two countries have complementary economies, a long history of trade and economic relations. This cooperation has the potential to benefit both countries, and is likely to continue to grow in the years to come. The Vietnamese business environment is dynamic and fertile, but Chinese SMEs can face challenges due to property access and policy amendments. 

To navigate through these challenges, investors are advised to consult top leaders in the industry. Viettonkin, with our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, can be your trustworth companion along  this inspecting and adapting process. Reach out to us if you are looking for new opportunities in Vietnam. With us by your side, you can focus on what matters the most!