Singapore Retains Top Rank As Vietnam’s Largest Foreign Investor In 2021 | Vietcetera
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Dec 31, 2021

Singapore Retains Top Rank As Vietnam’s Largest Foreign Investor In 2021

Singapore pumped some $7 billion into Vietnam this year — a third of all foreign direct investment this year — outpacing Japan and China.
Singapore Retains Top Rank As Vietnam’s Largest Foreign Investor In 2021

According to the Ministry of Planning and Investment, Vietnam received $19.74 billion of foreign investments in 2021.

For two consecutive years now, Singapore has pumped the most foreign direct investment (FDI) into Vietnam. For the first ten months of 2021, total FDI contributions stood at $6.77 billion, accounting for nearly 32.5% of outside investment in the country this year.

According to the Ministry of Planning and Investment, Vietnam received $19.74 billion of foreign investments in 2021, slightly lower than in 2020 due to the lockdown. Next to Singapore, Japan invested $3.2 billion, followed by China, Hong Kong, and Taiwan.

In 2020, Singapore was also ahead of South Korea, Japan, and China, with an investment totaling US$8.99 billion. Last year, Vietnam was also the top country for Singapore companies to explore overseas expansion, according to the Singapore Business Federation’s National Business Survey 2020/2021.

Leon Cai, regional director at Enterprise Singapore (ESG), said that these strong trade and investment interests between Vietnam and Singapore are results of excellent bilateral relations, underpinned by initiatives to deepen economic ties between the two nations. As the Singapore government agency championing enterprise development, ESG connects Singapore companies to Vietnamese businesses to help them identify joint business opportunities and develop partnerships.

There are currently around 2,700 approved projects by Singapore companies in Vietnam totaling US$62.6 billion — most of them expect to continue operations in-market, help facilitate the inflow of investments and create more jobs in the country.

Why has Singapore invested so much in Vietnam in recent years, and what key industries does the flourishing city-state pour financial capital into?

What attracts Singapore investors to Vietnam

The growing middle class is driving consumer spending in Vietnam. | Source: Tin Phung for Vietcetera

Growing middle class

From now until 2023, Vietnam’s middle class is expected to grow at an annual rate of 9.2%, according to McKinsey & Company, indicating the fastest growth among Southeast Asian economies. By 2035, more than half of the country’s population is expected to be middle class. Meanwhile, household spending in the country was projected to grow by 7% year-on-year in 2021, a leap from 0.8% in 2020. These data points signal an increasing demand for higher value-added products and services, making Vietnam an attractive consumer market.

Skilled and cost-competitive talent

Over the last 15 years, Vietnam has invested heavily in science, technology, engineering and math (STEM) education, creating a rich pool of engineering and IT talent. Its universities are estimated to produce some 80,000 IT graduates a year. This has made Vietnam attractive to many tech startups and global corporations. Singapore-based ride-hailing startup Grab, for instance, has set up a research and development center in Ho Chi Minh City to capitalize on Vietnam’s tech talent.

Wide trade links

Vietnam has comprehensive trade links, given its 14 free trade agreements (FTAs) with more than 50 economies around the world, including the EU-Vietnam Free Trade Agreement (EVFTA) and Regional Comprehensive Economic Partnership (RCEP).

With these FTAs, manufacturers venturing into Vietnam enjoy low tariffs and the ability to boost their exports to top markets such as the EU, US, Japan and Australia. And even with COVID-19 dampening business sentiment, Vietnam drew over US$28.5 billion in foreign investments in 2020, signaling investors’ long-term commitment to and confidence in the market.

Strong bilateral relationship

The relationship between Singapore and Vietnam has strengthened throughout the decades, with bilateral trade hitting S$22.7 billion in 2020.

This year, the two countries reaffirmed cooperation at bilateral and ASEAN levels, agreeing to expand cooperation to new growth areas such as digital economy, cybersecurity, sustainable development and smart cities.

The key industries

Vietnam-Singapore Industrial Parks (VSIP) are spread across six locations across Vietnam, attracting about $15 billion in investments in 2020. | Source: VSIP

Consumer and Lifestyle

Vietnam — especially Ho Chi Minh City — has become a rising consumer market with the expanding middle class. In 2019, sales of retail goods and consumer services hit a record high of over US$214.8 billion, an 11.8% increase year on year — figures that have attracted more and more foreign brands to enter the market.

Singapore consumer and lifestyle brands such as online shopping platforms Shopee and Shopback, and ride-hailing startup Grab, have already marked their names among Vietnamese consumers. When it comes to food services, consumers are increasingly willing to spend on international cuisines and higher quality food options. Singapore companies, such as snack brand Irvins and frozen products brand Chinatown Food, have expanded into the market to meet the demand.

Infrastructure and Smart City

Singapore is the smartest city in the world. Its masterfully planned urban development has become the ideal model for countries to follow. Vietnam dreams of the same thing. Ho Chi Minh City, the country’s commercial capital, has already laid the groundwork for its smart city transformation, starting with the newly built high-tech Thu Duc City.

HCMC and Singapore’s Centre for Livable Cities also entered a memorandum of understanding in April. Under the MoU, the two sides will support each other in coordinating experts and businesses to improve urban infrastructure, architectural conservation and expanding green spaces in the Vietnamese city.

Renewable projects are also seeing an increase in investment, with Vietnam strongly advocating to reach zero net emissions before 2050. Singapore electricity retailer Sunseap has been actively pushing for renewable energy. In 2019, it completed a US$150 million solar power plant in Ninh Thuan province that is now serving reliable clean electricity to the residents.


Singapore businesses see Vietnam as a key destination for business diversification. With competitive land and labor costs, Vietnam offers foreign investors, like Singapore’s Sembcorp Development, an attractive location for its operations. Sembcorp helped build the Vietnam-Singapore Industrial Parks in six provinces across the country, attracting collectively about US$15 billion in investments as of September 2021. VSIP Binh Duong will see the rise of the US$1 billion Lego factory come 2024.

While Vietnam offers promise as a new manufacturing hub, it is still considerably behind in productivity and technology. During COVID-19 lockdown, factories shut operations, affecting the global supply chain in the manufacturing sector. Singapore Industry 4.0 solution providers such as Arcstone and Deskera are working with local manufacturers to offer services such as automation, robotics, additive manufacturing and industrial Internet of Things. When implemented, such solutions can help manufacturers mitigate the operational disruptions from pandemic lockdowns or natural calamities.

Innovation and Startups

Vietnam is on a clear path to becoming one of the brightest startup scenes in Asia. Next to Singapore and Indonesia, the country has made tremendous progress in terms of investments injected into fintech, e-commerce, and enterprise solutions and in the government’s support in streamlining investment regulations.

Seeing how fast the startup ecosystem in Vietnam has thrived, Singapore startups and venture capitalists are ramping up their presence. VC firms like Monk’s Hill Ventures, Golden Gate Ventures, and Antler supported a number of tech startups in Vietnam to push their success rates even higher.

ESG and the National Agency of Technology, Entrepreneurship and Commercialisation (NATEC), under Vietnam’s Ministry of Science and Technology, also signed a memorandum of understanding in 2018 to facilitate exchanges between the startup ecosystems in both countries through joint initiatives and activities. The partnership was renewed in 2020 with an additional focus on leveraging open innovation initiatives, such as Singapore’s Open Innovation Network, to crowdsource solutions for corporates in Vietnam.

Plans for the year ahead

Vietnam's startup ecosystem is projected to expand further, with the help of major foreign investors, including Singapore. | Source: Shutterstock

Due to the months-long lockdown imposed in Vietnam in mid-2021, physical site visits and business mission trips were not possible. Singapore companies hope to resume these crucial visits in 2022 to explore business opportunities.

“Such visits could include sector-specific mission trips. For the manufacturing sector, for example, Singapore investors want to visit the industrial parks to understand the manufacturing landscape in Vietnam, meet local logistic companies and visit seaports, and see the entire supply chain,” explained Leon. During these trips, Singapore investors will also talk with lawyers to understand all the policies and administrative processes related to doing business in Vietnam.

Beyond that, Leon also emphasized the importance of developing more accelerator programs to support the market entry of Singapore and Vietnamese startups, as well as to better connect the Singapore and Vietnam startup ecosystems. ESG expanded the Global Innovation Alliance (GIA) network to Ho Chi Minh City in 2019, in partnership with Saigon Innovation Hub and Singapore-based venture fund Quest Ventures. The GIA is a network of Singapore and overseas partners in major innovation hubs and key demand markets, with a focus on technology and innovation. The GIA Acceleration program provides startups with market insights, connections to potential partners, and valuable mentorship.

“As we gradually move towards a new normal in 2022,” he said, “ESG looks forward to supporting more investments and stronger business cooperation between Vietnam and Singapore.”