Vietnam’s economic resilience has been tested and proven strong this year amidst brutal global inflation and mounting price pressures. GDP growth for the year has reached 8.02% — the highest since 1997 — driven by solid manufacturing and export performance.
With economic indicators signaling continued growth momentum, Vietnam has kept its position as a major investment destination for foreign firms. Data from the Ministry of Planning show the country saw more than $27.72 billion in foreign direct investments pumped into different sectors across provinces in 2022.
This includes $12.45 billion poured into 2,036 newly-licensed projects. Moreover, 1,107 projects increased investment capital by $10.12 billion, a year-on-year increase of 12.2%. The volume of foreign investors’ capital contributions and share purchases decreased by 25.2 % to $5.15 billion.
While this year’s capital inflow is down 11% compared to the previous year, the total disbursed volume set a new record of $22.4 billion, a 13.5% increase from 2021.
Vietnam’s better-than-expected COVID recovery and prudent monetary policy, and effective price controls boosted foreign investors’ confidence.
Singapore is still biggest investor for third consecutive year
A total of 108 countries and territories poured investments into Vietnam this year, led by Singapore. The city-state injected $6.46 billion in capital, accounting for nearly a quarter of the total FDI registered this year. Singapore was also Vietnam’s leading source of foreign investment in 2020 and 2021.
Leon Cai, former regional director of Enterprise Singapore, told Vietcetera last year that the strong trade and investment interests between the two Southeast Asian countries are the result of excellent bilateral relations and free trade agreements.
There are currently more than 2,800 approved projects by Singaporean companies in Vietnam — including 280 launched this year — most of them are expected to further deepen their presence in Vietnam in the coming years and create more jobs for Vietnamese workers.
Ranking second is South Korea, with $4.88 billion total registered capital in 2022. South Korea is the home base of tech giants LG and Samsung, two of Vietnam’s most prominent and active foreign investors.
South Korea has cumulatively made $81 billion worth of investment — the biggest to date — injected into nearly 10,000 projects since bilateral relations with Vietnam started three decades ago.
East Asian countries Japan, China, and Hong Kong are Vietnam’s third, fourth and fifth biggest FDI sources in 2022.
Denmark, which invested more than $1 billion in Vietnam to build its Lego factory in Binh Duong, ranked sixth.
Manufacturing and processing sector attracted the most FDI
Vietnam is called a manufacturing powerhouse for many reasons: Connectivity with supply chains, competitive labor and production costs, free trade agreements with the world’s biggest importers, and fast-developing infrastructure, to name a few.
As trade wars and power struggles burdened other nations, the attention of global companies shifted to Vietnam. Even during COVID lockdowns and supply chain challenges, the manufacturing industry retained investor and consumer confidence.
The manufacturing and processing sector received $16.8 billion in capital from foreign investors, making up 60.6% of total foreign investment inflows. Textile and garment manufacturing and electronics and food processing are at the forefront of booming investment.
At a vast distance, real estate and electricity followed in second and third places, with only $4.45 billion and $2.26 billion in total capital injection.
Wholesale and retail, which also contribute a significant portion of Vietnam’s GDP, were able to obtain a little over $1 billion in foreign investment. Foreign retail giants, such as Japan’s Aeon and South Korea’s Lotte, have set big goals for Vietnam in the coming years. Lotte, for example, broke ground for its $900-million eco-smart city project in Ho Chi Minh City in September. The eco-smart city complex will stand on a total area of more than 74,500 square meters. It will serve as a financial, commercial service center and multi-functional residential area.
Ho Chi Minh City remains top investment destination
As Vietnam’s largest economic engine, Ho Chi Minh City is the top choice for foreign investment. This year, the city got more than $3.94 billion, accounting for 14.2% of total FDI.
The southern metropolis has more than 150,000 enterprises and 19 industrial zones, including three export processing zones, 14 industrial parks, and two hi-tech parks. The industrial zones attract investment capital in all fields, especially manufacturing and processing. And as host to the largest airport and well-developed infrastructure, the city supports industrial production and international trading.
Binh Duong, considered the gateway to Ho Chi Minh City, ranked second, with $3.14 billion in total foreign investment. Binh Duong hosts 29 concentrated IPs spanning nearly 13,000ha, making it an attractive technology and trade hub.
The northern provinces of Quang Ninh and Bac Ninh occupied the third and fourth positions with $2.37 billion and $2.2 billion, respectively. Hai Phong and Thai Nguyen followed closely with $1.9 billion and $1.5 billion total FDI.
Capita city Hanoi, meanwhile, stood far down the ladder, in seventh place. It only attracted $1.7 billion in registered capital from foreign investors in 2022. Despite its low ranking this year, Hanoi remains a highly favored spot for investors for its strong business climate and fast digital transformation. The city of eight million people ranks third in overall foreign investment inflow, with $38.7 billion.