Foreign investors continued to eye Vietnam positively in 2025 amid intense investment completion at the regional level and ongoing global headwinds.

Vietnam has continued
to assert itself as one of the region’s most “safe and attractive” destinations
for foreign investors, with disbursed FDI reaching a five-year high in 2025, of
an estimated $27.62 billion, up 9 per cent against 2024.

According to a report
from the National Statistics Office at the Ministry of Finance, total registered
FDI into Vietnam last year amounted to $38.42 billion, up a modest 0.5 per cent
from 2024. This is considered a positive outcome given the intense competition for
investment among regional peers such as India, Indonesia, and Thailand, and in light
of the $38-40 billion target Vietnam set at the beginning of the year.

Positive picture

The most notable
aspect lies in the composition of these capital flows. While newly-registered capital
reached $17.32 billion, down 12.2 per cent in value but up 20.1 per cent in project
numbers, with 4,054, additional capital showed a slight improvement, totaling $14.07
billion, up 0.8 per cent. This suggests a clear trend: new investors are being more
cautious about initial investment sizes as they test the market, while existing
investors in Vietnam are increasingly committed to expanding their operations.

Notably, capital
contributions and share purchases recorded a sharp surge, of 54.8 per cent, reaching
$7.03 billion. This reflects a rapidly-heating market for mergers and acquisitions
(MAs), as foreign investors seek faster market entry by partnering with promising
domestic companies.

The record-high
disbursement level indicates that FDI projects are moving beyond paperwork and being
translated into factories, machinery, and jobs. The manufacturing and processing
sector continued to serve as the backbone of FDI, accounting for 82.8 per cent of
total disbursed capital, equivalent to $22.88 billion. This underscores Vietnam’s
growing role as a key manufacturing hub in global supply chains, particularly in
electronics, end devices, and semiconductor components.

The surge in disbursed
capital also reflects government efforts to remove bottlenecks related to infrastructure,
logistics, and administrative procedures – all critical factors enabling investors
to accelerate project implementation after registration.

In terms of investor
structure, Singapore maintained its position as the largest source of FDI in Vietnam
in 2025, with $4.84 billion, accounting for 27.9 per cent of newly-registered capital.
However, this year’s investment landscape also featured new highlights. China and
Hong Kong (China) significantly increased their presence, accounting for 21 per
cent and 10 per cent of newly-registered capital, respectively. The “China + 1”
supply chain shift continues to gain momentum, further reinforcing Vietnam’s appeal
as an investment destination.

Particularly noteworthy
was Sweden’s emergence, with $1 billion, or 5.8 per cent of newly-registered capital;
a positive sign for Vietnam’s attraction of high-tech and sustainable investment
flows from Northern Europe. Though Japan and South Korea ranked lower in terms of
newly-registered capital, accounting for 9.4 per cent and 5.2 per cent, respectively,
they remain among Vietnam’s most important partners, operating projects with substantial
disbursement volumes and spillover effects.

Advantages and challenges ahead

While monthly FDI
inflows fluctuated, the overall trend in 2025 broadly aligned with earlier assessments
by international organizations. In its “Vietnam at a Glance” report, HSBC noted:
“Vietnam is no longer merely an alternative to China, but is becoming an indispensable
link in the global value chain.” In particular, the country’s transition from a
low-cost manufacturing base to a high-tech production hub has attracted strong interest
from major US and European tech groups, especially in semiconductors and clean energy.

At the same time,
improvements in Vietnam’s investment and business environment, increasingly aligned
with international standards, have been positively assessed by strategic partners.

The implementation
of the Global Minimum Tax in 2025, meanwhile, posed new challenges to Vietnam’s
traditional reliance on tax incentives to maintain competitiveness. Rather than
viewing this as a setback, however, the country proactively shifted towards non-tax
investment support policies, including high-quality workforce training, digital
infrastructure upgrades, and green energy development.

In its recent “East
Asia and Pacific Economic Update,” the World Bank described Vietnam as one of the
most adaptable economies in the region, noting that its deep participation in next-generation
free trade agreements has created a “shield” protecting investment flows from global
trade volatility.

Meanwhile, the International
Monetary Fund emphasized that Vietnam’s macro-economic stability and effective inflation
control are among the most important factors in retaining FDI levels. It
forecast that Vietnam would continue to be a key growth engine in ASEAN in 2026
and remain an attractive destination for foreign investors.

A recent report
from the Organisation
for Economic Co-operation and Development (OECD) on Vietnam’s
investment environment also highlighted that modern investors no longer focus solely
on tax incentives. Rather, they prioritize access to renewable energy, infrastructure
quality, and the transparency of legal systems. In this context, Vietnam is moving
in the right direction by accelerating offshore wind power projects and smart grid
development, meeting the stringent environmental, social, and governance (ESG) requirements
of multinational corporations.

As a result, international
organizations continue to forecast that FDI inflows into Vietnam in 2026 will further
shift towards higher quality. Sectors such as semiconductors, the digital economy,
and green energy are expected to emerge as new magnets for investment.

However, to fully
realize these opportunities, Vietnam will need to act more decisively in upgrading
transport and energy infrastructure, while narrowing the skills gap to ensure readiness
to absorb core technologies from leading global investors.

VET-Anh Nhi