Vietnam’s FDI Outlook Strengthens Amid Global Tax Shifts and Supply Chain Reorientation

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Summary:

Despite initial investor hesitation following U.S. global tax retaliatory policies in April, Vietnam has not only stabilized its FDI inflows but also shifted focus toward high-tech and capital-intensive industries...

FDI Sentiment Rebounds After April Tax Concerns

In April 2025, investor sentiment in Vietnam briefly wavered due to the United States’ implementation of a global retaliatory tax policy. However, swift communication and policy responses from Vietnamese authorities helped restore stability, according to business leaders attending the 2025 Vietnam Industrial Real Estate Forum.

SLP Vietnam’s Director of Business Development and Commerce, Đinh Hoài Nam, reported that investor risk had since returned to minimal levels, with SLP’s project portfolio exceeding 90% occupancy. Official statistics confirmed this resurgence, with Vietnam attracting $28.54 billion in FDI in the first nine months of the year up 15.2% year-over-year and reaching the highest disbursed capital in five years at $18.8 billion.

Vietnam’s Competitive Edge Amid Regional FDI Competition

Vietnam currently ranks third among ASEAN countries in FDI growth, behind only Singapore and Indonesia, as confirmed by Trần Thị Hải Yến from the Ministry of Planning and Investment. Despite intensifying regional competition, Vietnam remains attractive due to political stability, targeted industrial park development, and preferential policies in high-tech investment. These measures not only position Vietnam as a beneficiary of global supply chain shifts but also enhance its comparative advantage over peers within ASEAN.

Hardy Diec, CEO of KCN Vietnam, observed a clear transition in Vietnam’s FDI profile from labor-intensive sectors like textiles and footwear to technology-driven and AI-powered industries. He emphasized that the appeal of low-cost labor is waning, replaced by investor demands for efficiency, sustainability, and technological capacity. Notably, the streamlining of Vietnam’s administrative processes from a three-tier to two-tier government model has contributed to a more transparent and efficient investment environment.

Investor Composition and Sectoral Shifts Reflect Structural Evolution

The current phase of FDI inflow reflects not just a recovery but a qualitative shift. The diversity of investors has expanded beyond traditional Asian sources to include conglomerates from Europe and North America. According to Trương Gia Bảo of VIREA, this evolving investor base signals rising confidence in Vietnam’s political and economic frameworks, with foreign companies now planning for long-term industrial participation rather than short-term manufacturing contracts.

JLL Vietnam CEO Trang Lê echoed this view, noting a clear movement from labor-intensive to capital-intensive sectors, particularly in high-tech, electronics, pharmaceuticals, logistics, and data centers. The average occupancy rate in industrial zones now exceeds 73%, reflecting both strong demand and an evolution in the type of investments entering the country.

Infrastructure, Human Capital, and Policy Direction Remain Central

While current FDI data is encouraging, experts caution that long-term success hinges on ongoing improvements in logistics infrastructure, skilled labor availability, access to clean energy, and sustainable land development. Hardy Diec emphasized that high-tech FDI requires more than fiscal incentives it demands a competent technical workforce, engineering expertise, and globally compliant operating standards.

Looking ahead, Vietnam is actively positioning itself as a strategic production hub rather than merely a manufacturing base. Government plans to double industrial real estate supply by 2030 and establish international financial centers in Ho Chi Minh City and Da Nang support this transformation. These developments will be key to attracting high-value capital and top-tier talent.

Private Sector as a Critical Counterpart in FDI Realization

Vietnam’s dynamic private sector plays a crucial counterpart role in absorbing and operationalizing foreign investments. Its adaptability and agility are instrumental in supporting long-term partnerships and facilitating knowledge transfer. As foreign investors become more discerning in choosing locations that offer long-term structural advantages, Vietnam’s dual commitment to policy reform and private sector empowerment may prove decisive.

Vietnam’s FDI recovery post-April tax disruptions demonstrates both resilience and strategic adaptation. While global policy shocks initially rattled investor confidence, Vietnam’s rapid policy engagement and its increasingly sophisticated investment ecosystem have not only restored capital inflows but reoriented them toward high-value, long-term sectors. The country’s ability to balance macroeconomic stability, infrastructure expansion, and skilled workforce development will determine the sustainability of this FDI upgrade in the coming decade.

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