Vietnam set to become regional manufacturing tech hub this year

Vietnam has shown remarkable potential to become a regional manufacturing hub, particularly in technology sectors, as global companies have expressed growing interest in expanding their operations in the country. Foreign direct investment (FDI) into Vietnam reached nearly $31.4 billion in the first 11 months of 2024, with disbursed FDI estimated at about $21.7 billion, reflecting a 7.1% increase compared to the same period in 2023. This marks the third consecutive year that Vietnam has disbursed over $20 billion in FDI, solidifying its position among the top 15 developing countries globally for attracting FDI.

Among provinces, Bac Ninh led the nation in registered investment capital, with nearly $5.04 billion, accounting for 16% of the total, which is more than three times higher than the same period in 2023. Quang Ninh and Ho Chi Minh City followed, with $2.29 billion and $2.28 billion, respectively, while other key provinces like Hai Phong, Hanoi, and Binh Duong also made significant contributions. Singapore topped the list of 110 countries and territories investing in Vietnam, contributing nearly $9.14 billion, which accounts for over 29% of total investments—a 53.7% increase year-on-year.

FDI Trends in 2025
High-value sectors such as electronics, semiconductors, and green technology dominated FDI inflows in 2024, a trend likely to continue into 2025. A notable development includes the recent agreement between the Vietnamese government and NVIDIA, a leading American chipmaker, to establish the Vietnam Research and Development Centre and Artificial Intelligence (AI) Data Centre. This positions Vietnam as a potential leader in AI research and development, second only to the U.S. and Taiwan globally.

Other major milestones include Google Asia Pacific Pte. Ltd.’s transfer of advertising partner rights to its newly established entity, Google Vietnam Company Limited, set to operate officially from April 1, 2025. In addition, SpaceX plans to invest $1.5 billion in Vietnam, as revealed during a meeting with Party General Secretary To Lam in New York. Foxconn also announced an $80 million investment in chip manufacturing in Bac Giang, while Meta plans to expand virtual reality equipment production in the same province. These developments underscore Vietnam’s growing significance in global technology supply chains.

The shift from assembly-focused operations to becoming an integral part of high-tech production networks highlights Vietnam’s rising importance in the global technology sector. This trend may gain further momentum under the anticipated policy changes in Donald Trump’s upcoming presidency, potentially accelerating production shifts to Vietnam. Consequently, the country could experience faster and more sustainable economic growth, reducing its dependence on the real estate sector.

Risks of 'Origin Evasion' Investments
While Vietnam has benefited greatly from increased FDI, experts caution about potential risks associated with investments aimed at evading origin rules, particularly amidst the ongoing U.S.-China trade war. China, which ranks third in registered capital in Vietnam, accounts for the highest number of newly licensed projects, representing 28.3% of all projects. Many of these are capital-intensive yet smaller-scale, leveraging Vietnam’s geographical proximity, affordable labor, and integration into global supply chains.

Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, emphasized the need for vigilance against origin fraud. He warned that some Chinese businesses might exploit Vietnam as a transit point for goods to avoid U.S. tariffs, especially as the U.S.-China trade war intensifies. Thanh stressed the importance of addressing this issue proactively, as it has been a concern since 2018–19.

Two critical measures were recommended to mitigate these risks. First, local authorities should reject projects posing environmental pollution risks or failing to meet safety and environmental standards. Second, smaller projects focused on importation and final-stage manufacturing for export, which are often used to evade origin rules, require thorough vetting.

Professor Nguyen Thuong Lang from the National Economics University also highlighted the need for ongoing monitoring and supervision of FDI projects, particularly in sectors prone to origin rule evasion. He called for strict action against projects found engaging in origin fraud, emphasizing that maintaining a transparent investment environment is crucial for sustaining Vietnam’s FDI-driven growth.

As Vietnam continues to attract high-quality FDI, establishing clear criteria for project selection and implementing robust monitoring mechanisms will be essential to ensure sustainable development while safeguarding against exploitation.