Vietnam has been asserting its position as one of the leading destinations for foreign direct investment (FDI). Total registered FDI entering Vietnam in 2024 reached approximately US$38,23 billion, a 3% increase compared to the previous year, and disbursed FDI reached a record high of US$25,35 billion, a 9,4% increase compared to 2023. This impressive growth reflects the strong confidence of international investors in entering the Vietnamese business market.

Vietnam's attractiveness is reinforced by its stable socio-political foundation, a key factor in reassuring long-term investors. The Vietnamese economy maintains positive growth, with a GDP exceeding US$400 billion and a projected GDP growth of 6.7% in 2025, alongside the government's ambitious 8% target. Vietnam is also actively integrating into the international economy through participation in and signing of a series of new-generation Free Trade Agreements (FTAs) such as the CPTPP and EVFTA, opening doors to global markets and facilitating import and export activities.

This report is compiled to provide an in-depth analysis of potential FDI-attracting sectors in Vietnam, key capital and legal requirements, the importance of establishing local partnerships, and the indispensable role of professional consulting services in mitigating risks when entering the Vietnamese market. The ultimate goal is to equip FDI enterprises with the necessary knowledge and strategies to make informed investment decisions and achieve sustainable success.

I. Potential Sectors for Attracting FDI in Vietnam

1. Manufacturing and Processing Industry

The manufacturing industry has always played a pivotal role in attracting FDI to Vietnam. In the first quarter of 2025, this sector accounted for the majority with US$4,05 billion (81,7%) of the total newly registered FDI capital. This figure is similar to the 66,9% share of total registered FDI capital in 2024, affirming the leading position of this sector in the structure of foreign investment attraction.

The prominent segments in the manufacturing and processing industry include:

Electronics (semiconductor chips, components, electronic device assembly, AI):
- Vietnam is emerging as an attractive destination for investors in the semiconductor industry, with 174 FDI projects and a total registered capital of nearly US$11,6 billion. Leading global technology corporations such as Intel, Samsung, LG, Canon, Datalogic, Foxconn, Luxshare, GoerTek, and Pegatron have invested heavily in Vietnam, producing electronic products, components, LCD/OLED displays, printers, and other high-tech equipment. Vietnam became the third largest exporter of semiconductors to the US in 2023, with a value reaching US$562 million.
- The greatest potential lies in higher value-added segments such as semiconductor chip design, electronics, telecommunications, and artificial intelligence (AI). The government is actively directing efforts to attract FDI into R&D and more complex manufacturing processes to enhance its position in the global value chain.
Manufacture of automobiles and automotive components:
- The automotive industry attracts significant investment from international corporations, contributing to increased production and expansion of the global supply chain. Currently, there are over 377 automotive-related manufacturing enterprises, of which 169 are FDI enterprises, accounting for 46,43%. FDI businesses are focusing on high-value segments of automobile and auto parts manufacturing.
- Vietnam has a strong advantage in manufacturing automotive electrical components, especially wiring harnesses, with export turnover reaching approximately US$1,17 billion in 2023, ranking third in the world. However, 80% of key automotive parts and components such as engines, gearboxes, and electronic systems are still imported, indicating significant potential for FDI in high-tech supporting industries.
Textiles and garments (manufacturing of fabrics, yarns, and high-tech accessories):
- The textile and garment industry has a great need for FDI capital, especially for the production of fabrics, yarns, and accessories to complete the domestic value chain and take advantage of tariff preferences from FTAs.
- Currently, there are approximately 3.500 FDI projects in the textile and garment sector, with a total investment of over $37 billion. The FDI sector contributes about 65% of the total export turnover of the entire industry. Vietnam is experiencing a large deficit in fabric (imports exceeding $10 billion/year), creating opportunities for FDI in this segment.
- New-generation FTAs impose rules of origin requirements, forcing textile and garment businesses to develop along the entire domestic value chain. In addition, the "greening" requirements from major markets such as the US and EU encourage investment in advanced, environmentally friendly dyeing and finishing technologies.

The concentration of FDI in the processing and manufacturing sectors, especially electronics, reflects Vietnam's strategy to participate more deeply in global value chains. However, this also reveals an urgent need for the development of supporting industries and the transfer of high-quality technology.

Currently, Vietnam is primarily involved in low-value-added assembly, testing, and packaging stages in the semiconductor industry. Similarly, the automotive and textile industries remain heavily reliant on imported raw materials and components. This situation presents a significant opportunity for FDI into higher-end segments of the supply chain, but also a challenge for enhancing domestic capacity. Without substantial technology transfer and the development of supporting industries, Vietnam could become stuck in low-value stages, leading to dependence on foreign sources for raw materials and technology, impacting long-term competitiveness.

Foreign direct investment (FDI) tends to concentrate in provinces and cities with developed industrial infrastructure. Bac Ninh currently leads the country with nearly $5,04 billion in registered capital (accounting for 16%), followed by Quang Ninh ($2,29 billion), Ho Chi Minh City ($2,28 billion), and other key industrial provinces such as Hai Phong, Hanoi, and Binh Duong.

2. High-Tech Industry

The high-tech industry, particularly semiconductors and artificial intelligence (AI), is a major driver of global economic growth, aiming for a revenue milestone of $1.000 trillion by 2030. Vietnam recognizes this potential and is striving to attract FDI into areas such as chip design, component manufacturing, and R&D. Collaboration with major corporations like NVIDIA has made a significant impact, promising to shape a thriving semiconductor ecosystem as they enter the Vietnamese market.

The Vietnamese government has issued numerous policies and special incentives to attract FDI into the high-tech industry:

Law amending and supplementing a number of articles of the Law on Planning, the Law on Investment, the Law on Investment under the Public-Private Partnership method and the Law on Bidding (effective January 1, 2025):
- This law introduced a “green lane” investment procedure applicable to investment projects in high-tech zones, export processing zones, and economic zones, focusing on the development of innovation centers, R&D, semiconductor industries, and other priority high-tech sectors.
- This process allows investors to receive an Investment Registration Certificate (IRC) in just 15 days and is exempt from some initial licensing procedures related to construction, fire safety, and environmental protection. This is a breakthrough aimed at significantly shortening project implementation time, representing a shift from a "pre-approval" to a "post-approval" mechanism in investment management.
Investment Support Fund:
- Established from global minimum tax revenue (GMT) and other legitimate sources, this fund aims to stabilize the investment environment, encourage and attract strategic investors, especially multinational corporations and high-tech projects (semiconductors, AI, R&D).
- The fund will provide direct financial support for activities such as human resource training and development (50% of actual costs), investment in fixed assets (up to 10%), production of high-tech products (up to 3% of added value), and investment in social infrastructure (up to 25% of costs).
- For R&D center projects in the semiconductor and AI industries, up to 50% of the initial costs may be subsidized.
Decree 182/2024/ND-CP:
- Reforming investment incentive policies will strengthen and enhance Vietnam's competitive position in attracting high-tech industries, creating a crucial impetus to help businesses access necessary financial resources.

The "special investment procedures" policy and the "Investment Support Fund" for the high-tech sector demonstrate Vietnam's proactive adaptation to the global minimum tax (GMT) landscape. The implementation of GMT from 2024 has reduced the effectiveness of traditional tax incentives. The Vietnamese government's response has not only involved amending laws but also introducing entirely new and groundbreaking mechanisms.

The special investment procedure, with an IRC issuance time of only 15 days and exemption from certain sub-licenses for high-tech projects, demonstrates a determination to shorten administrative processes. Simultaneously, the Investment Support Fund provides direct financial support, bypassing tax channels, for R&D activities and the development of high-tech human resources. This represents a profound strategic shift, showing that Vietnam is not only responding to the Global Smart City model but also proactively reshaping its FDI policy to attract high-value projects that align with sustainable development goals and enhance national competitiveness.

Despite its significant potential, Vietnam faces a major challenge regarding high-quality human resources. Currently, there are only about 5.000 semiconductor integrated circuit design engineers, while the projected demand by 2030 is 50.000 engineers (including 15.000 integrated circuit design engineers). Developing human resources to meet the requirements of the high-tech industry is a key factor in realizing this potential.

3. Logistics Industry

Vietnam's logistics industry is experiencing an unprecedented boom, attracting significant foreign investment. The sector boasts high growth rates of approximately 14-16% annually and contributes around 4-5% to the national GDP. Vietnam's strategic geographical location in the heart of the Asia-Pacific region, coupled with its extensive network of Free Trade Agreements (FTAs), provides a unique advantage for the development of the logistics industry, which plays a vital role in the economy.

Potential segments within the logistics industry include:

3PL (Third-Party Logistics) services: Foreign direct investment (FDI) businesses in Vietnam often seek integrated logistics service packages that go beyond simply transporting goods and include various value-added services such as customs clearance, warehousing, packaging, and product distribution.
International transport: Although currently the majority of this market share belongs to foreign businesses, it remains a significant potential segment if Vietnamese businesses increase investment and receive policy support from the government.
Specialized services within the logistics value chain: Services include freight forwarding, warehouse rental, customs clearance, and consolidation of less-than-truckload (LTL) shipments.

Although the logistics industry has great potential and is booming, challenges such as high costs, inadequate infrastructure, weak technology, and a shortage of qualified personnel are hindering its comprehensive development.

Logistics costs in Vietnam remain high, equivalent to approximately 20% of GDP, significantly higher than the 7%-9% in developed countries.
Despite significant progress, transportation infrastructure has not yet been fully synchronized and developed in proportion to the pace of industrialization, leading to congestion and gridlock in some key areas.
Information technology in Vietnam's logistics industry is still weak and disorganized, both on the service provider and user sides, leading to high costs and suboptimal efficiency.

In particular, Vietnam's logistics workforce is not only lacking in quantity but also weak in quality, with only about 5-7% of workers in this field having received formal training. The lack of a clear legal framework for some logistics services is also a factor hindering the comprehensive development of the industry. All these factors indicate that, although the industry is growing in scale, its efficiency and ability to provide maximum support to manufacturing industries (especially FDI) remain limited.

These challenges could become "bottlenecks" for the development of FDI penetrating the Vietnamese market in general if they are not addressed comprehensively through investment in infrastructure, technology, human resource training, and the improvement of the legal framework.

II. Key Requirements for Entering the Vietnamese Market

1. Investment Capital Requirements

The 2020 Enterprise Law does not stipulate a general minimum capital requirement for all types of businesses. However, investors must contribute the full amount and the correct type of assets as committed when registering the business within 90 days of receiving the Enterprise Registration Certificate (ERC). The investment license application also needs to demonstrate the investor's financial capacity to meet the registered capital requirement.

Some business sectors have conditional requirements that demand a minimum registered capital to ensure financial security and minimize business risks.

Healthcare sector: The minimum investment capital for a hospital is $20 million; for a general clinic, it is $2 million; and for a specialized treatment facility, it is $200.
Securities sector: Securities brokerage (25 billion VND), securities trading (50 billion VND), securities underwriting (165 billion VND), securities investment consulting (10 billion VND).
Insurance sector: From VND 750 billion to VND 1.300 billion, depending on the type of insurance business.
Real estate business sector: Equity capital must not be less than 20% of the total investment for projects with a land area of less than 20 hectares, and not less than 15% of the total investment for projects of 20 hectares or more.
Deposit capital: This refers to the amount of money deposited in a bank as stipulated by law to secure the financing of transactions and commitments. For example, for international travel services, the deposit amount is VND 250 million (inbound) or VND 500 million (outbound). The 2020 Investment Law allows investors to secure project implementation by submitting a guarantee from a credit institution instead of requiring a cash deposit.

Foreign investors can enter the market through capital contributions in Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technological processes, technical know-how, or other assets that can be valued in Vietnamese Dong. For cash capital contributions, it is mandatory to conduct the transaction through a direct investment account opened at a legally registered bank in Vietnam.

2. Legal Requirements and Regulations

The legal framework for foreign investment in Vietnam is built on the foundation of important laws and decrees:

Investment Law 2020 (No. 61/2020/QH14): Effective from January 1, 2021, this is the most important legal document regulating investment and business activities in Vietnam and from Vietnam abroad. This law has addressed the inadequacies and overlaps between laws related to investment and business, ensuring the consistency of the legal system.
Law on Enterprises 2020 (No. 59/2020/QH14): Effective from January 1, 2021, regulations govern the establishment, management, restructuring, dissolution, and related operations of various types of businesses (limited liability companies, joint-stock companies, partnerships, and sole proprietorships).
Decree 31/2021/ND-CP: This Decree provides detailed guidance on several provisions of the 2020 Investment Law, effective from March 26, 2021. It also publishes the List of sectors and professions with restricted market access for foreign investors (Appendix I) and the List of sectors and professions eligible for investment incentives.
Decree 19/2025/ND-CP: Effective from February 10, 2025, this Decree details the Investment Law regarding special investment procedures. This Decree applies to investment projects in the fields of high technology, semiconductors, R&D, innovation, and digital transformation, especially projects in high-tech zones, export processing zones, and economic zones. A key highlight is the shift from a "pre-approval" to a "post-approval" mechanism, shortening the time for issuing Investment Registration Certificates (IRC) to 15 days and waiving some initial licensing procedures related to construction, fire safety, and environmental protection.

List of sectors and professions prohibited from investment and business activities: According to Clause 1, Article 6 of the 2020 Investment Law (supplemented by Clause 2, Article 2 of Law 57/2024/QH15), prohibited investment and business activities include: trading in narcotic substances (Appendix I), toxic chemicals/minerals (Appendix II), specimens of wild plants/animals originating from natural exploitation (Appendix I CITES, Appendix III of the 2020 Investment Law), prostitution, trafficking in persons/tissues/corpses/body parts/human fetuses, business activities related to human cloning, trading in firecrackers, debt collection services (new regulation), trading in national treasures, and exporting relics and antiques.

List of sectors and business activities subject to conditional investment and market access restrictions for foreign investors: Decree 31/2021/ND-CP promulgates the List of sectors and professions with restricted market access for foreign investors, including 25 sectors and professions that are not yet open to the market and 58 sectors and professions with conditional market access. The "select-and-exclude" principle is applied, whereby foreign investors are allowed market access like domestic investors, except for sectors and professions on the List of Restricted Market Entry into Vietnam.

Sub-licenses and specific technical/environmental standards:

Common characteristics of sub-licenses: This is a mandatory document for businesses operating in conditional industries or professions, issued by competent authorities after the business has obtained a business registration certificate, and usually has a validity period.
Manufacturing industry: Production projects, especially in the processing and manufacturing industries, must strictly comply with environmental protection regulations and require an Environmental Permit. The validity period of an Environmental Permit is 07 years for Group I projects and 10 years for other projects. Processing and manufacturing facilities are subject to environmental standard certification. For the textile and garment industry, standards such as RCS, RDS, RWS, GRS, GOTS, OCS, OEKO-TEX, FSC, ISO 14001, ISO 5001, and BSCI are important to ensure quality and sustainability.
Technology industry: High-tech projects in high-tech zones that meet the criteria for high-tech projects are subject to special investment procedures. For specific information technology services such as portals, social networks, online games, data centers, or electronic identification services, businesses may require specialized licenses issued by the Ministry of Information and Communications or the Ministry of Public Security.
Logistics industry: This is a conditional business sector. The conditions regarding the foreign investor's capital contribution ratio vary depending on the specific logistics activity, according to the WTO Commitment Schedule and Decree 163/2017/ND-CP. For example: for maritime transport services (excluding domestic), the foreign capital ratio does not exceed 49-70% (depending on the ASEAN country); for rail/inland waterway/road transport, it does not exceed 49-51%; for air transport, it does not exceed 30%; while customs clearance and freight brokerage services have no restrictions on the capital contribution ratio.

Procedures for issuing Investment Registration Certificates (IRC) and Enterprise Registration Certificates (ERC):

Step 1: Complete the online application and submit your IRC application: Investors need to declare investment project information on the National Information System on Foreign Investment, and then submit hard copies of the application. The application includes a project proposal, a copy of the foreign individual investor's identity card/passport, or the financial statements for the two most recent years of the institutional investor, confirmation of the account balance corresponding to the planned investment capital, and a lease agreement for the office/headquarters.
Step 2: Submit your application for ERC: After obtaining the IRC, the investor submits an application for a Business Registration Certificate. The Business Registration Office will issue the ERC within 7 working days if the application is valid. Establishing an FDI enterprise is usually more complex than establishing a purely Vietnamese enterprise and can take from 30 to 60 days, not including any unforeseen issues with documentation and legal requirements.

Post-licensing procedures:

Engrave a company seal: After obtaining the ERC and publishing the business establishment notice, the business proceeds to have its seal engraved. The business has the right to decide on the number and form of seals within the limits permitted by law.
Open a Direct Investment Capital Account (DICA): This is a mandatory procedure. Foreign investors need to open a direct investment capital account at a legally registered bank in Vietnam. All investment capital must be transferred into this account within 90 days of receiving the ERC. This account is also used to collect profits and repatriate them to their home country.
Initial tax filing and electronic transaction registration: This includes declaring and paying business license fees, notifying the application of the value-added tax calculation method, registering individual tax identification numbers for employees, and registering for electronic transactions with the tax authorities.
Declaring social and health insurance for employees: Businesses are responsible for carrying out these procedures.
Applying for a Work Permit for a foreigner: If there are foreign workers employed at the company.

Quarterly and annual tax reports and annual audits: FDI enterprises are obligated to submit periodic tax reports and undergo annual audits as required by law.

See more: Detailed guide to the process of establishing a foreign direct investment (FDI) enterprise in Vietnam for foreign investors.

3. Requirements for Local Partners

The importance of local partners in a Vietnamese market entry strategy is undeniable. Strong partners provide deep insights into the local market, helping foreign businesses overcome cultural, linguistic, and legal barriers. They also play a crucial role in building robust supply chains and maintaining good relationships with local authorities and regulatory agencies, ensuring smooth investment implementation and minimizing legal risks.

Foreign direct investment (FDI) forms in Vietnam include establishing wholly foreign-owned enterprises, joint ventures, or business cooperation under BCC (Business Cooperation Contract) agreements. The ownership stake of foreign investors can range from 1% to 100%, depending on the type of company and business sector, as stipulated in the 2020 Investment Law. In the case of FDI joint ventures, ownership and control are shared between domestic and foreign investors. This creates a combination of the financial and technological strength of the foreign investor with the domestic partner's understanding of the domestic market and business relationships.

Leveraging localization is key to the success and sustainable growth of foreign businesses entering the Vietnamese market. This includes adapting to customer consumption behavior and culture, and developing differentiated products and services based on quality and experience. Direct production in the target market significantly reduces logistics costs and increases flexibility in meeting customer demands, rather than facing import tariffs or quotas. Vietnam has competitive labor costs and tax incentives, making it an ideal destination for international investors. Utilizing local resources such as labor, tax incentives, or the local partner ecosystem is crucial for building a sustainable competitive advantage.

III. The Role of Professional Consulting Services in Risk Reduction

1. Common Risks When Entering the Vietnamese Market

Although Vietnam is an attractive destination for FDI, foreign businesses still face a number of significant risks and challenges when entering the market:

Legal risks and complex administrative procedures: Although the Vietnamese legal system has improved, it still has many scattered, overlapping, and sometimes contradictory regulations, making application and compliance difficult. Administrative procedures can be complex and time-consuming, especially those following the issuance of the Investment Registration Certificate, such as construction permits, fire safety permits, and environmental permits.
Risks of technology transfer leading to obsolescence and economic dependence: Vietnam risks receiving much unsuitable and only average technology from foreign companies. These companies often transfer outdated technology and old machinery and equipment to modernize their own technology in their home countries. This makes it difficult to determine the true value of the machinery, leading to losses in calculating equity stakes and profit sharing in joint ventures. Furthermore, outdated technology is often accompanied by environmentally polluting production processes and reduces the competitiveness of products in the international market. Over-reliance on the capital, technology, and distribution networks of multinational corporations can also lead to unsustainable economic development, considered "false prosperity."
Challenges include suboptimal costs, a lack of synchronized labor supply and infrastructure. Rising raw material costs and high input prices can create difficulties for businesses. The supply of highly skilled and technically qualified labor remains limited, while policies governing foreign labor are quite strict. Vietnam's infrastructure, although improving, still does not fully meet international standards, impacting transportation, installation, and construction costs, prompting investors to reconsider.
Limitations in the domestic supply chain: The supporting industries for component manufacturing in Vietnam are still in their infancy, making it difficult for FDI enterprises to build domestic supply chains and forcing them to import a large proportion of components and parts.

2. Risk Reduction Consulting Services

Professional consulting services play a crucial role in assisting FDI businesses to navigate the complexities of the Vietnamese market and mitigate risks. Consulting firms provide comprehensive guidance and strategic support to optimize opportunities and ensure compliance.

Consulting services typically include:

Customized market entry strategy: Develop tailored market entry strategies based on thorough market research and analysis, including market feasibility studies, financial analysis, and competitor assessment, to maximize FDI success.
Guidance on legal and tax compliance: We provide in-depth information on local regulations, investment laws, and government policies to ensure compliance. Simultaneously, we offer expert advice on the legal framework, tax implications, and investment structure to optimize financial returns and minimize legal risks.
Detailed risk assessment: Conduct comprehensive risk assessments to identify potential challenges and propose risk mitigation measures related to FDI investment projects.
Identify and evaluate suitable local partners: Support in identifying suitable local partners, suppliers, and distributors to improve operational efficiency and market penetration.
Support relations with the Government and regulatory agencies: Establish and maintain relationships with relevant government agencies and stakeholders to facilitate approvals, permits, and licenses.
Support for transactions and post-investment services: We provide transaction support throughout the investment process, including assistance with contract negotiation, drafting, and execution. After the investment, ongoing support services include monitoring, compliance management, and strategy adjustments to ensure long-term success.

Utilizing professional advisory services offers numerous significant benefits, including optimizing time and costs, ensuring compliance with complex legal regulations, and supporting informed investment decisions.

Consulting firms can help foreign businesses overcome legal barriers and complex administrative procedures, and provide information about the market and partners, thereby significantly reducing the risks when entering the Vietnamese market.

IV. Conclusion and Recommendations

Vietnam continues to be an attractive destination for FDI, with outstanding opportunities in manufacturing (especially electronics, automotive, and textiles), high-tech industries (semiconductors, AI, R&D), and logistics. The Vietnamese government is demonstrating proactiveness and flexibility in adjusting policies, particularly with the application of the Global Minimum Tax, by introducing new support mechanisms such as “special investment procedures” and “Investment Support Funds” to attract high-quality projects with high added value.

However, FDI enterprises still face significant challenges, including the complexity of the legal system and administrative procedures, the risk of transferring outdated technology, limitations in infrastructure and high-quality human resources, and the nascent nature of supporting industries. These challenges require a carefully planned market entry strategy and comprehensive preparation.

To achieve sustainable success in the Vietnamese market, foreign investors are advised to:

In-depth market and legal research: Conduct a thorough analysis of potential sectors, updated legal regulations (especially the 2020 Investment Law, the 2020 Enterprise Law, Decree 31/2021/ND-CP and Decree 19/2025/ND-CP), and specific requirements regarding capital, sub-licenses, and technical/environmental standards.
Take advantage of the new incentive policies: Proactively research and utilize incentives from "special investment procedures" and "Investment Support Funds" for high-tech projects, R&D, and other priority sectors.
Develop a long-term human resources strategy: Investing in training and developing high-quality human resources, especially in technology fields, is essential to meet the growing demands of the market.
Establishing strategic local partnerships: Collaborating with experienced and knowledgeable Vietnamese partners can help overcome cultural and legal barriers and build efficient supply chains.
Utilize professional consulting services: To minimize risks and optimize the market entry process, seeking support from consulting firms specializing in FDI and Vietnamese law is essential. These consultants can provide a clear roadmap, compliance support, risk assessment, and representation in government relations, helping businesses make informed and effective investment decisions.

Vietnam, with its reform efforts and strong development potential, remains a promising destination for FDI investors. However, the key to maximizing this potential lies in thorough preparation, flexible adaptability, and support from experts with in-depth knowledge of the Vietnamese market and legal framework.

Management Knowledge

Category

Market Entry Strategy for FDI Enterprises in Vietnam