Amidst escalating geopolitical tensions between the United States and China, multinational corporations have sought refuge in Vietnam, utilizing its strategic location to diversify their supply chains. So, this Southeast Asian nation has risen as a prime destination for FDI, capturing the attention of astute investors worldwide. In the wake of this transformative shift, several locales have emerged as hotspots, attracting these new market entrants with their favorable investment climates and promising prospects. This article offers a detailed guide to Vietnam's top five places to invest, fostering foreign relationships and enticing savvy investors. From bustling economic centers to emerging industrial zones, each location offers unique advantages and potential for exponential growth, making Vietnam an enticing investment landscape in the ever-evolving global market.
1. Overview of Vietnam’s Economy in 2022
Vietnam's GDP increased at 8.02% in 2022, the fastest pace recorded between 2011 and 2022. The rise is three times that of 2021 and exceeds the Government's aim of 6-6.5% aim. Economic data show that Vietnam's economy is rapidly recovering. The foreign direct investment totaled $27.7 billion. FDI was over 22.4 billion USD, up 13.5% yearly and the highest pace in the last five years. The consumer price index increased 3.15% year on year, achieving the National Assembly's aim. Trade turnover surpassed 730 billion USD, with Vietnam enjoying a trade surplus of 11 billion USD, more than three times that of 2021.
Tourism has also been a boon to the economy. Since reopening its borders to international visitors on March 15, Vietnam's tourism industry has steadily recovered and grown. Foreign visitors topped 3.66 million in 2022, a 23-fold increase over 2021. Domestic visits topped 101 million, representing a 168% increase year on year. Notably, the economic structure has altered in favor of the better. The agroforestry fisheries contributed less than 12% of GDP, whereas industry and construction contributed 38% and the service sector contributed 41%. The country's digital economy contributed considerably to the economy, with revenues estimated at 148 billion USD, a more than 10% growth year on year.
In terms of digital economic growth, Vietnam leads Southeast Asia. The Vietnam digital economy’s projected to reach a value of $23 billion in 2022, marking a significant 28% annual growth. Vietnam's economic stability has garnered recognition from global rating organizations like Moody's, Standard & Poor's, and Fitch Ratings. Fitch Ratings rated Vietnam BB with a favorable outlook at the end of 2022. Moody's Investors Service has improved the country's long-term national credit rating to Ba2 from Ba3, with a stable outlook.
2. Vietnam’s Economic Prospects in 2023
According to a World Bank analysis issued on March 13, Vietnam's economic growth is expected to slow to 6.3 percent in 2023, from a healthy 8 percent last year, as services expansion moderates and increasing prices and interest rates weigh on individuals and investors. In the March 2023 edition of its Taking Stock report, titled "Harnessing the Potential of the Services Sector for Future Growth," the World Bank made reform proposals to tap into the potential of the service industry.
According to the report, the service sector would rise marginally, mostly due to domestic demand, which may be impacted by higher-than-expected inflation of 4.5% this year. Part of the 2022-2023 economic support package is intended to boost the economy. Domestic inflation should be kept under control through a flexible monetary policy along with fiscal policy objectives.
Unlike many other nations, according to WB Country Director in Vietnam Carolyn Turk, Vietnam has budgetary headroom to implement growth-boosting initiatives. "Effective implementation of priority public investments is critical to supporting growth, both in the short and long term." Furthermore, fiscal and monetary policies must be coordinated to provide effective economic assistance and macroeconomic stability," she stated.
According to WB senior economist Dorsati Madani, if used efficiently, the service sector might play a significant role in sustaining Vietnam's productivity development and reaching the country's aim of becoming a high-income economy by 2045. Priority should be given to reducing trade and foreign investment restrictions in this area, as well as introducing reforms to boost competitiveness and local enterprises' access to funding. Services that may help generate growth in other industries, particularly manufacturing and processing, should be prioritized.
3. Best 5 Places to Invest in our country
3.1. Ho Chi Minh City
Ho Chi Minh metropolis, Vietnam's largest metropolis, will get the lion's share of FDI in 2022. This thriving economic area in the south of Vietnam has become a regional industrial and commercial magnet. The port of HCMC is the largest in Vietnam in terms of both area and amount of cargo passing through it. It also boasts Vietnam's busiest international airport and is centrally placed in Southeast Asia. HCMC also has a population of over nine million people, of which approximately five million are of working age. It also has a variety of foreign colleges and training institutes that provide a regionally high-caliber workforce.
Not only that, but HCMC has a track record of successful FDI initiatives as well as supportive policy toward foreign direct investors. HCMC is Vietnam's #1 FDI destination for these reasons, albeit not just for these reasons.
As Vietnam’s capital, Hanoi’s charms date back to many years ago. In the past, its name was “Thang Long”, representing a rising dragon. All names show the potential and the city’s prosperity. Throughout 2017, Hanoi’s GRDP stood at around $24 billion, compared to 2016. No matter how FDI inflows, Hanoi placed fourth of the cities and provinces in our country with more than 5,000 projects in force.
Hanoi is one of worth places to invest in for some reasons. Initially, it is the transportation center of northern cities in our country. The city government has invested significantly to enhance the city’s transport infrastructure with some huge campaigns enlarging other internal city streets, or upgrading the railway station, and tunnels. Hanoi is also bestowed with more investment incentives from our government.
3.3. Bac Ninh
Securing the fourth spot on the list is Bac Ninh, a petite province situated approximately 40 kilometers north of the bustling capital city, Hanoi. Notably, Bac Ninh amassed an impressive sum of over US$2 billion in newly registered capital in 2022, solidifying its position as an attractive magnet for foreign direct investment (FDI). Even as early as 2017, Vietnam Briefing recognized the remarkable potential of this relatively small region to entice substantial FDI inflows. Koushan Das, the editor of Vietnam Briefing at the time, astutely pointed out that the region's well-developed infrastructure, including roads, rail networks, canals, and industrial zones, played a pivotal role in attracting investment. Building upon this initial foresight, Bac Ninh has continued to foster sustained investment over the past five years, firmly establishing itself as a prominent FDI destination within Vietnam's thriving investment landscape.
3.4. Binh Duong
Binh Duong, HCMC's northern neighbor, ranks second among the most appealing sites for FDI in Vietnam in 2022.
In 2021, Binh Duong was placed sixth in Vietnam's Provincial Competitiveness Index (PCI). Because of its proximity to HCMC, factories have been and continue to be developed throughout the province. It also ranked #1 in infrastructure in the previously stated PCI.
These firms are distributed throughout 30 industrial parks with a combined surface area of about 12,670 hectares and an occupancy rate of 87.4%. The province also contains 12 industrial clusters with a combined surface area of 790 hectares and a 67.4 percent occupancy rate, making it a manufacturing powerhouse and a popular destination for foreign investors.
3.5. Da Nang
Danang is home to 888 foreign-invested projects totaling $5.9 billion in investment capital. According to the Ministry of Planning and Investment (MPI), the city received more than $172.34 million in foreign capital in 2021, with 40 newly registered projects and 19 adjusted capital projects. Underscoring China plus one plan, a US-based fabrication business recently chose Da Nang for a US$60 million systems facility after considering various Central Region possibilities. A Hong Kong-based manufacturer of recreational goods, ground pools, and airbeds has been granted permission to construct a US$12 million facility in the Hoa Khan Industrial Zone, while a Japanese business aims to erect a US$35 million R&D center in the Da Nang Hi-Tech Park.
Despite the epidemic, these instances highlight Da Nang's desirability as an investment location. Vietnam Briefing investigates why Da Nang is a popular destination for international investors, as well as its top development drivers and competitive industries.
Overall, the year 2022 was outstanding for foreign direct investment in Vietnam. Its importance as a vital alternative to China is becoming obvious, and its economic environment is becoming increasingly friendly for Western investment.
Vietnam has 63 provinces in total, five being the most popular in 2022. There are also a handful of emerging markets where foreign investors might find more chances and less competition.
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