Vietnam is formulating a new strategy for aligning foreign capital with sustainable development, Le Toan

Minister of Finance Nguyen Van Thang in late June reported that as Vietnam is working to draw in more foreign investment, it has been and will continue introducing new solutions.

“Foreign direct investment (FDI) attraction is now closely linked with requiring foreign investors to substantially transfer technology to domestic partners, and to help promote innovation capacity,” he said.

Vietnam will adjust policies on investment incentives, with conditions requiring knowledge transfer. Large foreign-led projects will be asked to submit plans detailing how they will engage local supply chains, support small- and medium-sized enterprises in training, testing, and technical collaboration from the outset.

“In the coming time, in the process of welcoming new foreign-funded ventures, all these issues must be raised and there must be a very specific legal requirement for international enterprises to comply with this, to avoid the situation [of wooing capital purely in quantity] as in the recent past,” Minister Thang stressed.

According to the Ministry of Finance (MoF), in order for Vietnam to become a developed nation by 2045, the country will “carry out selective mobilisation of FDI, with priority placed on bringing in ventures involving high-end technologies and innovation, embracing added value and environmental sustainability, rather than focusing on numbers alone”.

FDI from Vietnam’s strategic partners, including the G7, South Korea, Singapore, Taiwan, the US, and the EU, will be a key target, and these sources will be closely tied to industries that Vietnam is prioritising, Minister Thang stressed at a recent Q&A session at the National Assembly (NA).

“Amid intense strategic competition among global economies, Vietnam is formulating a new strategy for aligning this capital with sustainable development,” he said.

Vietnam’s strategy for competing internationally will shift from offering tax breaks to enhancing the overall quality of the domestic business climate and its supporting sectors, placing strong emphasis on infrastructure for industrial zones and economic areas.

Furthermore, the government will also provide foreign-invested enterprises with stable power supply, available land, and a highly skilled workforce, while streamlining procedures after licences are granted. These efforts aim to reduce the lead time for implementation.

“In addition, the MoF is drafting new regulations to establish a number of specialised industrial areas dedicated to AI development and some smart complexes, in order to improve the level of technical sophistication in FDI sectors and generate spillover benefits for domestic businesses,” Minister Thang stated.

Several incentives have been introduced for such investors. For example, on June 14, the NA adopted the revised Law on Corporate Income Tax (CIT), which was prepared by the MoF, offering preferential treatment to a range of enterprises and initiatives.

The revised law stated that professions and sectors eligible for a 10 per cent CIT rate within the first 15 years from launch include application of advanced technologies listed in the government’s priority portfolio, high-tech incubation, and construction and operation of related incubator facilities.

Also eligible are the development of software and critical IT products; cybersecurity goods and services; construction of AI data hubs; and research and design as well as production, packaging, and testing of semiconductor chips.

Incentives also apply to output from supporting industries for textiles and garments, leather and footwear, electronics and informatics, vehicle manufacturing and assembly, and precision engineering.

Last year, the government approved Vietnam’s semiconductor industry development strategy and a human resource development programme towards 2030, in which it aims to train at least 50,000 engineers for the full-value chain of the semiconductor field. Vietnam has formed partnerships with leading global firms like Siemens and Intel to establish a microchip design incubation centre in the country.

Authorities will also support Vietnamese companies in acquiring or merging with international firms that hold proprietary technologies. Universities, research institutes, and specialists are being linked with FDI stakeholders to learn from their experience in applying advanced systems and digital tools.

“All of these technological and talent-related measures aim to ensure that FDI flowing into Vietnam will truly become a powerful driver for local innovation and help Vietnamese companies ascend the value chain,” Minister Thang stressed.

At present, global trends are focusing on advanced systems, core technologies, semiconductors, AI, renewable energy, circular economy, and sustainability.

“Vietnam continues to be seen as an appealing destination for FDI thanks to a well-aligned strategy. We enjoy political stability, strong positioning, and a favourable business environment. The inflow of FDI remains robust despite significant external challenges,” the MoF stated.

The MoF reported that as of May 31, the country had nearly 43,350 foreign-led ventures registered at $517.14 billion. Actual disbursed capital has reached $331.5 billion, equal to 64.6 per cent of total pledges. Contributions from FDI make up about $20.5 billion to the state budget in 2024, up 12 per cent on-year and accounting for 24.7 per cent of total government revenue.