As global businesses reassess supply chains, investment strategies, and long-term growth plans amid geopolitical uncertainty and rapid technological change, Vietnam is increasingly being viewed as one of ASEAN’s most compelling investment destinations.
That theme ran consistently through discussions at the 10th ASEAN Conference in Singapore on July 30-31, especially during the Vietnam Market Breakout session, where government officials, business leaders, and investors pointed to Vietnam’s transition beyond its traditional role as a low-cost manufacturing base. The focus was increasingly on the country’s efforts to attract higher-value investment, strengthen digital and physical infrastructure, build more resilient supply chains, and develop the capabilities needed for its next phase of growth.
For Vietnam, the changing landscape presents both opportunities and challenges. While the country’s manufacturing-led growth model has helped transform its economy over the past three decades, many speakers argued that sustaining growth will require a new phase of development, one driven by higher-value industries, innovation, digital transformation, infrastructure, and greater integration with regional and global value chains.
ASEAN’s next cycle
The forces reshaping the global economy are no longer viewed solely as risks for ASEAN but increasingly as opportunities. For much of the past decade, Southeast Asia has benefited from shifting supply chains and growing trade diversification. Today, however, the region is entering a different phase. Rather than competing primarily on lower production costs, ASEAN is becoming a strategic destination for investment, supported by deeper regional integration, expanding infrastructure, and growing confidence among international businesses.
Mr. Frederick Chin, Head of Group Wholesale Banking and Markets at United Overseas Bank (UOB), described the current environment as “a structural reordering of the global economy,” driven by geopolitical tensions, rapid advances in AI, China’s continued move up the industrial value chain, Japan’s emergence from decades of deflation, and the evolution of global capital markets. Against that backdrop, he argued, “the world’s biggest disruptions are becoming ASEAN’s biggest opportunities.”
According to UOB’s latest ASEAN Connect report, FDI into ASEAN more than doubled over the past decade, rising from $115 billion to $244 billion, while the region now accounts for around 15 per cent of global FDI inflows. ASEAN’s exports are projected to grow by nearly 90 per cent by 2031, or more than three-times the pace of global trade growth, as manufacturers continue to diversify production and supply chains across the region.
The changing nature of investment was another recurring theme at the ASEAN Conference. “Businesses are making decisions based not only on efficiency but also on resilience, reliability, and confidence,” Mr. Chin said. “In a fragmented world, flows follow trust.”
That shift places ASEAN in a stronger position than at any point in its recent history. For decades, the region was largely viewed as a manufacturing base positioned between larger global markets. Today, however, it is increasingly being seen as an economic platform in its own right, offering a market of nearly 700 million people, complementary economies, and an expanding network of regional and international trade agreements.
Addressing the gathering, Mr. Mark Lee, Chairman of the Singapore Business Federation (SBF), said the conversation around ASEAN’s economy has evolved beyond growth and market opportunities to focus increasingly on “resilience, competitiveness, and relevance” in a more uncertain world. As geopolitical tensions, supply chain realignment, technological disruption, and the energy transition reshape global business, he said, stronger collaboration between governments, businesses, and institutions will be essential to strengthening connectivity and unlocking new opportunities across the region.
That changing role is also reflected in ASEAN’s policy agenda. Initiatives including the ASEAN Digital Economy Framework Agreement (DEFA), the upgrading of the ASEAN Trade in Goods Agreement (ATIGA), and the ASEAN Power Grid are examples of how the region is seeking to strengthen digital integration, facilitate trade, and improve energy connectivity. Together, these efforts are expected to reinforce what Mr. Chin described as the three pillars of ASEAN’s next phase of growth: trade connectivity, digital connectivity, and energy connectivity.
Against this regional backdrop, Vietnam repeatedly emerged as one of the economies best positioned to benefit. Throughout the event, the country was highlighted not simply for its established manufacturing base but for the scale of its ambitions to move into higher-value industries, develop modern infrastructure, strengthen regional supply chains, and attract the long-term capital needed to support its next stage of development. Rather than competing solely on labor costs, Vietnam is increasingly seeking to position itself as a destination for advanced manufacturing, technology investment, digital innovation, and sustainable growth within ASEAN’s evolving economic landscape.
From attracting to shaping investment
If ASEAN is an increasingly important destination for global capital, the question now is how Vietnam intends to capitalize on that opportunity. Rather than emphasizing low production costs or export manufacturing alone, speakers pointed to a broader transformation in Vietnam’s investment strategy, one centered on higher-value industries, stronger supply chains, modern infrastructure, and closer integration with regional and global markets. For Vietnam, ASEAN remains central to that strategy.
Speaking at the Vietnam Market Breakout session, with the theme “Spotlight on Vietnam’s Growth Journey and Opportunities,” Mr. Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (VIETRADE) at the Ministry of Industry and Trade, described ASEAN as “not only a neighboring market” but also “an important network of trading partners, investors, suppliers, and production bases,” adding that it serves as a vital platform for Vietnam to integrate more deeply into the global economy.
He noted that regional trade agreements, including the ASEAN Trade in Goods Agreement (ATIGA), the Regional Comprehensive Economic Partnership (RCEP), and ASEAN’s free trade agreements with major partners, have expanded market access, facilitated cross-border trade, and strengthened regional production networks. Looking ahead, initiatives such as the ASEAN Economic Community Strategic Plan 2026-2030, together with continued work on digital transformation, logistics, green growth, and resilient supply chains, are expected to create further opportunities for Vietnamese businesses to participate in regional and global value chains.
Vietnam’s economic relationship with Singapore illustrates that growing integration. According to Mr. Phu, bilateral trade reached $11 billion in 2025 and totaled $8.1 billion in the first half of 2026, up 37 per cent year-on-year. More than 80 per cent of Vietnam’s exports to Singapore consisted of high-value manufactured and processed products, reflecting increasingly sophisticated trade links between the two economies. Singapore also remains one of Vietnam’s largest foreign investors, with more than 4,500 projects and nearly $85 billion in registered investment capital.
While regional integration provides the framework, speakers argued that Vietnam’s next challenge is to attract a different quality of investment. Mr. Victor Ngo, Country Head of UOB Vietnam, described this transition as “FDI 2.0” - the country’s shift from competing primarily on labor-intensive manufacturing toward attracting investment in advanced manufacturing, technology, innovation, and sustainable industries. As labor costs rise and global investors place greater emphasis on resilience and productivity, he argued that Vietnam’s competitiveness will increasingly depend on the quality of its infrastructure, workforce, institutions, and investment environment rather than cost alone.
Supporting that transition will require significant investment in both physical and financial infrastructure. Mr. Ngo pointed to the need for long-term capital to finance transport networks, energy systems, logistics, and digital infrastructure, while also highlighting the role of Vietnam’s planned international financial centers in Ho Chi Minh City and Da Nang in mobilizing international investment for the country’s next stage of development.
Attracting higher-value investment is also becoming increasingly about developing integrated economic ecosystems rather than standalone industrial projects, and the provincial capital Dong Nai is positioning Long Thanh International Airport as a key example of that approach.
Presenting its vision, Mr. Vu Ngoc Long, Vice Chairman of the Dong Nai City People’s Committee, said the city is positioning Long Thanh not simply as an airport project but as an integrated economic ecosystem combining logistics, aviation services, high-tech manufacturing, innovation, urban development, and international connectivity. Plans include a free trade zone linked to the airport, high-tech industrial parks, commercial and urban centers, and supporting infrastructure designed to attract industries such as semiconductors, AI, data centers, aviation services, and advanced manufacturing.
The strategy is underpinned by Politburo Resolution No. 16-NQ/TW, issued in July, which establishes Dong Nai as a nationally-significant growth pole through 2035, with a vision to 2065. The Resolution provides the institutional framework for the city to mobilize investment and accelerate major infrastructure and economic development projects.
Dong Nai province is already among Vietnam’s leading destinations for FDI, with more than 2,200 active FDI projects worth over $45 billion in registered capital and average monthly exports of approximately $2.9 billion. Singapore remains the city’s largest foreign investor, with more than 200 projects totaling over $5.3 billion, concentrated in the infrastructure, electronics, logistics, and processing industries.
Ecosystem advantage
For businesses that have operated in Vietnam over several decades, the country’s transformation is visible not only in economic figures but also in the day-to-day realities of investing and operating in the market.
Mr. Ernie Koh, Vice Chairman of the Southeast Asia Business Group at the Singapore Business Federation, reflected on his first business trip to Vietnam in 1993, shortly after the country began opening its economy. “My workers were paid about $1 a day,” he recalled.
More than three decades later, he said, the contrast is striking. His company now employs around 2,000 workers in Vietnam, with a general worker earning roughly $600 a month. “The progress Vietnam has made has been remarkable,” he said.
Beyond rising incomes, Mr. Koh pointed to significant improvements in the investment environment itself. Compared with even ten years ago, industrial parks today provide comprehensive support for investors, from customs and logistics to administrative services, while many procedures have been digitized. “For those considering investing in Vietnam,” he said, “this is a great time to do it.”
He also highlighted what he believes remains one of Vietnam’s greatest advantages: its workforce. “Vietnam has a young, dynamic, and enthusiastic workforce,” he said. “Many of my staff are in their 30s. The energy and dynamism of Vietnam’s workforce are truly impressive.”
That evolution is also changing the role of industrial park developers. According to Mr. Lawrence Chan, Head of VSIP at Sembcorp Development, Vietnam’s industrial strategy has evolved dramatically over the past three decades. When the first VSIP (Vietnam-Singapore Industrial Park) opened in 1996, Vietnam’s priorities were relatively straightforward: creating jobs, improving connectivity, and attracting manufacturers through abundant, low-cost labor. “Today we’re talking about attracting high-tech investments, greener industries, and higher value-added manufacturing.”
What I call FDI 1.0 - electronics, textiles and processing - remains vital. But traditional drivers alone will not push growth from 8 to 10 per cent. That gap must be filled by FDI 2.0.
As a result, he added, developers have had to rethink their own role. Instead of simply providing industrial land, VSIP is now focused on building integrated ecosystems capable of supporting industries such as semiconductors, data centers, and advanced manufacturing.
He described this strategy as “VSIP 2.0,” built around what he called the “Four I’s” - Interconnectedness, Integration, Innovation, and Intelligence. Those changes extend beyond industrial infrastructure.
As global manufacturers increasingly evaluate environmental performance alongside production costs, industrial parks are also being expected to provide renewable energy, lower-carbon operations, and internationally-recognized sustainability standards. “Industrialization has already been a remarkable success,” Mr. Chan said. “The next challenge is ensuring that it is sustainable.” For companies such as LEGO, he noted, access to renewable energy and sustainable industrial ecosystems has become an important consideration when making investment decisions.
Vietnam’s next phase of industrialization is increasingly centered on complete development ecosystems rather than individual projects. Dr. Khuat Viet Hung, Vice President of the Sovico Group, described the planning process surrounding Long Thanh International Airport as an example of that approach.
Working with Dong Nai authorities and other partners, Sovico has been involved in developing an integrated master plan that combines industrial development with transport infrastructure, urban planning, education, and supporting services. The vision includes the Long Thanh Special Economic Zone, free trade areas linked to the airport, high-tech industrial parks, metro connections, a central business district, and a science and technology university.
For Dr. Hung, attracting investment in this new environment requires much more than providing factory space. “We’re no longer just building industrial parks,” he said. “We also need housing, urban facilities, services, food, education, and many other supporting industries.” That is why, he added, one of the most important decisions for foreign investors is to “find the right local partner.”
Together, the discussions illustrated how Vietnam’s investment proposition has evolved alongside its economy. The country’s early success was built on labor-intensive manufacturing and competitive costs. Today, the focus is increasingly on creating the industrial ecosystems, skilled workforce, sustainable infrastructure, and partnerships needed to support a more sophisticated phase of growth.
Building the capabilities
While infrastructure and industrial development featured prominently throughout the discussions, speakers also emphasized that Vietnam’s long-term competitiveness will increasingly depend on its ability to innovate, adopt new technologies, and mobilize the capital needed to support a more sophisticated economy.
Mr. Rich McClellan, CEO of the Vietnam International Financial Center in Ho Chi Minh City (VIFC-HCMC), argued that Vietnam is approaching an important turning point after more than three decades of sustained economic growth. “Vietnam is sitting at a really, really interesting inflection point right now,” he said, noting that the country’s manufacturing- and export-led, low-wage growth model “is going to run out of steam very soon.”
The next phase of development, he continued, will require several strategic levers working together. Continued investment in transport infrastructure, including projects such as the North-South railway, will be essential to connect the economy more effectively, while innovation and AI will help create new sources of productivity and higher-value industries.
Perhaps the greatest challenge, however, will be financing that transition. Mr. McClellan estimated that Vietnam could require as much as $1.5 trillion in investment over the coming decade to support its next stage of development. Mobilizing that scale of capital, he argued, will require the country to not only attract international investors but also to continue innovating in its policy framework. He pointed to the proposed international financial centers as one example, describing them as a mechanism to access global capital through internationally-familiar standards, legal frameworks, and financial regulations.
Technology is expected to play an equally important role. For Vietnamese businesses, AI is already beginning to reshape how companies operate rather than remaining a future concept.
Vietnam is working to turn strong political relations into concrete programs, projects, and long-term business partnerships.
Ms. Thao Dao, Country Strategy & Operations Lead at Google, pointed to Vietnam’s rapidly-expanding digital economy as evidence of that transformation. According to Google’s latest e-Conomy SEA report, Vietnam’s digital economy reached $39 billion in gross merchandise value, including $25 billion from e-commerce, while video commerce continues to grow rapidly and around 650,000 Vietnamese sellers now use digital platforms as their primary sales channel.
She illustrated the shift with a simple example. A neighborhood bakery that once served customers within walking distance can now use AI to develop new products, create marketing content, build its online presence, and reach customers nationwide. “AI is no longer just a niche tool,” she said. “It’s basically empowering local businesses, students, policymakers, and everyone in Vietnam to thrive.”
Meta sees a similar trend emerging among Vietnamese businesses. Ms. Shanti Alexander, Director of Policy Programs and Campaigns for Asia-Pacific at Meta, said the company’s partnership with VIETRADE aims to help enterprises move “from cost competitiveness to capability competitiveness” by equipping businesses with practical AI tools and digital skills.
She cited the example of the Da Nang-based e-commerce company Hadaki, whose adoption of Meta’s Business AI on Messenger enabled its marketing team to handle significantly more customer inquiries, improve sales conversion, and expand into new markets. For Meta, such examples demonstrate that AI-powered tools are no longer reserved for large corporations but are becoming increasingly accessible to businesses of all sizes.
The discussion also highlighted how AI is extending well beyond digital services. Mr. James Yuk, APAC Vice President at Singapore’s Deye Inverter, noted that the company has incorporated AI agents into its renewable energy platforms to help users better understand energy efficiency, manage electricity consumption, and optimize how solar energy is used.
Together, the Conference discussions suggested that Vietnam’s next phase of growth will depend on much more than maintaining its manufacturing competitiveness. Infrastructure, finance, digital technology, AI, sustainability, and human capital are increasingly becoming interconnected drivers of development.
As businesses adopt new technologies and policymakers continue to reshape the investment environment, the challenge is no longer simply sustaining rapid growth, but building the capabilities needed to support a more innovative, resilient, and higher-value economy.
