Vietnam may be on the cusp of a new wave of investment following President Joe Biden’s visit last month.
Historically, Vietnam has experienced three significant waves of foreign direct investment. The first wave occurred in 1997 when Honda Motor began producing two-wheeled vehicles in Vietnam. The second wave, which spanned from the 2000s to 2008, coincided with the global financial crisis triggered by Lehman Brothers’ collapse. During this period, Samsung Electronics invested in a smartphone production facility in Bac Ninh in 2009.
The third wave gained momentum in the mid-2010s, with Vietnam becoming an attractive destination for foreign consumer businesses due to its rising purchasing power. For instance, the Japanese retail giant Aeon opened its inaugural store in Vietnam, Aeon Mall Tan Phu Celadon, in 2014.
President Biden’s recent visit holds the potential to stimulate a wave of American investment in Vietnam, creating the opportunity for a fourth FDI wave.
Up until the end of 2022, the United States’ direct investment capital in Vietnam stood at $11.4 billion, ranking 11th among countries and territories investing in this market of over 100 million people. In comparison, South Korea invested $80.9 billion, Singapore $70.8 billion, and Japan $68.8 billion.
Vietnam’s current objective is to transition from labor-intensive industries like textiles, garments, and electronics assembly to high-tech, high-value-added sectors. Collaboration with American technology firms, especially those specializing in semiconductors and AI, will play a pivotal role in reshaping the country’s industrial landscape.
Prime Minister Pham Minh Chinh has recently called for the development of a project aimed at training 30,000 to 50,000 engineers and 100 experts in digital transformation, chip and semiconductor manufacturing. Vietnam is also exploring new measures and policies to attract multinational companies. However, it remains to be seen whether the fourth FDI wave in Vietnam will materialize.
In September, during his visit to Vietnam, President Joe Biden and General Secretary Nguyen Phu Trong established a comprehensive strategic partnership between the two countries. Biden’s visit also resulted in significant business deals, including Vietnam Airlines signing an agreement to purchase 50 Boeing 737 Max aircraft valued at approximately $10 billion.
FPT Software announced a strategic collaboration with the American startup Landing AI. Synopsys, a company specializing in industry-leading semiconductor design, IP, and software security solutions, also signed a memorandum of cooperation to support the Vietnamese semiconductor industry in workforce development.
Following these developments, Prime Minister Pham Minh Chinh embarked on a business trip to the United States. During his visit to the headquarters of the chip manufacturing giant Nvidia, the Prime Minister proposed that the group establish a factory in Vietnam, positioning the country as a hub in Southeast Asia. Additionally, he held discussions with leaders of leading U.S. technology corporations such as Bill Gates and Elon Musk.