FDI picture in 2024–2025: Increased volume, shifting quality
In 2024, Vietnam's disbursed FDI capital is estimated to reach 25.35 billion USD, an increase of 9.4% compared to 2023. This is the highest growth rate ever. By 2025, in the first 9 months of the year, total registered capital reached 28.54 billion USD, an increase of 15.2% compared to the same period, and in the first 11 months of the year, registered FDI capital reached 33.69 billion USD, an increase of 7.4% compared to the same period last year. This shows that Vietnam is still an attractive destination in the context of strong global capital flows. However, when looking at the quality of FDI capital flows, we can see that the localization rate of FDI projects is still low. Supporting industries only meet about 10% of domestic production and consumption needs, and links between FDI enterprises and Vietnamese enterprises are still very loose. Large corporations mainly import raw materials and accessories from the global network and only perform the assembly stage in Vietnam. Although the number of FDIs shows signs of growth, added value and labor productivity are not commensurate.
Why should high-quality FDI be prioritized in the coming period?
Vietnam cannot continue to pursue the "red carpet" strategy for all FDI capital flows, but must switch to a selective thinking, prioritizing projects with high added value, closely linked to sustainable development. There are at least four strategic reasons why Vietnam cannot continue to attract FDI in the old way.
First, the growth model based on cheap labor, tax incentives, and processing exports has helped Vietnam develop rapidly in the past three decades. However, as labor and land funds become increasingly expensive, this model will face difficulties in maintaining growth. If FDI continues to be attracted mainly to processing and assembly, Vietnam will easily fall into the middle-income trap, lacking motivation to improve labor productivity.
Second, with increasing geopolitical risks and the application of a global minimum tax, the "any FDI expansion" strategy will become risky. Countries now have to compete with institutions, infrastructure, human resources and innovative ecosystems, instead of just relying on financial incentives as before.
Third, Vietnam is moving towards sustainable development, including a green economy, digitization and innovation, which requires FDI capital flows to be accompanied by clean technology, energy saving and having a positive impact on the environment and community.
Finally, ensuring benefits for workers and social security is a factor that needs to be considered. Some low-quality FDI projects can cause environmental pollution, use cheap labor with unsecured working conditions, cause labor conflicts and create pressure on infrastructure and living environment.
Orienting the selection of priority occupations
Vietnam needs to choose industries with high added value, closely linked to the domestic economy. The XIII Congress set out the foundation when emphasizing selective FDI attraction, prioritizing advanced technology projects, high added value and effective links with the domestic economic sector. Accordingly, there are five industries prioritized for FDI attraction, including high technology and semiconductors, digital economy, renewable energy, supporting industries and high-tech logistics, along with high-quality services such as healthcare, education and finance. These are industries with sustainable development potential and can create motivation for domestic enterprises to participate in the global value chain.
Choosing the right priority industry is the first important step, however, it is not acceptable for FDI projects to duplicate industries with surplus supply, causing waste of resources and environmental pollution, as well as only using simple labor with low added value.
Concretizing the new generation FDI criteria
To make "selection" thinking become practical action, Vietnam needs to build a new generation of FDI criteria, as a basis for licensing and incentives for FDI projects. This set of criteria includes important factors such as: Technology and R&D, supply chain linkage, sustainable development and ESG (environment, society, governance), and budget contribution and socio-economic efficiency.
FDI projects need to have modern technology, upgrade capabilities and commitment to invest in R&D in Vietnam. Along with that, FDI enterprises need to have a high rate of domestic supplier use, supporting Vietnamese enterprises to develop a supply network in the next 5-10 years. Sustainable development and ESG criteria will also be emphasized, with the requirement of reducing CO2 emissions, using renewable energy, and complying with labor and governance standards.
Switching from "red carpeting" to "smart carpeting
An important part in attracting high-quality FDI is the shift from the mindset of "inviting FDI" to "reorganizing the production and supply ecosystem". Current reality shows that supporting industries in Vietnam only meet about 10% of domestic demand. For high-quality FDI to truly promote the development of Vietnamese businesses, a national-level supporting industry strategy is needed associated with each strategic FDI group. The State can support consulting costs and upgrade management for Vietnamese businesses with enough potential to become a primary supplier for large corporations.
In addition, it is necessary to design financial and tax policies based on the level of participation in the supply chain. Incentives on corporate income tax, value-added tax, and land use fees can be granted to Vietnamese businesses participating in supplying FDI corporations or exporting in chains.
Building an innovation center system for small and medium-sized enterprises, connecting national digital numbers about Vietnamese suppliers transparently will help domestic enterprises strengthen their competitiveness and participate more deeply in global value chains.
FDI data in 2024-2025 shows that registered and disbursed capital continues to grow, but Vietnam is no longer chasing quantity but needs to select capital flows that bring high added value, technology transfer, create quality jobs and closely link with Vietnamese businesses. To achieve this goal, Vietnam needs to build a new generation of FDI criteria, reform incentive systems, promote high-tech industries and create a strong innovation ecosystem, helping FDI not only be a figure in the report but truly become a driving force for the sustainable development of the economy.
