Building effective mechanism to attract FDI inflows

Cautious optimism

According to the latest figures, realised FDI in Viet Nam during the first four months of 2025 reached 6.74 billion USD, its highest level in the past five years (2020–2025), representing a 7.3% year-on-year increase. Notably, in April 2025, the very month the US announced its countervailing tax decision, several major projects continued to receive capital injections, reaffirming the consistent commitment of foreign investors in Viet Nam.

Bruno Jaspaert, Chairman of EuroCham Viet Nam, stated that most European businesses are still in a “wait and see” mode, closely monitoring changes in global trade policy, and have yet to make any strategic adjustments to their investment or recruitment plans.

A EuroCham survey conducted immediately after the US announced a 46% countervailing tax on Vietnamese goods showed that none of the member companies had plans to shut down operations. However, about 25% of surveyed firms expressed concerns about potential revenue declines; another 25% rated the impact as neutral, while only around 10% believed the tax measures could have a positive effect.

Previously, EuroCham members had expressed optimism, albeit tempered with caution. In the EuroCham Viet Nam Business Confidence Index Q1 2025, companies identified several key factors that could enhance Viet Nam’s long-term investment appeal. These included infrastructure development, streamlined administrative procedures, simplified visa and work permit processes for foreign experts, and greater transparency in the legal framework and its enforcement.

Responsive measures needed

Economists argue that a mass exodus of investors from Viet Nam is unlikely due to the high costs associated with relocating FDI.

Moreover, Viet Nam retains several advantages, particularly political stability, favourable geographic location, and low labour costs. Nonetheless, significant challenges remain if Viet Nam is to retain existing investors and attract high-quality FDI in line with its new development strategy.

Phi Thi Huong Nga, Head of the Industry and Construction Statistics Department under the General Statistics Office, emphasised the need for Viet Nam to maintain its attractiveness through continued administrative reform, faster infrastructure development, and stronger incentives to draw FDI into high-tech and sustainable sectors.

Lawyer Nguyen Hong Chung, Vice chairman and General secretary of the Viet Nam Industrial Park Finance Association (VIPFA), noted that the core factor in inter-provincial competition for FDI is shifting from infrastructure, land costs, and incentives to human resources—specifically, workforce quality, availability, and adaptability.

“The solution lies in a mechanism for training orders between enterprises and educational institutions,” he said, suggesting that localities could also establish “Labour supply-demand coordination centres” through software platforms to manage job opportunities and match workforce supply with investor demand. Such platforms could become integral parts of provincial investment promotion systems.

From 2025, Viet Nam’s investment legislation includes several new policies aimed at attracting high-quality FDI. These include “green lanes” for special investment procedures and the establishment of an Investment Support Fund to stabilise the investment environment and strengthen competitiveness.

These efforts are especially relevant in the context of the global minimum tax regime, as Viet Nam seeks to attract strategic investors and multinational corporations into priority sectors.

Directive No. 47/CĐ-TTg dated 22 April 2025, issued by the Prime Minister, outlines key tasks and solutions to promote economic growth in 2025. It instructs the Ministry of Finance to take the lead, in close coordination with relevant ministries, agencies and local authorities, to develop effective, selective mechanisms to attract FDI.

The focus is on large-scale, high-tech, environmentally friendly projects, as well as timely resolution of difficulties faced by FDI enterprises, especially through cutting administrative procedures to speed up project implementation.

The Prime Minister also directed that by the end of May, the “National one-stop investment portal” be completed, followed by the rollout of “Provincial one-stop investment portals” once the new provinces are established.

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