The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

To access the ICS, visit the U.S. Department of State  Investment Climate Statements website.

Executive Summary

AnchorAnchorAnchorAnchorAnchorForeign direct investment (FDI) continues to be of vital importance to Vietnam as an economic growth driver. The government has policies in place that are broadly conducive to FDI, particularly for enterprises engaged in export-oriented manufacturing. Factors that attract the interest of foreign investors include political stability, strong economic growth, a young and increasingly urbanized and educated population, competitive labor costs, a growing number of trade agreements, and an affordable, stable power supply.

According to the Ministry of Planning and Investment (MPI), which oversees investment activities, Vietnam’s FDI stock stood at USD274 billion at the end of 2022. At the 26th United Nations Climate Change Conference (COP26), Prime Minister Pham Minh Chinh made an ambitious pledge for Vietnam to reach net zero emissions by 2050. In December 2022, Vietnam entered the Just Energy Transition Partnership (JET-P) with a coalition of international partners, including the United States, Japan, United Kingdom, and European Union that will mobilize at least an initial USD15.5 billion for Vietnam’s energy transition efforts. In May, the government approved Power Development Plan 8 (PDP-8), Vietnam’s national master plan for the development of the power sector, but it does not describe how to implement this commitment. Implementation plans are being developed – a process likely to take two years.

Vietnam’s recent moves forward on free trade agreements (FTA) make it easier to attract FDI by providing better market access for Vietnamese exports and encouraging investor-friendly reforms. The EU-Vietnam Free Trade Agreement (EVFTA) entered into force August 1, 2020. The UK-Vietnam Free Trade Agreement entered into force May 1, 2021. The Regional Comprehensive Economic Partnership (RCEP) entered into force January 1, 2022, for 10 countries, including Vietnam. These agreements may benefit U.S. companies operating in Vietnam by reducing barriers to inputs from and exports to participating countries, but also make it more challenging for U.S. exports to Vietnam to compete against contenders benefiting from preferential treatment. Vietnam is a founding member and active participant in ongoing Indo-Pacific Economic Framework for Prosperity (IPEF) negotiations involving the United States and 13 regional partners.

In February 2021, the 13th Party Congress of the Communist Party of Vietnam (CPV) approved a 10-year economic strategy that calls for shifting foreign investment to high-tech industries and ensuring such investment meets higher standards relating to environmental protection. At the beginning of 2021, Vietnam’s new Securities Law and Labor Code, which the National Assembly originally approved in 2019, came into force. The new Securities Law formally states the government’s intention to remove foreign ownership limits for investment in most industries. The new Labor Code includes several updated provisions that support greater contract flexibility, grant formal recognition to a greater part of the workforce, and allow workers to join independent workers’ rights organizations, though key implementing decrees remain pending. In June 2020, Vietnam passed a revised Law on Investment and a new Public-Private Partnership Law, both of which are designed to encourage foreign investment in large infrastructure projects, reduce the burden on the government to finance such projects, and increase linkages between foreign investors and the Vietnamese private sector.

Despite having a relatively high level of FDI net inflows as a percentage of GDP compared to regional peers, Vietnam faces some significant challenges with its investment climate. These include widespread corruption, the entrenched position of state-owned enterprises (SOEs) in certain sectors, regulatory uncertainty in key sectors, a weak and opaque legal regime, poor enforcement of intellectual property rights, a shortage of skilled labor, restrictive labor practices, and slow government decision-making processes. With high reliance on inputs from the People’s Republic of China, Vietnamese manufacturing is vulnerable to forced labor risks in supply chains, though the government and industry are actively working to address these concerns. Although Russia’s war of aggression against Ukraine has had minimal impacts on Vietnam’s economy to date, fertilizer shortages caused by extended hostilities may pose food security challenges.