As Vietnam strides into 2024, the nation stands on the cusp of significant economic expansion, targeting a growth rate between 6-6.5% despite facing both global and domestic headwinds. February marks a pivotal moment in this journey, reflecting a vibrant economic revival from the sluggish pace of early 2023 to a robust recovery by year-end. With the government’s strategic focus on bolstering domestic consumption and production, alongside a notable leap in GDP and foreign investment attraction, Vietnam’s economic landscape is ripe with opportunities.
This narrative will delve into the concerted efforts underpinning this optimistic outlook, including sector-specific growth initiatives and the pivotal role of key cities and industries in sustaining Vietnam’s economic momentum and asserting its regional leadership.
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Aiming for Accelerated Economic Growth
Vietnam’s economy is poised for higher growth in 2024, targeting a 6-6.5% increase despite global and domestic challenges. The government’s resolution emphasizes boosting domestic consumption and production, with economic growth showing a steady recovery from 3.32% in Q1 to 6.72% in Q4 of 2023. The country’s GDP surpassed US$400 billion, ranking third in ASEAN and making significant strides in trade and foreign investment attraction. And in 2023, Vietnam’s gross domestic product (GDP) growth rate is estimated at 5.05% in 2023, the General Statistics Office (GSO) announced on December 29.
Efforts to enhance economic stability include improving the business climate and accelerating public investment disbursement. Over 159,000 new enterprises were established in 2023, with FDI reaching US$36.6 billion, a 32.1% increase from 2022. The government aims for further growth by prioritizing sectors like digital transformation, green transformation, and high-tech industries, alongside improving infrastructure and human resources to sustain Vietnam’s economic momentum and regional leadership.
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Ho Chi Minh City Embraces Green Transformation
Ho Chi Minh City is advancing its green growth strategy by seeking investments for 28 projects aimed at sustainable economic development. Highlighted projects include a US$300 million data center and high-tech manufacturing initiatives requiring over US$178 million. The city’s commitment to environmental sustainability is showcased through its focus on renewable energy and high-tech industries, aiming to reduce its carbon footprint significantly.
The city’s green agenda also targets major infrastructure upgrades and eco-friendly urban projects, with investments like a US$500 million financial and commercial area and a US$220 million central square and riverbank park. These initiatives, part of a broader effort to attract over US$6.7 billion in green investments, underscore Ho Chi Minh City’s dedication to becoming a model of urban sustainability and economic resilience in the face of climate change and environmental challenges.
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Hanoi Secures US$870 Million FDI
In the first months of 2024, Hanoi attracted an impressive US$866.8 million in foreign direct investment (FDI), marking a significant influx of capital into the city. This figure includes US$859.4 million for 10 new projects, an additional US$5.1 million for six existing projects, and US$2.3 million in capital contributions or share purchases in local businesses.
The city also saw the establishment of 2,529 new companies with a combined capital of VND 35.4 trillion (US$1.4 billion), indicating a robust 54% increase in new businesses and a 2.4-fold rise in capital year-on-year. This economic activity, coupled with a 50% increase in firms resuming operations, underscores Hanoi’s growing appeal to both domestic and foreign investors, driven by administrative reforms and trade promotion efforts.
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Bac Giang’s Foreign Enterprises to Hire Thousands in Q1 2024
In the first quarter of 2024, Bac Giang’s industrial zones are set to expand, with 13 foreign-invested enterprises (FIEs) planning to hire 13,000 workers. The demand for February and March is 7,430 and 5,630 employees, respectively, across various companies, including Luxshare’s four member companies, which are seeking to fill positions ranging from 1,300 to 3,080 employees each.
Luxshare-ICT Bac Giang, an Apple supplier, is notably expanding its factory in Quang Chau Industrial Park with a US$330 million investment, aiming to complete the expansion within 24 months. This will bring the total investment to US$504 million, supporting the production of electronic components for export, including wireless Bluetooth headsets and audio components for smartphones, and significantly increasing employment opportunities in the region.
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Da Nang Targets FDI Boom in Semiconductor Sector
Da Nang’s Hi-Tech Park and Industrial Zones Authority (DHPIZA) aims for half of the FDI businesses investing in 2024 to enter the semiconductor (ICT) industry. The city attracted nearly US$260 million in investment in 2023, despite facing challenges, and is offering preferential policies to sectors like semiconductors, high-quality healthcare, and aerospace to encourage further investment.
Significant investments include a US$400 million commitment from Taiwan’s Foxlink for an electronics factory expansion and a US$277 million project by South Korea’s ICT Vina Co. Ltd. Da Nang is focusing on attracting more semiconductor businesses, with Taiwanese and Japanese companies considering investments, reflecting the city’s strategic efforts to become a key player in the global semiconductor value chain.
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Vietnam’s Manufacturing Sector Shows Promising Growth
Vietnam’s manufacturing sector saw growth at the start of 2024, with the S&P Global Vietnam Manufacturing Purchasing Managers’ Index rising to 50.3 from 48.9 in December. This marks the first improvement in five months, driven by renewed expansions in new orders and production, particularly in intermediate goods. The increase in new business and production was marginal, leading to broadly unchanged staffing levels and purchasing activity.
Despite the slight growth in orders and output, backlogs of work accumulated for the second consecutive month, reaching the most pronounced rate since March 2022. Manufacturers’ optimism for the future dipped to a seven-month low, reflecting concerns over economic conditions. However, overall sentiment remains positive, fueled by expectations of demand improvement, increased customer numbers, and new product launches.
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DEEP C Zones: Prime Investment Destination Confirmed
In 2023, DEEP C Industrial Zones in Haiphong City and Quang Ninh Province launched 21 new projects, totaling US$970 million in capital. These projects span various sectors, including vehicle manufacturing and renewable energy component production, indicating a strong interest in high-tech and sustainable industries. The northern region’s industrial hubs market has seen significant growth, with an occupancy rate of 81% and a record absorption area exceeding 800 hectares, a 37% increase from the previous year.
DEEP C’s expansion reflects the increasing demand for green industrial real estate and sustainable development among foreign investors in Vietnam. Notable projects include the US$500 million ECOVANCE high-tech biodegradable materials project by South Korea’s SK Group and the US$18.5 million POSCO Vietnam Processing Centre. These investments underscore the strategic importance of DEEP C Industrial Zones as a hub for innovative and environmentally friendly manufacturing, contributing to Vietnam’s position as an attractive investment destination.
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Singapore-Vietnam Partnership Reaches New Heights
In 2023, Singapore emerged as Vietnam’s largest investor, injecting over US$6.8 billion, nearly 19% of Vietnam’s total foreign investment, and cumulatively investing US$74.51 billion, making it Vietnam’s second-largest investor. This investment surge is part of the broader deepening of economic ties, highlighted by the launch of five new Vietnam-Singapore Industrial Parks (VSIPs) and the initiation of the Green-Digital Economic Partnership to foster cooperation in carbon credits, renewable energy, and the digital economy.
The bilateral relationship between Singapore and Vietnam is set to further evolve with plans to elevate their partnership to a comprehensive strategic level. This includes significant projects like the bilateral electricity project for importing 1.4GW of low-carbon energy from Vietnam to Singapore, showcasing the commitment to sustainable development and innovation. These developments underscore the dynamic and growing economic cooperation between the two nations, setting a strong foundation for future collaboration in emerging sectors.
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US-Vietnam Relations Achieve Milestones in 2023
In 2023, US-Vietnam relations reached new heights with a focus on economic security, particularly in semiconductors and supply chains. The US is enhancing trade opportunities and clean energy cooperation with Vietnam, following President Biden’s visit. Meetings between US and Vietnamese officials aim to develop Vietnam’s semiconductor ecosystem, including workforce initiatives and trading promotion, with the US considering Vietnam’s requests for market economy status and high-tech export barriers.
The US has shown interest in Vietnam’s semiconductor and clean energy sectors, with 15 companies planning about US$8 billion in investments. A partnership formed last September aims to support resilient semiconductor supply chains, including a US$2 million US initiative to develop Vietnam’s semiconductor workforce and infrastructure. This collaboration underscores Vietnam’s growing role in global supply chains and the mutual commitment to technological and green energy advancements.
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