VN FDI attraction: the rise of high-tech & green investment

Vietnam increasingly attracts foreign direct investment (FDI) in high-tech sectors like semiconductors and electronics. The government is also working to attract greener investment in renewable energy and sustainable manufacturing.

High-tech FDI projects enjoy higher incentives

Vietnam’s FDI has recently been concentrated in top industries in the high-tech sector. This is especially true since the Politburo’s Resolution No. 50 on “Guiding Opinions on Improving Institutional Policies to Improve the Quality and Efficiency of Outward Investment Cooperation by 2030” was officially issued in 2019.

Particularly noteworthy are recent high-value foreign direct investment projects, such as the production of mobile phones, electronic devices, and chips. Amkor Technology, a global semiconductor product packaging and testing service provider, invested $1.6 billion in the Yen Phong II Industrial Park in northern Bac Ninh Province to build its largest factory in the world, which began operations last October.

One month prior, in September, South Korea’s Hana Micron Vina Co. opened a semiconductor factory in neighbouring Bac Giang Province, the first in northern Vietnam. The factory produces integrated circuit boards for mobile phones and other smart electronic products. The company plans to increase total investment in the factory to more than $1 billion by 2025, with annual sales expected to reach $800 million and create 4,000 jobs.

Chinese Apple supplier Luxshare-ICT invested an additional $330 million in its electronic component manufacturing project in Bac Giang province through its Vietnamese subsidiary in November, bringing the total investment in the province to $504 million. The company also invested $290 million in two projects producing innovative electronic components in the north-central province of Nghe An.

The Vietnamese government has also formulated policies and laws to attract new investments in high-tech sectors. The massive investment of global technology groups in the technology production industry has rapidly expanded the domestic market, making Vietnam a “manufacturing hub” for major companies such as Samsung and LG.

“Greenize” the FDI

Vietnam is working to make foreign direct investment “greener” by attracting projects that adopt advanced environmental protection technologies, modern management and high-added value.

At COP28, members of the Group of Seven industrialized countries, including the United States, the European Union and the United Kingdom, announced a commitment of $15.5 billion to help Vietnam achieve its net zero emissions target in support of the signing of the Just Energy Political Declaration Transition Partnership (JETP).

In recent years, Vietnam has become one of the leading countries in developing wind and solar energy, with many large-scale projects underway. From 2015 to 2022 alone, the country attracted $106.8 billion in foreign direct capital for the renewable energy industry.

Equinor, Norway’s largest energy company, has opened an office in Hanoi to conduct business in the Vietnamese market. The company hopes to promote cooperation with Vietnam National Oil and Gas Group (PVN) to develop offshore wind power projects in the country. Mean while, Copenhagen Infrastructure Partners has established a joint venture company and two representative offices to study and develop offshore wind power projects in Vietnam. These include the La Gan offshore wind power project in Binh Thuan Province, with an estimated total investment of up to $10.5 billion.

Renewable energy and green finance

Renewable energy is the only priority area in which the country hopes to attract investment to implement its green growth strategy. The Danish Lego Group’s $1.3 billion project is being implemented in VSIP 3 IP. in Binh Duong province and is considered one of the flagship projects that marks the shift of foreign investment capital to the Vietnamese market. The Vietnam-Singapore Industrial Park (VSIP) Board of Directors is committed to realizing its ambition to transform Binh Duong VSIP 3 into an eco-industrial park (EIP) to attract more green projects, you can read more about EIP in here.

Elsewhere, the country’s Gia Dinh Group, a trusted partner of global brands such as Nike, Adidas, The North Face and Polo, signed a memorandum of understanding in April to build a carbon-neutral industrial park in Binh Duong province with South Korea’s SEP Cooperative to build a $200 million factory specializing in footwear manufacturing and carbon reduction infrastructure.

Previously, Heineken operated a brewery in Ba Ria-Vung Tau that fully used renewable energy to power the production line.

Green finance is becoming an essential trend in Vietnam. The Vietnamese government has committed to developing green finance and launched supportive policies, including establishing a Green Finance Fund to support sustainable and environmentally friendly projects.

Many banks have begun integrating ESG (Environmental, Social, and Governance) factors into their business strategies. The State Bank of Vietnam has also issued guidelines on green finance development, encouraging banks to lend for green projects. Both foreign banks in Vietnam, like the Asian Development Bank (ADB) and local banks, such as the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), have issued green bonds and green loans to meet enterprises’ demands for green finance.

Source: vneconomy