In the first six months of 2024, the processing and manufacturing industry continued to be the most attractive sector for FDI, with total investment reaching nearly $10.69 billion, accounting for 70.4% of the total registered FDI and increasing by 26.3% compared to the same period in 2023.
The largest FDI-attracting industry in Vietnam
In 2023, Vietnam’s processing and manufacturing industry attracted over $23.5 billion in FDI with 1,075 new projects, making it the largest FDI-attracting sector among the 18 economic sectors with foreign direct investment in Vietnam.
In the first six months of 2024, the processing and manufacturing industry continued to be the most attractive sector for FDI, with total investment reaching nearly $10.69 billion, accounting for 70.4% of the total registered FDI and increasing by 26.3% compared to the same period in 2023. Manufacturing in Vietnam is thriving, with a trade surplus reaching $11.63 billion, of which exports amounted to over $368.5 billion, an increase of 15.7% compared to the same period last year. Vietnam’s major export markets with significant trade surpluses include the United States estimated at $47.2 billion, the EU at $17 billion, and Japan at $952 million.
FDI investment in Vietnam’s Processing and Manufacturing Industry over the past 10 years
In 2024, Vietnam continued to attract many high-quality FDI projects in key sectors, such as: the LG INNOTEK Hai Phong factory project, which increased its capital by an additional $1 billion; the LITE-ON Quang Ninh factory project with a total capital of $690 million; and the Goodway Vietnam – Thai Binh factory with a total capital of $45 million, etc.
Read more: List of industrial parks in Thai Binh attracting investors to build factories and workshops
Specialized policies for enterprises in the processing and manufacturing industry
Vietnam focuses on developing policies for the processing and manufacturing industry
Vietnam has been researching and developing policies for industries such as mechanical engineering, processing, and electronics through the Law on Key Industrial Development to encourage FDI enterprises to invest in the processing and manufacturing industry. Additionally, the Ministry of Industry and Trade has stated it will enhance training efforts, focusing on leveraging the effectiveness of universities, colleges within the industry and trade sector, and some vocational schools to improve the quality of the workforce to meet the demands of foreign investors.
Exclusive incentives for enterprises in the processing and manufacturing industry in Vietnam
General Incentives for FDI Enterprises:
- Tax Rate: 10 – 17% depending on the specific fields as stipulated in the Corporate Income Tax Law
- Corporate Income Tax Incentives: Tax exemption for up to the first 4 years and a 50% tax reduction for the next 9 years as stipulated
- Import Tax Incentives: Exemption of import tax on goods imported to create fixed assets, raw materials, supplies, and components used for production if they cannot be produced domestically
- Accelerated Depreciation: Increase the deductible expenses when calculating taxable income
Exclusive Incentives for FDI Enterprises in Processing and Manufacturing Industry:
The processing and manufacturing industry includes sectors such as mechanical engineering, electronics, textiles and footwear, machinery and equipment manufacturing, etc. In addition to the general incentive, FDI Enterprises in the processing and manufacturing industry also have exclusive incentives.
| Industry | Investment Incentives |
| Mechanical engineering |
|
| Textiles and Footwear |
|
| Electronics |
|
| Automobile Manufacturing |
|
| Medical Equipment Manufacturing |
|
Development Orientation for the Processing and Manufacturing Industry in Vietnam for the Period 2024 – 2030
According to data from the General Statistics Office, 82.9% of enterprises in the processing and manufacturing industry assessed that business operations in the third quarter of 2024 will be more favorable than in the second quarter. The industrial production index (IIP) in the first six months is estimated to increase by 12.6%, and the inventory index has decreased compared to the previous year, showing a positive recovery of industrial production.
The industry of electronic and computer components production has shown a clear recovery, with a significant increase in the number of domestic and export orders.
To promote the development of the processing and manufacturing industry – one of the key pillars of the economy, Vietnam has been developing and implementing various policies such as Planning on infrastructure for national storage and supply of gasoline, oil and gas; Planning for exploring, exploiting, processing and using minerals. These are important factors in supplying raw materials and operating production industries, contributing to the sustainable development of the processing and manufacturing sector. Additionally, Vietnam is focusing on the application of science and technology and innovation, emphasizing the construction of a circular economy to optimize resources, minimize waste, and meet strict global supply chain standards.
In addition, Vietnam will focus on selective foreign investment attraction and cooperation, with quality, efficiency, technology, and environmental protection as top evaluation criteria. In particular, Vietnam will prioritize the development of key industries with new production and processing technologies, as well as focus on attracting investment in high-tech industries such as chip manufacturing and semiconductors.
.
Read more: FDI in Vietnam increased by 13.4% in Q1 2024, focused on the Processing and Manufacturing sectors
