Increased European investments flowing into Vietnam
Vietnam has emerged as a priority market for investment for Italian firms, as well as other European companies. The influx of foreign direct investment (FDI) from Europe in Vietnam has been steadily increasing, with the EU now accounting for nearly 2,500 projects in the country.
The bulk of European capital is directed towards processing and manufacturing (36.3%), energy and gas (20.7%), real estate (11%), and information and communications (6.6%). However, European investments are gravitating towards emerging sectors such as clean energy, high technology, and logistics.
The Netherlands, France, Luxembourg, and Germany together contribute around $20 billion in FDI in Vietnam. Investors from Denmark and Germany are particularly active in renewable energy. Notable investments include LEGO of Denmark, which built a toy factory worth $1.3 billion in Ho Chi Minh City, and the likely Playmobil, part of the Brandstätter Group, which built a toy factory in Vietnam, valued at approximately $1.3 billion.
Despite these investments, European investments are not yet as significant as Vietnam's attraction potential. Limitations in human resources, infrastructure, institutional framework, and administrative procedures continue to pose major challenges for FDI from Europe.
However, the EU-Vietnam Free Trade Agreement (EVFTA) is expected to create further opportunities for European investment in Vietnam. The aim is to position Vietnam as a regional transhipment hub, and European investors are present in almost all provinces and cities in Vietnam, with the largest concentrations in metropolises and industrial hubs such as Ho Chi Minh City, Dong Nai, Hanoi, Bac Ninh, and Quang Ninh.
Michal Ron, chief international business officer at SACE, affirmed this at a recent B2B networking event in Hanoi. European investors channelled $2.5 billion of FDI into Vietnam in 2022, and this is expected to increase to $3.25 billion in 2024. The future of European investments in Vietnam looks promising, as more companies continue to recognise the potential of this Southeast Asian country.
