Strengthened Market Standing Affirmed
In a positive turn of events for Vietnam's economy, foreign direct investment (FDI) disbursement has reached a 5-year high, amounting to $26.2 billion (5.5% of GDP) in the 12 months to June 2025. This significant surge represents a 9.3% growth on-year, according to official data.
Manufacturing, a key sector in Vietnam's economy, recorded a disbursement figure of $12.57 billion, accounting for 81.6% of the country's total FDI disbursement. This robust growth can be attributed to the increased impetus for supply chain resilience with the US' expanded trade war and heavy tariffs on China.
Jola Pasku, senior economist at S&P Global, noted that the continued robust increase in pledged FDI in 2025 suggests positive investor sentiment and rising confidence in Vietnam's economy. Pasku also highlighted Vietnam's consolidated manufacturing competitive position, both within Asia and globally, as evident from the significant share of FDI targeting the manufacturing and processing industries.
The World Bank report corroborates these findings, indicating that FDI commitments were mostly directed to manufacturing (51%) and real estate (22%). In the real estate sector, the largest foreign direct investment influences predominantly come from China. Chinese investors have maintained a strong presence in the real estate sector in Vietnam in recent years and continue to be the major source of FDI in this area.
FDI commitments for newly registered capital moderated in the first half of 2025 at $9.3 billion (-3% on-year), but notably, newly registered capital from China surged during the first six months, rising by 28.9% on-year and representing 30% of all FDI commitments.
The steady climb in FDI disbursement shows that investors remain confident in Vietnam's appeal. Brian Lee, an economist at Maybank Investment Banking Group, echoed this sentiment, stating that the continued robust increase in pledged FDI suggests positive investor sentiment and rising confidence in Vietnam's economy.
Moreover, the World Bank report reveals that high-frequency indicators such as industrial production and exports remain quite upbeat, bucking softness elsewhere in the region. Strong manufacturing funding drives demand for industrial space, and infrastructure investment is unlocking new areas for development. Regulatory reforms like the land law have also played a part in improving transparency for foreign investors.
Apple's decision to assemble most of its non-iPhone products in Vietnam, instead of China, further underscores Vietnam's attractiveness to global investors. Reciprocal tariffs on Vietnam remain in line with other ASEAN countries and lower than China and India, providing a favourable business environment for foreign investors.
In the energy sector, the production and distribution of electricity, gas, water, and air conditioning amounted to $563.6 million. With these positive developments, Vietnam is poised to continue its economic growth trajectory, attracting more foreign direct investment and solidifying its position as a regional powerhouse.
