Vietnam – a destination for pioneering industries

Hanoi (WAN) – Vietnam has the potential to attract investment in pioneering industries, and solutions are needed to capitalize on these opportunities, industry insiders say.

Earlier this month, Foxconn Group received the green light from the northern province of Quang Ninh to launch two $551 million projects in the province. The projects, aimed at producing smart entertainment products and intelligent systems, fall within Quang Ninh’s target industries for investment in processing and manufacturing.

These initiatives bring Foxconn’s total investment in Quang Ninh to nearly $1 billion and exceeds $3 billion in Vietnam as a whole. The company is involved in large-scale electronics and components projects in the northern provinces of Bac Giang and Bac Ninh, including manufacturing hardware and components for Apple. Last month, Foxconn also invested $383 million in a project at Nam Son Hap Linh Industrial Park in Bac Ninh.

Meanwhile, Amkor Group recently obtained a revised investment certificate to increase its investment by an additional $1.07 billion for its Bac Ninh semiconductor project. The decision brings Amkor’s total investment in the project to $1.6 billion, a staggering 11 years ahead of schedule. Amkor had initially planned to invest just $1.6 billion in Vietnam by 2035.

Apart from these two investors, recent reports suggest that many well-known tech corporations such as Samsung and LG, as well as industry giants such as Hyosung, CJ and Posco are gearing up to invest another billion dollars in Vietnam in the near future.

During a recent meeting with Prime Minister Pham Minh Chinh during his official visit to the Republic of Korea, Jeong Cheol-dong, CEO of LG Display, said that LG has already invested more than $5 billion in Vietnam and plans to invest an additional $3 billion in the next five years. As part of this expansion, the LG Innotel plant aimed to double its production capacity, strengthening LG’s integrated manufacturing center in Vietnam. Jeong added that LG views Vietnam as its key manufacturing center.

Samsung, meanwhile, has long viewed Vietnam as a global manufacturing hub, investing more than $22.4 billion and steadily increasing its capital by an average of about $1 billion annually in recent years. With the opening of a Research and Development (R&D) Center in late 2022, Samsung has designated Vietnam as the group’s global R&D center—a designation Vietnam never expected.

But that’s just the beginning, as Vietnam is increasingly becoming a focal point for global corporations in the semiconductor and AI sectors. Companies like Intel, Amkor, HanaMicron, Marvell, and Synopsys have already invested in the country and continue to do so.

Meanwhile, NVIDIA Corporation is gradually realizing its vision of making Vietnam its “second home.”

Minister of Planning and Investment (MPI) Nguyen Chi Dung recently participated in an online discussion with NVIDIA to discuss further cooperation plans.

The interest of tech giants in Vietnam is palpable. In a recent statement, MPI highlighted that not only are numerous large-scale projects spanning semiconductors, energy (including battery, photovoltaic and silicon rod production), component manufacturing, electronics and high-value-added products set to receive new investment and increased capital in the first half of this year, but Vietnam also shows promise in attracting investment in cutting-edge industries such as AI, semiconductors, hydrogen and renewable energy.

MPI is currently finalizing a draft decree on the establishment, management and use of the Investment Support Fund. The purpose of this initiative is to provide government support to high-tech enterprises, companies involved in the production of high-tech goods and those undertaking high-tech application projects.

According to Statista Market Insights, Vietnam is poised to achieve a compound annual growth rate of 11.6% in semiconductor revenue from 2023 to 2027, reaching $31.28 billion by 2027. Under this forecast, integrated circuits, the cornerstone of the semiconductor industry, are expected to reach $16.44 billion this year.

Google’s forecast suggests that Vietnam’s digital economy is set to grow 11-fold by 2030, reaching $220 billion, almost half of the country’s current GDP. AI will play a key role in helping Vietnam achieve those projections, according to Marc Woo, managing director of Google Asia Pacific in Vietnam.

The forecast seems distinctly optimistic. However, given the intensifying competition to attract investment, Vietnam needs to act quickly in the current landscape; otherwise, it would miss out on this unprecedented opportunity.

In a recent report to the government, Dung highlighted the persistent challenges facing the economy, noting that emerging sectors such as the digital economy, the green economy, artificial intelligence, chips and semiconductors are lagging behind, threatening Vietnam’s global and regional competitiveness.

MPI reported that despite the steady growth of foreign investment in Vietnam, the number of large high-tech projects remained limited. Vietnam attracted only 108 projects exceeding $500 million in investment, an average of 15 projects per year, of which only 27 were in the high-tech sector.

“Immediate steps are needed to develop skilled human resources, especially in semiconductor electronics, to maintain and enhance investment attractiveness. At the same time, it is necessary to address local electricity shortages in regions where many electronics projects are located. In addition, it is crucial to streamline processes to simplify and speed up post-investment registration procedures, such as obtaining construction permits and fire safety certificates,” Dung said.

But that is just one challenge. The pressure to compete for foreign investment in the high-tech sector is intensifying, and many countries, including the US, Europe, the Republic of Korea, Japan, Malaysia, Indonesia and Thailand, require significant investment support policies.

For example, the RoK unveiled a 26 trillion won (about US$19 billion) support initiative to boost the chip industry. Malaysia has released a New Industry Master Plan 2030 by the end of 2023, estimated to be around US$20 billion, aimed at revitalizing Malaysia’s industries, particularly in electronics, chemicals, electric vehicles, aerospace, pharmaceuticals, medical equipment and advanced materials. China has set up a US$27 billion semiconductor investment fund to boost the self-sufficiency of its semiconductor industry. The US and Europe are ready to allocate tens of billions of dollars to support investors in the semiconductor sector.

Growing pressure is forcing Vietnam to prepare human resources, infrastructure and other key elements, while implementing globally competitive investment support policies to both retain existing investors and attract more industry leaders./.