Việt Nam’s Investment Shift: Beyond The FDI Surge | Vietnam Today

Well, first of all, thank you for joining our BizLine program. Thank you. FDI into Ho Chi Minh City surged over 200% in the first quarter of 2026, which is well above the national average growth of 43%. So what structural factors explain this jump? And is this a one-off spike or the start of a more sustained trend? I think, let me give a breakdown. Probably this number comes from a comparison between Ho Chi Minh City in the first quarter of this year, which also has the merger of Binh Duong and Hung Tau. So in our view, an apple-to-apple comparison, the FDI commitment to Ho Chi Minh City in the first quarter of 2026 increased about 32% year-over-year. And this is still a positive number and quite in line with the national average. And in our view, to identify whether this is a structural improvement or whether it's a one-off stuff, like you mentioned, probably we need further monitoring. Because if we just recall the first quarter of 2025 last year, we also had the FDI commitment to Ho Chi Minh City increase over 100%. But by the end of 2025, we had the full-year growth came just about 6%. So I think the start is very positive, but we still need to monitor in the coming months. There appears to be a clear shift from labour-intensive industry into high-tech digital infrastructure and ESG-aligned projects. Which sectors are currently capturing the largest share of this new FDI? And how does this reshape the city's economic structure? The FDI outstanding in Ho Chi Minh City is comprised of four main sectors. The first is manufacturing, which accounts for about 35% of total commitment. The second is real estate sector, which accounts for about nearly 30%. The next is retail sales, which accounts for about 10%. And the fourth key sector is IT and professional services, which accounts for another 10%. So like you mentioned, yes, we do have a shift in recent years in which the traditional manufacturing and real estate has declined slightly. This is quite important because this is a higher margin FDI sector, which will bring more economic growth for Ho Chi Minh City and also for the country. So as you know, Ho Chi Minh City is one of the key metropolitan hubs in Vietnam. Of course, with such a high economic growth, the labor cost and the availability of the land bank will become more and more restrained. So it's quite natural that the city will gradually shift from the traditional heavy manufacturing and real estate into the higher service and higher margin sector, like the IT or the retail sales sector, like I mentioned. Over the past three to four years, the IT and the retail sales, professional services, FDI sector sees a commitment growth of about 14 to 15% annually. Meanwhile, the more shares in manufacturing and real estate register a very subdued annual average growth of about 2 to 3%. Now with major inflows into semiconductors, AI, data centers, and financial infrastructure, how competitive is Ho Chi Minh City in attracting these high value sectors compared to regional hubs like Singapore or Bangkok? Let me share with you a very positive development recently. So I think just last month, we have the release of the Global International Financial Center Index, in which we have Ho Chi Minh City jumped 11 spots to the 84th position. And basically, the city has already overtaken Bangkok and Jakarta in the list ranking. And in our view, such positive development has stemmed from the fact that Ho Chi Minh City has enjoyed consistent high growth in economic activity for several years, and directly benefits from the overall development story of Vietnam. And outside of that, Ho Chi Minh City also has a strategic logistic location in the region. Ho Chi Minh City also has a young, dynamic, affordable labor force, and also a very favorable and stable working environment for the expat. So these are all important factors. And in our view, Ho Chi Minh City will continue to be a rising hub in the coming time, especially with the fact that just back in February this year, Vietnam has launched the International Financial Center, officially in Ho Chi Minh City, to give the city a stronger platform for future development into a regional and international financial center. How are major infrastructure projects like the Long Thanh Airport and T-Expressway helping unlock this wave of FDI? And to what extent are these projects a magnet for new investments to Ho Chi Minh City? I think all of these projects that you have mentioned are all nationally strategic, important projects for Vietnam and also for Ho Chi Minh City. And we do agree that infrastructure is not just important for Ho Chi Minh City and FDI in Ho Chi Minh City, but also for the overall development of Vietnam in the long term. So of course, with better infrastructure, we will have a lower logistic cost, we will have a faster transit hub, and we will have better connectivity between Ho Chi Minh City and other industrial provinces. I think firstly, we should just look at what the impact that this project can bring for Ho Chi Minh City. So as you may know, the city has a very ambitious target for the rest of 2026. So for the first quarter, we already have nearly 3 billion FDI commitments, like you mentioned. So for the rest of this year, the city is targeting an additional $10 billion. If we can really realize this target, we will achieve almost two-time growth as compared to 2025. And this should be quite a major statement that Ho Chi Minh City can deliver to the investors in the region. I think I want to highlight a key FDI project in the pipeline for Ho Chi Minh City, which is the international seaport. So normally in Vietnam, we have the public sector, will be the major investor for such a big infrastructure project in Vietnam. But I think Can Tho is one of the pioneering projects that we have the participation of both the private sector domestically and also the international foreign investor. So in our view, this should be a milestone project that can set the example for more to come for FDI in Ho Chi Minh City. Now, with such strong inflow, how can the city ensure that the capital turn into real gain? In our view, Ho Chi Minh City should try to convert more commitment number into real disbursement. So one interesting data point that I want to say is that between the period of 2015 to 2024, we have the total FDI commitment to Ho Chi Minh City reached about $55 billion. However, the actual disbursement number came just $20 billion. So this implies a low conversion rate of just 37%. And in our view, the city should take time to look into that issue to identify what is the bottleneck that it needs to resolve so that we should bring up that conversion number. Because just simply increasing the conversion number is already enough to return the FDI commitment of Ho Chi Minh City to the peak of pre-COVID level. And secondly, technology transfer. So I think this is still a sticky problem that not only Ho Chi Minh City but the whole Vietnam FDI. And in our view, one potential solution is that we should try to link the FDI incentive with the level of technology transfer from foreign investors to the local business so that our local business will become stronger and stronger. Looking ahead with global uncertainties already affecting exports, how should Ho Chi Minh City adjust its FDI strategy to stay resilient while still aiming for strong high-quality growth? I think firstly, Ho Chi Minh City should look to leverage the recent status at Vietnam International Finance Center so that it can gradually transfer from the current legacy FDI model, which is still quite focused on manufacturing and real estate, into the new FDI model, which is more about service and higher margin knowledge economy. Secondly, I think Ho Chi Minh City should look not only at its own development story. Ho Chi Minh City has the resources and has the ability to draw resources to other provinces as well. Because when the International Finance Center is in the global landscape, the investors there will enjoy a lot of financial incentives, such as tax-free, such as have a sandbox for more flexible regulation. And from that, these investors can invest in other provinces in Vietnam, making more risky investments, bring more economic benefits for the whole country. And in our view, Ho Chi Minh City can try to leverage that and deliver a more inclusive development for Vietnam. So I think this year, we have a lot of good pipelines in the horizon. In addition to the international seaport projects that I mentioned, $5 billion, we also have other important FDI projects, such as the AI data center in Phu Chi province, estimated at about $2 billion. Other eco-real estate projects like the Lotte Thu Thiem or the GS Nha Be Metro City project. These are important projects that we should try to ensure they will be really translated into real disbursement. And we should have the ability that the full-year FDI coming growth for 2026 will be a high double-digit number. Okay. Well, once again, thank you so much for joining our program. Thank you.