Why FDI Waves Reversed, Costing Northern Vietnam’s Largest Industrial Hub Its Crown

After four months of provincial mergers, Vietnam's economic landscape is beginning to reveal a fresh palette of opportunities. The consolidation and expansion of development spaces have not only facilitated infrastructure connectivity and resource sharing among localities but have also rapidly amplified the ripple effect in attracting foreign direct investment (FDI).

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The FDI Race: Southern and Northern Hubs Compete for Foreign Investment

Ho Chi Minh City (HCMC) in the South and Bac Ninh in the North are intensifying their competition to attract foreign direct investment (FDI). The nine-month FDI results highlight Vietnam’s continued appeal as a global investment destination. According to the Ministry of Finance, total registered FDI in Vietnam as of September 30 reached USD 28.54 billion, a 15.2% increase compared to the same period last year.

Actual FDI disbursement for the nine months hit a five-year high, totaling USD 18.80 billion, an 8.5% rise year-on-year. HCMC led the nation with USD 4.8 billion in registered investment, accounting for 16.8% of the national total, despite an 8.9% decline compared to the previous year. Bac Ninh closely followed with over USD 4.7 billion, also representing 16.8%. Hanoi ranked third with more than USD 3.8 billion, or 13.6%, followed by Dong Nai, Hai Phong, and Hung Yen.

HCMC aims to attract USD 11.5 billion in FDI by 2026.

In terms of project volume, HCMC dominated with 49.3% of new projects, 29.3% of capital adjustment projects, and 71.2% of equity contributions. Notably, in the first eight months, Bac Ninh unexpectedly took the lead with USD 4.7 billion in registered capital, equivalent to 17.9% of the total investment. However, by September, HCMC reclaimed the top spot with USD 4.8 billion, narrowly surpassing Bac Ninh’s USD 4.799 billion.

Following its merger with Bac Giang, Bac Ninh has solidified its position as the Northern FDI magnet. Already an industrial powerhouse with billion-dollar projects from Samsung, Canon, and Goertek, Bac Ninh gains further strength by joining forces with Bac Giang—an emerging global investment hub featuring major players like Foxconn, Hana Micron, and Luxshare. This alliance not only expands production capacity but also establishes a high-tech industrial cluster with significant regional influence.

Yen Phong Industrial Park, Bac Ninh.

In August, Bac Ninh hosted an investment promotion conference, awarding dozens of new investment decisions, underscoring the merged province’s attractiveness. Mr. Chau Nghia Van, Head of Foxconn Vietnam, revealed that the company has invested nearly USD 3.5 billion in Vietnam, with facilities in Bac Ninh, Bac Giang, and Quang Ninh, employing over 100,000 workers. This year, Foxconn will expand two projects in Quang Chau Industrial Park, adding USD 320 million to meet global production demands.

In the South, FDI is flowing strongly into HCMC following its merger with Binh Duong and Ba Ria-Vung Tau. While HCMC is recognized as a financial, service, and innovation hub, Binh Duong serves as the region’s industrial engine, and Ba Ria-Vung Tau acts as an international logistics gateway with deep-sea ports and tourism potential. This convergence creates a comprehensive growth pole, enhancing HCMC’s appeal as a “super metropolitan region.”

The city is finalizing a list of key projects to attract new investment, focusing on strategic sectors such as international transshipment ports, innovation centers, R&D, advanced materials, clean energy, semiconductors, microchip design and manufacturing, flexible electronics, and high-tech batteries. The Can Gio International Transshipment Port project stands as a new infrastructure symbol for the Southern key economic region.

Among recent FDI projects in HCMC, notable high-tech investments include BE Semiconductor Industries N.V.’s USD 42 million semiconductor manufacturing plant, Amazon Data Services Vietnam’s USD 48 million capital increase, and GSK Vietnam’s USD 133 million expansion in pharmaceutical production and research.

Strengthening Long-Term Investment Position

The latest survey by the European Chamber of Commerce in Vietnam (EuroCham) reveals that 76% of member companies are willing to recommend Vietnam as an investment destination, a 4% increase from the previous quarter. The Business Climate Index (BCI) also rose to 66.5 points, the highest in three years.

EuroCham’s Q3 BCI reached 66.5 points, the highest in three years, reflecting European businesses’ optimism in Vietnam.

Mr. Bruno Jaspaert, EuroCham Chairman, highlighted the survey’s most notable aspect: a significant improvement in business sentiment. Eighty percent of investors expressed optimism about Vietnam’s prospects over the next five years, while 76% confirmed they would recommend Vietnam to partners as a potential investment destination. “This demonstrates Vietnam’s enduring appeal, despite external fluctuations,” Mr. Bruno emphasized.

Additionally, FTSE Russell’s upgrade of Vietnam’s stock market from frontier to secondary emerging status has bolstered international investor confidence. According to Mr. Bruno, this upgrade not only reflects Vietnam’s rising global investment profile but also contributes to the optimistic sentiment evident in this quarter’s BCI results.

The BCI aligns with Vietnam’s growth ambitions, as 42% of surveyed businesses believe Vietnam will achieve its 8.3-8.5% GDP growth target this year.

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