The Wilson Center (USA) recently published an article highlighting Vietnam’s economic potential and investment opportunities for American businesses.

In addition to analyzing the existing strengths of the economy, the article also outlines strategic industries that investors, including those from the US, should consider when investing in Vietnam.

Semiconductors

Vietnam’s semiconductor industry is poised for robust growth. By the end of 2024, the industry is expected to be worth over $6.16 billion. Currently, Vietnam’s semiconductor industry is largely limited to assembly, testing, and packaging of components, but efforts are underway to develop domestic design and manufacturing capabilities.

There are some challenges that Vietnam needs to address to fully unlock its potential. One of them is energy.

The article acknowledges that Northern Vietnam has experienced electricity pressures, and this issue is being addressed through solutions such as the operation of the 500kV line 3 Quang Trach – Pho Noi.

Another challenge is the lack of skilled labor. To meet the demand, Vietnam is investing heavily in increasing the number of university graduates specializing in semiconductors.

The government aims to train 50,000 people by 2030. Concerns about Vietnam’s labor force limitations led to a $2 million commitment from the US government during President Biden’s visit in September last year to support initiatives for developing the semiconductor workforce in Vietnam.

Pharmaceuticals

Vietnam’s pharmaceutical industry has the potential for strong growth, benefiting from a low-cost domestic labor force and favorable domestic demand driven by a rapidly growing middle class.

However, due to limited research capabilities and investment, domestic drug production is mostly focused on generic and other types of drugs. This presents an opportunity for foreign companies to collaborate with local manufacturers to produce more specialized medications, although entry barriers remain.

To address these constraints, the Ministry of Health has drafted amendments to the pharmaceutical law to propose new incentives for FDI.

This includes granting foreign companies similar rights as enjoyed by domestic companies.

As a result, foreign companies will be permitted to conduct research, import raw materials, perform clinical trials, and engage in wholesale drug sales to retailers, among other activities.

Telecommunications

Foreign investment in Vietnam’s telecommunications sector is only permitted through joint ventures, partnerships, or equity purchases.

However, foreign investors are allowed to own the entire capacity of undersea fiber-optic cable transmission and sell that capacity to licensed telecommunications service providers in Vietnam.

The Vietnamese government has recently signaled its intention to open up the telecommunications sector to foreign competition by introducing provisions in the Telecommunications Law, which came into effect on July 1, 2024.

These provisions allow foreign companies to own 100% of cloud computing services, data centers, and internet telecommunications services.

Infrastructure Projects

Vietnam’s large-scale infrastructure projects, including port infrastructure, offer numerous opportunities for foreign investors.

An example is the Cai Mep Ha Logistics Center, which is planned as part of the Cai Mep- Thi Vai port system. This logistics center will be developed by Vietnam’s Gemadept Group and SSA Marine, a Seattle-based port operator.

The Vietnamese government is positioning the Cai Mep port as a major logistics hub, as the Cai Mep- Thi Vai port system is the only port system in the country capable of receiving container ships directly to Europe and North America without transshipment through another country.

The development of adjacent free trade zones and industrial parks holds the potential for even more trade and investment opportunities.