Vietnam Emerges as Prime Investment Hub,Fueled by Tech,Green Energy,and Healthcare
HANOI,Vietnam – Vietnam is rapidly transforming into a regional innovation center,attracting significant foreign investment across several key sectors. A youthful population, a burgeoning middle class, and increasingly pro-business government policies are positioning the Southeast Asian nation as fertile ground for investors, notably in details technology (IT) and artificial intelligence (AI), renewable energy, and healthcare.
According to a survey conducted by Vietnam Report, a leading business research firm, IT, pharmaceuticals and healthcare, and electricity and energy consistently rank as the top three sectors with the highest growth potential. The survey, which polled 500 of Vietnam’s fastest-growing companies (FAST500) over three years (2022-2024), underscores the sustained confidence in these industries.
Tech and AI Ascendancy
Vietnam’s IT sector is experiencing a boom, driven by robust growth in software outsourcing and a proactive embrace of AI. The Ministry of information and Communications estimates that the sector will generate VND 4,244 trillion (approximately $165.9 billion) in revenue in 2024,a 13.2% increase from 2023. Industry giants like FPT, VNG, TMA Solutions, and MoMo are expanding their regional presence, further solidifying Vietnam’s position in the global tech landscape.The country’s workforce is also rapidly adopting AI, with numerous reports suggesting vietnamese workers are enthusiastically using the technology to enhance productivity, underscoring a readiness to adapt to global standards. According to recent data:
70% of Vietnamese workers have used AI tools in their jobs.
54% report that AI boosts productivity and idea generation.
90% express a desire to delegate as much work as possible to AI to reduce their workload.
The Ministry of Information and Communications projects that Vietnam’s ICT sector will reach $170 billion in revenue by 2025, contributing over 12% to the national GDP. The AI market alone is valued at around $547.1 million in 2023 and is expected to surge to $2.06 billion by 2032, boasting a compound annual growth rate (CAGR) of 15.8%.
“Vietnam is well-positioned to become the regional hub for AI innovation, driven by growing demand for digital services and smart technologies,” said Nguyen Thanh Hung, a technology analyst based in Hanoi.
Did you know? Despite the influx of approximately 50,000 ICT graduates annually,Vietnam’s tech industry faces a shortage of around 400,000 professionals,creating opportunities for workforce progress and education initiatives.The Vietnamese government is actively supporting this growth through a range of incentives,including tax holidays for AI startups for up to four years,matching grants for international R&D collaboration,and partnerships with the private sector to establish AI universities and tech zones,outlined in Decision No. 127/QD-TTg – The National AI Strategy (2021–2030).
Significant investments underscore the momentum in the tech sector:
Hana Micron (South Korea) plans to invest approximately $930 million by 2026 to expand chip packaging operations.
Google is considering building a large data center near ho Chi Minh City.
FPT and NVIDIA have jointly invested $200 million to establish Vietnam’s frist “AI Factory.”
Renewable Energy Gaining Momentum
Vietnam is also making strides in renewable energy and green infrastructure. Driven by rapid industrialization and urbanization, the country’s electricity demand is expected to rise by 12%-13% in 2025. As of the end of 2023, renewable energy accounted for 27% of the total installed power generation capacity, with solar and wind power projects leading the charge.
To meet the growing demand and integrate renewable energy sources effectively, the Vietnamese government is investing in the modernization and expansion of the national power grid. The country aims to achieve 30.4 GW of solar and 6 GW of offshore wind capacity by 2030.
Decree 80/2024/NĐ-CP is particularly significant, enabling Direct Power Purchase Agreements (DPPA), which support energy diversification, reduce reliance on fossil fuels, and bolster energy security. The government is also revising Feed-in-Tariff (FIT) rates to promote renewable energy sectors.
Pro tip: Investors should closely monitor the implementation of Decree 80/2024/NĐ-CP and FIT revisions, as these policies will considerably impact the financial viability and attractiveness of renewable energy projects in Vietnam.
Recent investments in this sector include:
The Adani Group (India) invested in two renewable energy projects in Vietnam, including a wind power project operated by Adani Phuoc Minh Wind Power Co., Ltd. with a capacity of 27.3 MW in Phuoc Minh commune, Thuan Nam district, Ninh thuan province; and a 50 MW solar power project also located in Ninh Thuan
Japanese Ambassador to Vietnam Ito Naoki affirmed that the Japan Bank for International Cooperation (JBIC) and Japanese enterprises will jointly invest in 14 projects in Vietnam, including wind power plants, with total capital reaching up to USD 20 billion
Healthcare Sector Poised for Growth
Vietnam’s healthcare sector presents another compelling investment chance. Total healthcare expenditure increased from $16.1 billion to $22 billion between 2017 and 2022.Healthcare expenditure as a percentage of GDP also rose from 4.52% in 2016 to approximately 6.5% in 2022.
the Ministry of Health reports that per capita healthcare spending has grown by an average of 11% annually over the past decade. The average number of hospital visits per person per year increased from 1.89 in 2010 to 2.95 in 2020, indicating considerable room for growth in healthcare services.
The medical device market is projected to reach $2.1 billion by 2026. Additionally, the ministry of Health launched 1,000 Telehealth sites connected to over 30 major hospitals in 2020, facilitating consultations and treatment of complex cases.The 2024 Law on Medical Examination and Treatment further simplifies FDI procedures, eliminating the requirement for foreign investors to partner with state hospitals, allowing 100% foreign-owned clinics and hospitals, and offering tax cuts, import duty waivers, and faster licensing timelines.
The Counterargument: Infrastructure Challenges
Despite the optimistic outlook,Vietnam faces infrastructure challenges that could hinder investment and growth. Inadequate transportation networks, power grid limitations, and bureaucratic hurdles can create obstacles for foreign investors.However, the Vietnamese government has acknowledged these challenges and is actively working to address them through infrastructure development projects, streamlined regulations, and improved governance.Conclusion
Vietnam’s strategic location,youthful population,pro-business policies,and growing middle class are positioning it as a prime investment destination in Asia. While infrastructure challenges remain, the government’s commitment to addressing these issues, coupled with the strong growth potential in IT, renewable energy, and healthcare, makes Vietnam an attractive market for foreign investors seeking enduring, high-growth opportunities.
FAQ
Q: what are the key sectors driving investment in Vietnam?
A: Information Technology (IT) and Artificial Intelligence (AI), Renewable Energy, and Healthcare are the key sectors attracting foreign investment.
Q: What government incentives are available for investors in Vietnam?
A: The Vietnamese government offers tax holidays for AI startups, matching grants for international R&D collaboration, public-private partnerships to develop AI universities and tech zones, and simplified FDI procedures in the healthcare sector.
Q: What is the expected growth rate of Vietnam’s AI market?
A: The AI market is expected to experience a compound annual growth rate (CAGR) of 15.8% from 2023 to 2032, reaching $2.06 billion.
Q: What are the main challenges for investors in Vietnam?
A: potential obstacles include inadequate transportation networks, power grid limitations, and bureaucratic hurdles.
Q: What is the Vietnamese government doing to improve the investment climate?
A: The government is actively addressing infrastructure challenges through development projects, streamlining regulations, and improving governance.
