Singapore is quickly catching up to South Korea in Vietnam's foreign direct investment (FDI) market. This year, Singapore has significantly outpaced South Korea in new investments, raising the possibility of a shift in the rankings for cumulative investments. As Vietnam shifts its focus from merely expanding production facilities to securing advanced technologies like semiconductors and artificial intelligence (AI) while nurturing local companies, experts emphasize that South Korea must enhance its technological competitiveness and local industry connections.
According to local media, including VN Express, Singapore's registered investment in Vietnam from January to September this year reached approximately $12.85 billion, making it the top investor. This amount exceeds South Korea's by more than $3.1 billion and accounts for over 25% of the total foreign registered investment in Vietnam during the same period.
Singapore's investment has surged by about 86% compared to the same period last year, an increase of roughly $6 billion. The amount registered for new projects alone surpassed $9.26 billion, representing about one-third of all new foreign project investments in Vietnam.
Investments to expand existing projects or acquire stakes in local companies have also continued. Singaporean investors registered an additional amount exceeding $2.32 billion for existing projects, while investments in equity stakes and stock purchases in Vietnamese companies surpassed $1.26 billion.
While South Korea remains the largest investor in Vietnam based on cumulative investment, Singapore's total registered investment has exceeded $101.5 billion, narrowing the gap with South Korea to about $2.7 billion. If the current trend of new investments continues, competition for cumulative investment rankings could intensify.
This investment expansion comes amid a significant increase in foreign capital flowing into Vietnam. From January to September this year, Vietnam's registered foreign investment exceeded $50 billion, marking a 76.4% increase compared to the same period last year. The actual executed investment also surpassed $21.07 billion, setting a record high.
The Vietnamese government is working to not only increase the scale of foreign investment but also improve its quality. A resolution announced by the Politburo on June 8 includes a goal of attracting $200 billion to $300 billion in registered foreign investment by 2030. It also outlines a plan to secure 75% of new registered investments from advanced economies with strong technological, capital, and management capabilities.
Particularly, the development of advanced industries such as semiconductors and AI has emerged as a key priority. Vietnam aims to attract at least three global technology companies to establish research and development (R&D) centers in the country by 2030 and to involve 10,000 Vietnamese companies in the supply chains and value chains of multinational corporations.
In the capital city of Hanoi, the science and technology sector is leading foreign investment. According to the Hanoi Department of Finance, foreign investment in the city from January to September this year reached $4.067 billion, a 5.9% increase from the same period last year. Of this, investments in professional, scientific, and technological activities accounted for approximately $2.243 billion, or 55.2% of the total.
In contrast, investments in the real estate sector totaled about $394 million, while the information and communication sector attracted $352.1 million, highlighting a significant difference from the science and technology sector.
Vietnam has also set specific goals to enhance its capabilities in the semiconductor industry. By 2030, the country aims to establish at least 100 semiconductor design companies, one small semiconductor manufacturing plant, and ten packaging and testing plants. This strategy aims to connect foreign investment with the development of a semiconductor industry ecosystem and enhance the technological capabilities of local companies.
The challenge lies in ensuring that the increase in foreign investment translates into real competitiveness for Vietnamese companies. Associate Professor Nguyen Minh Khuong from the Lee Kuan Yew School of Public Policy at the National University of Singapore noted that while Vietnam has made progress in attracting global companies and expanding exports, the linkage between foreign-invested enterprises and local companies has not yet reached its potential.
He emphasized that Vietnamese companies should not limit themselves to merely increasing the local procurement ratio of foreign-invested enterprises. Instead, collaboration with local firms should evolve into substantial partnerships that enhance the competitiveness of global companies.
This shift also has implications for South Korean companies operating in Vietnam. While South Korea still holds the top position in cumulative investment, experts argue that to maintain competitiveness, South Korean firms must evolve their investment strategies beyond merely expanding production facilities to include research and development, technology collaboration, and greater participation in local supply chains.
* This article has been translated by AI.
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