Manufacturing has been a key driver of the export-oriented economy of Vietnam since the initiation of the Doi Moi economic reforms in 1986. Today, the country is considered an emerging manufacturing hub, thanks to various factors such as its strategic location in the middle of the Southeast Asia region, its stable political system, and the availability and affordability of its labor force. In 2022, the sector employed the second-largest number of people only after the agriculture sector, and remained the leading contributor to Vietnam’s gross domestic product.
In 2023, despite the high inflation rate affecting the global economy post-COVID-19 pandemic, Vietnam still attracted over 23.5 billion U.S. dollars of FDI to its manufacturing sector, equaling approximately 64 percent of the total investment of this kind. FDI firms contributed significantly to the total exports from Vietnam, especially regarding high-tech products such as smartphones, computers, and machinery. Local producers, on the other hand, were more active in producing agriculture and fishery or textile products.
Vietnam’s emergence as a new manufacturing hub
For many companies, solely relying on China for production outsourcing was no longer the best option due to several reasons. This included the U.S.-China trade war, the COVID-19 pandemic, and the increasing manufacturing costs in the East Asian nation. As a result, Vietnam emerged as a new candidate for manufacturing, thanks to its low labor and overhead costs, as well as its policies for attracting foreign direct investment (FDI). Additionally, the country boasts access to important trade routes via its transportation network, especially maritime transport. To further support the manufacturing sector, the Vietnamese government has been supporting the establishment of over 400 industrial parks and so-called economic zones with favorable conditions for investments in designated provinces across the country.In 2023, despite the high inflation rate affecting the global economy post-COVID-19 pandemic, Vietnam still attracted over 23.5 billion U.S. dollars of FDI to its manufacturing sector, equaling approximately 64 percent of the total investment of this kind. FDI firms contributed significantly to the total exports from Vietnam, especially regarding high-tech products such as smartphones, computers, and machinery. Local producers, on the other hand, were more active in producing agriculture and fishery or textile products.
