Vietnam's growth ambitions
Barely two months into the year, Vietnam's parliament has raised the country's GDP growth target for 2025 from 6.5% to 7% to at least 8%.1 The ambitious GDP target rides on the back of an impressive influx of foreign direct investment ("FDI") into the country in January 2025. Data released by the Ministry of Planning and Investment showed more than USD 4.33 billion in foreign investment, representing an increase of 48.6% from the same period last year.2
Sectors in focus
In 2024, the processing and manufacturing industry was the leading recipient of FDI in the country and accounted for 66.9% of total investment capital.3 This trend is expected to continue into 2025 as global trade dynamics make Southeast Asia increasingly important in the supply chain as companies seek to diversify their manufacturing strategies. Continued growth in the manufacturing sector will also have knock-on effects on supporting sectors like logistics businesses.
The real estate sector in the country has also been showing signs of recovery. The industry benefits from recent regulatory updates aimed at enhancing Vietnam's attractiveness as a destination for real estate and infrastructure investment. For instance, foreign-invested enterprises now enjoy greater rights to acquire land in industrial parks, economic zones and high-tech zones and minority-owned foreign enterprises are also given the same rights as domestic companies to acquire land use rights.
Infrastructure development remains a cornerstone of Vietnam’s growth strategy. The government continues to channel significant investments into infrastructure projects, such as electricity generation and distribution, the development of highways, airports and railways to improve connectivity. The country has also set ambitious targets for expanding its renewable energy capacity, leveraging on its natural potential for wind and solar power. In a more recent development, lawmakers are laying the groundwork for development of nuclear power plants and satellite internet services in Vietnam.4
Fueling growth: Credit expansion
Amidst this landscape of opportunities, credit plays an important role in sustaining Vietnam's growth momentum. The State Bank of Vietnam has set a credit growth target of 16% for 2025.5 While the onshore loan market has benefitted from elevated USD interest rates in the past years, offshore lenders are also well-positioned to meet the burgeoning demand for credit – offshore lending may be more attractive as a financing solution as it offers greater flexibility in terms of loan purposes and repayment structures, such as bullet repayment structures not typically favoured by onshore lenders.
Capitalising on momentum
Vietnam's continued credibility as an investment destination is demonstrated by several high-profile deals in 2024. These include the joint venture between ST Telemedia Global Data Centres and VNG Corporation to develop and operate data centre projects in Ho Chi Minh City6, the acquisition by Kohlberg Kravis Roberts & Co., of a majority stake in Saigon Medical Group7 and the acquisition by SK Group of the semiconductor manufacturing company Iscvina Manufacturing Co., Ltd.8 . In a bid to improve administrative efficiency, lawmakers have also announced a reform plan that will cut up to a fifth of government bodies, addressing the frequent critique that regulatory delays impede investment activity and demonstrating the government's continued commitment to foster economic growth.9 The investment into infrastructure will improve mobility and overall production and, as a result, should encourage further FDI and create new commercial opportunities in the region.
1 The Business Times, Vietnam raises 2025 GDP growth target to at least 8%, approves policies for major projects, accessible at https://www.businesstimes.com.sg/international/asean/vietnam-raises-2025-gdp-growth-target-least-8-approves-policies-major-projects
2 Ministry of Planning and Investment of the Socialist Republic of Vietnam, FDI attraction in January, accessible at https://www.mpi.gov.vn/en/Pages/2025-2-11/FDI-attraction-in-January-gs8375.aspx
3 Ministry of Planning and Investment of the Socialist Republic of Vietnam, FDI attraction situation in Vietnam and Vietnam's overseas investment in 2024, accessible at https://www.mpi.gov.vn/en/Pages/2025-1-14/FDI-attraction-situation-in-Vietnam-and-Vietnam-s-ehsipf.aspx
4 Reuters, Vietnam to approve key infrastructure projects, revised GDP target, accessible at https://www.reuters.com/world/asia-pacific/vietnam-approve-key-infrastructure-projects-revised-gdp-target-2025-02-19/
5 The State Bank of Vietnam, Prime Minister: Banks should join hands and be united for country's common good, accessible at sbv.gov.vn/webcenter/portal/en/home/sbv/news/Latestnews/Latestnews_chitiet?leftWidth=20%25&showFooter=false&showHeader=false&dDocName=SBV624065&rightWidth=0%25¢erWidth=80%25&_afrLoop=15567230820481774
6 ST Telemedia Gloval Data Centres, ST Telemedia Global Data Centres Expands into Vietnam through a Joint Venture with VNG to Build and Operate Data Centres, accessible at https://www.sttelemediagdc.com/sg-en/newsroom/stt-gdc-expands-vietnam-through-joint-venture-vng-build-and-operate-data-centres
7 Vietnam Investment Review, KKR scoops up a majority stake in Medical Saigon Group, accessible at https://vir.com.vn/kkr-scoops-up-a-majority-stake-in-medical-saigon-group-108490.html
8 Deal Street Asia, SK Group acquires Vietnamese semiconductor firm ISCVina for $300m, accessible at https://www.dealstreetasia.com/stories/sk-group-iscvina-416771
9 Reuters, Vietnam to approve key infrastructure projects, revised GDP target, accessible at https://www.reuters.com/world/asia-pacific/vietnam-approve-key-infrastructure-projects-revised-gdp-target-2025-02-19/
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