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Navigating Vietnam’s 2024 Investment Boom and Green Transition

General Report May 20, 2025
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TABLE OF CONTENTS

  1. Summary
  2. Surge in Foreign Direct Investment in Early to Mid-2024
  3. Vietnam’s Vision for a Green Economy
  4. Challenges Facing Renewable Energy Investors
  5. Conclusion

1. Summary

  • Between mid-2024 and late 2024, Vietnam witnessed unprecedented growth in Foreign Direct Investment (FDI), which was largely fueled by substantial infrastructure projects, dynamic bilateral partnerships, and a growing emphasis on sustainable investments. In the first quarter of 2024, FDI inflows rose to $6.17 billion, marking a 13.4% year-on-year increase. This uptick spurred a remarkable 58% rise in newly registered capital, reaching $4.77 billion and signaling a robust and sustained foreign investor appetite within the nation. As reported by July 2024, total FDI commitments exceeded $18 billion, largely driven by significant disbursements across sectors such as processing and manufacturing, which accounted for over 70% of the registered capital. Vietnam's strategic initiatives, aimed at improving the regulatory landscape and the overall business environment, played a pivotal role in attracting these investments, particularly from countries such as Singapore and Hong Kong, whose investments surpassed $2.55 billion and $1.05 billion, respectively.

  • Furthermore, the collaborative signing of a memorandum of understanding (MoU) between Vietnam Airlines and India's Innovation India in late July 2024 aimed to enhance economic, investment, and cultural ties through various initiatives including the NAMASTE Vietnam Festival. This partnership reflects Vietnam's broader aspirations to position itself as a leading travel and tourism destination in Asia, further contributing to FDI inflows. Concurrently, Vietnam's commitment to achieving net-zero carbon emissions by 2050 emerged as a cornerstone for its development strategy. This pledge resonates with international sustainability efforts and aims to attract investments in green technologies and sustainable practices. The discussions among thought leaders about harnessing Vietnam's potential as a center for environmental technology highlight the nation's investment in clean technologies, further aligning with its sustainability goals. However, despite these significant strides, challenges remain within the renewable energy sector. By September 2024, prominent investor Enel indicated plans to withdraw from the Vietnamese market, alongside similar actions from other key players, underlining barriers associated with regulatory frameworks and market conditions. This juxtaposition of rapid FDI growth against the backdrop of investor withdrawals paints a complex picture of Vietnam's investment landscape.

  • As such, understanding the interplay between these developments is critical for various stakeholders aiming to navigate the challenges and opportunities within Vietnam's burgeoning economic environment. The momentum gained in the FDI sector, coupled with Vietnam's commitment to a green economy, holds tremendous promise, yet it is imperative to address existing hurdles to ensure sustainable investment trajectories in the years to come.

2. Surge in Foreign Direct Investment in Early to Mid-2024

  • 2-1. Q1 2024 FDI performance

  • In the first quarter of 2024, Vietnam's foreign direct investment (FDI) demonstrated significant growth, achieving a total inflow of $6.17 billion—an increase of 13.4% year-on-year. This uptick in FDI was driven by a notable 58% rise in newly registered capital, which reached $4.77 billion. Furthermore, the country witnessed over 644 new project registrations, showcasing a robust investment sentiment among foreign stakeholders. Although the adjusted registered capital saw a decline of 22.6% to $934.6 million, the overall FDI picture for Q1 was amplified by successful projects, especially in processing and manufacturing, which accounted for 63.6% of the total registered capital.

  • Prominent contributors included Singapore, leading with investments exceeding $2.55 billion, followed closely by Hong Kong at around $1.05 billion. This surge can be partially attributed to the strong recovery of Vietnam's macroeconomic environment post-COVID-19, elevating the country's status as an attractive hub for foreign investors in various industries, including technology, renewable energy, and semiconductor production. The government’s initiatives to streamline investment procedures and improve the overall business climate also played a crucial role in bolstering foreign investor confidence.

  • 2-2. July 2024 FDI totals and forecasts

  • By July 2024, Vietnam's FDI commitments soared to exceed $18 billion, marking a 10.9% rise compared to the same period the previous year. This growth was underpinned by substantial disbursements, with over $12.55 billion actually utilized, indicating an 8.4% increase. The processing and manufacturing sector remained the focal point of this investment flow, accounting for more than 70% of total registered FDI. The predicted annual FDI for 2024 was set at around $39 to $40 billion, reflecting the sustained enthusiasm among foreign investors about Vietnam's long-term economic trajectory amidst global uncertainties.

  • The Ministry of Planning and Investment highlighted that the quality of incoming projects had improved, particularly in high-value sectors such as renewable energy, electronics, and AI. Furthermore, it was anticipated that Vietnam's continuing role in global supply chain diversification strategies would cement its position as a leading FDI destination. As companies seek stable bases to operate amid geopolitical tensions, Vietnam's favorable investment climate made it an increasingly sought-after locale.

  • 2-3. Strategic MoU in aviation and tourism

  • In late July 2024, a significant memorandum of understanding (MoU) was signed between Vietnam Airlines and India's Innovation India, aimed at enhancing economic, investment, and cultural ties between the two nations. The initiative included the co-hosting of the NAMASTE Vietnam Festival, scheduled for late August 2024 in Ho Chi Minh City, which would feature cultural exchanges, trade workshops, and community engagement activities. This partnership is expected to deepen bilateral relations and promote tourism between Vietnam and India, contributing to a rise in FDI in the tourism sector.

  • As part of the broader strategy to elevate its tourism profile, Vietnam Airlines also announced plans to launch new direct flight routes between key cities in Vietnam and India, thereby facilitating greater connectivity and travel between the two countries. The burgeoning relationship and collaborative efforts between Vietnamese and Indian businesses signify a proactive step toward bolstering investment opportunities, creating a win-win situation for both economies.

3. Vietnam’s Vision for a Green Economy

  • 3-1. Net-zero by 2050 commitment

  • Vietnam has committed to achieving net-zero carbon emissions by 2050, a significant pledge made by Prime Minister Pham Minh Chinh during the COP28 summit. This long-term target aligns with global sustainability efforts and sets a framework for national action plans aimed at reducing carbon emissions across various sectors. The commitment is essential not only for environmental protection but also for attracting foreign investments in green technologies and sustainable practices, positioning Vietnam as a potential leader in the transition to a low-carbon economy.

  • 3-2. Op-Ed proposals for environmental technology

  • Recent op-ed discussions highlight Vietnam's potential as a hub for environmental technology innovation. The country is well-equipped to leverage its strategic location, natural resources, and government support to become a leader in sustainable practices. The op-ed emphasizes the importance of fostering collaboration between domestic and international entities to develop clean technologies in sectors such as energy, transportation, and agriculture. By implementing supportive policies and offering incentives for sustainable investment, Vietnam aims to attract over $10 billion annually for clean energy and sustainable infrastructure projects.

  • 3-3. Three strategies for sustainable growth

  • To facilitate the transition to a green economy, experts propose three core strategies: First, simplifying regulatory frameworks will encourage investments in renewable energy and environmentally friendly technologies. Second, there is a critical need to upskill the workforce for new job opportunities that arise in green industries. This involves integrating sustainability into educational programs and vocational training. Lastly, fostering international cooperation can enhance Vietnam's access to funding, advanced technologies, and best practices for environmental projects, ensuring a comprehensive approach to sustainable economic growth. These strategies are designed to cultivate an investment-friendly environment while simultaneously addressing environmental issues and supporting local communities.

4. Challenges Facing Renewable Energy Investors

  • 4-1. Enel’s planned withdrawal

  • Enel, one of the largest investors in renewable energy globally, signaled a significant shift in its strategy regarding investments in Vietnam. Reports from September 2024 indicated that Enel was planning to exit the Vietnamese market, following similar moves by other European giants like Norway's Equinor and Denmark's Orsted. This exit can be attributed to growing concerns surrounding the regulatory framework and market conditions impacting the renewable energy sector in Vietnam. Enel had set ambitious plans to develop up to 6 gigawatts of renewable energy but chose to retreat as these plans faced operational uncertainties and the possibility of insufficient support for wind energy projects, which was considered central to its strategy.

  • 4-2. Implications for Vietnam’s energy strategy

  • The withdrawal of leading companies like Enel poses critical challenges to Vietnam's broader energy strategy, which is aimed at achieving net-zero carbon emissions by 2050. The increasing trend of foreign investors exiting the Vietnamese renewable energy sector highlights deeper issues, particularly in regulatory and infrastructural domains. The completion of Vietnam's power development plan (PDP8), which intends to expand energy generation capacity significantly, is now at risk. As highlighted in reports prior to Enel's withdrawal, effective offshore wind development is stymied by regulatory uncertainties; industry experts warned that delays and lack of clarity in project approvals have deterred many potential investments. The government's ambitious plans, including transitioning from coal dependency to a renewable-heavy energy mix, could be severely undermined without robust foreign investment.

  • 4-3. Investor confidence and policy barriers

  • Renewable energy investors in Vietnam are increasingly expressing concerns over the local investment climate. Key issues relate to the lack of a transparent policy framework, which has led to hesitance in launching new projects. For instance, major investments are currently hindered by inadequate guidelines for project approvals, pricing mechanisms, and proper allocations of maritime areas for offshore wind. The enduring unpredictability surrounding these regulatory frameworks was echoed by investment professionals, who noted that without guarantees of profitability and operational clarity, many companies have opted to withdraw or reconsider their involvement in the Vietnamese market. Understanding these dynamics is vital, as investor confidence is imperative for Vietnam to attract necessary capital to realize its green energy ambitions, especially in light of substantial funding gaps identified in projects requiring roughly $134 billion for execution by 2030.

Conclusion

  • As of May 20, 2025, Vietnam's investment landscape through 2024 reveals a narrative of both formidable strengths and emerging vulnerabilities. The incremental rise in FDI inflows and heightened international partnerships underscored a prevailing global confidence in Vietnam's economic viability and growth prospects. Concurrently, Vietnam's vision of a green economy, reinforced by its commitment to achieving net-zero emissions by 2050, underlines its ambition to lead in environmental stewardship and green technology innovation. This juxtaposition of optimism against the backdrop of investor exodus highlights the critical dimensions that Vietnam must navigate moving forward. The retreat of significant renewable energy investors, notably Enel, signals an urgent need for the Vietnamese government to cultivate clearer regulatory frameworks that are conducive to sustaining long-term foreign investment commitments. The ongoing regulatory uncertainties paired with an inadequate support structure for renewable initiatives threaten the realization of Vietnam's ambitious energy transition goals.

  • To address these multifaceted challenges, Vietnam must realign its investment strategies, focusing on creating a more transparent, efficient, and investor-friendly landscape. This entails refining existing policies to nurture startups within the environmental technology sector, enhancing infrastructure capabilities, and implementing tangible incentives to attract and retain foreign investors keen on supporting a sustainable future. Such actionable steps are essential not only for maintaining the FDI momentum experienced in prior years but also for positioning Vietnam as a leading player in the global green economy. Looking ahead, the ability to effectively balance ambitious sustainability measures with pragmatic regulatory reforms will be pivotal in determining Vietnam's success in achieving its green transition agenda and fostering a resilient and diversified economic landscape.

Glossary

  • Foreign Direct Investment (FDI): Foreign Direct Investment (FDI) refers to investments made by individuals or entities from one country into businesses or assets in another country. It typically involves acquiring a significant degree of control over the foreign business. As of May 20, 2025, Vietnam's FDI grew substantially in 2024, fueled by major infrastructure projects and a favorable investment climate.
  • Net-zero Emissions: Net-zero emissions signify a balance between the amount of greenhouse gases produced and the amount removed from the atmosphere. Vietnam has committed to achieving net-zero emissions by 2050, as highlighted in its sustainability strategy, which aims to attract investments in green technologies.
  • Renewable Energy: Renewable energy encompasses energy derived from natural processes that are replenished at a faster rate than they are consumed, such as solar, wind, and hydro. This sector has seen significant investment activity in Vietnam, albeit faced challenges related to regulatory frameworks as of late 2024.
  • Environmental Technology: Environmental technology refers to the use of science and engineering techniques to improve the natural environment and provide renewable energy, reduce waste, and create sustainable practices. Vietnam has been identified as a potential hub for innovation in this field as of 2025.
  • Memorandum of Understanding (MoU): A Memorandum of Understanding (MoU) is a formal agreement between two or more parties indicating an intention to work together towards a shared goal. In July 2024, Vietnam Airlines signed an MoU with Innovation India to enhance bilateral ties, indicating a strengthened focus on tourism and economic collaboration.
  • Sustainable Development: Sustainable development combines economic growth with environmental stewardship and social inclusion to ensure that resources are used in a way that meets present needs without compromising future generations. Vietnam's vision includes strategies that promote sustainable practices as part of its development goals.
  • Climate Change: Climate change refers to long-term alterations in temperature and typical weather patterns in a place. Vietnam's efforts to achieve net-zero emissions by 2050 are part of its response to the pressing global challenge of climate change, aiming to reduce its carbon footprint.
  • Vietnam Airlines: Vietnam Airlines is the national flag carrier of Vietnam, providing domestic and international air transportation services. The carrier has been active in forming strategic partnerships, such as the MoU with India's Innovation India, to enhance its operations and cultural connections as of July 2024.
  • Enel: Enel is a multinational energy company and one of the largest investors in renewable energy globally. By September 2024, Enel announced plans to withdraw from the Vietnamese market due to challenges related to regulatory frameworks affecting renewable energy projects.
  • FDI Growth: FDI growth refers to the increase in foreign direct investment inflows over a specified period. In 2024, Vietnam experienced a notable FDI growth rate of 13.4% in the first quarter, attributed to a revived business climate post-COVID-19.

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