M&A cold, FDI hot as ‘eagles’ make high-tech, green investments in Vietnam: KPMG exec
Foreign investors are increasing their Vietnam investments, focused particularly in electronic components, semiconductors and green energy, but mergers and acquisitions (M&A) activities have declined sharply, says Nguyen Cong Ai, a partner with KPMG Vietnam.

Nguyen Cong Ai, a partner with KPMG Vietnam. Photo courtesy of the company.
In the first seven months of the year, newly registered FDI in Vietnam reached $10.76 billion, up 35.6% over the same period last year. As an investment consultant, what does this figure reflect, qualitatively?
I think the numbers reflect reality. Foreign investors are paying more attention to the Vietnamese market and increasing investments, focusing on areas like electronic components and semiconductors.
One of the FDI highlights in the first half of this year was the increased investment by Amkor of more than $1 billion. Amkor deciding on expansion earlier than its original 2035 plan shows its confidence in Vietnam’s market and investment environment. It also shows that factors like policies, infrastructure and human resources have been meeting requirements.
What other sectors are investors most interested in, and does their interest match the goals and priorities of the Vietnamese Government?
Real estate in general, especially industrial real estate, has been attracting strong investments. Some localities with large land funds have recently upgraded transport infrastructure and improved the readiness of their industrial parks with good service quality, creating confidence among investors in the manufacturing sector.
Furthermore, as the world’s geopolitical situation remains unstable, Asia-Pacific countries like Vietnam, Indonesia and India will have an advantage in attracting investment.
We can say that the interest shown recently by foreign investors completely fits the Vietnamese Government’s wishes. First of all, the Government wants to attract large enterprises – “FDI eagles” – into high-tech fields. And just as the Government wishes, investors have tended to pay more heed to research and development (R&D), information technology etc. to serve foreign markets. This will help train high-quality human resources for Vietnam.
“Green” energy is also receiving great attention, given Vietnam’s need for energy conversion and emission reduction. What would you say is a key development in this field of late?
There are currently two important trends in the Vietnamese economy. One is greening, the other is digitalization. Both are important for attracting FDI.
Recently, the Government issued a decree on the direct power purchase agreement (DPPA) mechanism, which is very important for attracting investment into renewable energy projects. Foreign investors are also interested in ESG (environmental, social and governance) and Vietnam is paying increasing attention to these factors.
Regarding digitalization of the economy, many foreign businesses are establishing data processing centers in Vietnam to take advantage of reasonably priced skilled labor. Industries related to AI and cloud computing are also of great interest. Vietnam may not have reached a high level, but is taking steps in the right direction, especially focusing on training human resources for this field.
Is there a real, clear shift in production of multinational companies from China to Vietnam?
Yes, It’s a reality. Apart from multinational companies, many Chinese businesses have been considering investing in Vietnam. On July 29, Ho Chi Minh City Information Technology Association organized the Itech-Expo event with the participation of over 350 businesses, of which about 200 were from China. Clearly, the interest of Chinese investors in the Vietnamese market is huge.
China is currently among the top investors in Vietnam. This is a huge opportunity for Vietnam, but Vietnam must try harder to take advantage of it.
Vietnam has signed 16 regional and bilateral free trade agreements, helping exports enjoy many tax incentives. Chinese businesses have shown increasing strengths in finance and technology. Are these major factors leading to the rapid surge in Chinese direct investment in Vietnam?
Last year, at a conference on industrial real estate, I said that in 2024, Chinese investors will have a larger role in Vietnam. That’s happened. Among the big Chinese names interested in investing in Vietnam are BYD, Weichai, China Power and many other leading enterprises.
In addition to large enterprises with leading technology, many Chinese small and medium-sized enterprises are also interested in investing in Vietnam. For such investors, state management agencies and industrial park developers need to carefully evaluate their technology as well as environmental impacts.
There were 1,795 capital contributions, share purchases and sales by foreign investors with a value of $2.72 billion in the first seven months of the year, down 3.1% and 45.2% year-on-year, respectively. What do these figures tell you about M&A activities in Vietnam this year?
The M&A market is quite “cold”. The above figures do not fully reflect the decline of M&A in Vietnam in both number of transactions and value. This is partly a consequence of the global decline in M&A, down 16% in 2023.
In 2023, Vietnam’s M&A market was not very difficult because some transactions that had been initiated a few years earlier was finalized that year. In 2024, difficulties became more prevalent, with the number of transactions decreasing slightly and the total value tumbling by about 50%. In some industries, the market is almost frozen.
We expect that the second half of 2024 will see the M&A market warm up, but overall, things will remain very difficult. The M&A market is expected to continue to accumulate “energy” this year, waiting for a boom in 2025.
What are the reasons behind this decline in M&A activities apart from global uncertainties that make investors uneasy?
The current M&A decline is mainly derived from global trends. When money is expensive and lending interest rates are high, people do not want to take that money abroad to invest. Instead, they want to bring money back. When the market is uncertain, people want to deposit money in banks, especially when interest rates in the U.S. are high, about over 5%; Australia about 8%; and the EU, 4%.
Meanwhile, there are difficulties in investing in Vietnam with the long and complicated licensing process, not to mention unclear procedures and regulations in some instances.
Among economic sectors, investment prospects in renewable energy, healthcare, and education are quite bright. But there are still difficulties, for example, the electricity price policy is unclear and borrowing capital is still difficult.
Fed chair Jerome Powell on August 23 said that “The time has come for policy to adjust”, laying the groundwork for interest rate cuts ahead. What do you think will happen to Vietnam’s FDI attraction when the Fed cuts currently high interest rates?
The Fed’s recent message is that interest rates will be reduced starting in September 2024. The Bank of England recently cut interest rates, which may prompt the Fed to follow suit. Alongside this, lower-than-expected economic growth data may also encourage the Fed to reduce interest rates faster. If the Fed reduces dollar interest rates, the M&A environment will improve, investors will invest more and invest more abroad.
That’s a global thing. For Vietnam, the most important thing now is to maintain political and economic stability. If we continue to control inflation, keep interest rates low and less volatile, and keep exchange rates increasing at a moderate level, these macroeconomic stability factors will contribute to economic growth, and foreign investors will feel secure to make capital disbursements.
Prime Minister Pham Minh Chinh and the Ministry of Industry and Trade have repeatedly assured that last summer’s electricity shortage will not be repeated. Do foreign investors feel much more secure about power supply now?
Our discussions with foreign investors show that stable electricity supply is always the number one factor when choosing an investment location. Last year, tensions regarding electricity supply caused many difficulties for businesses. This year, the situation is quite positive. The fact that Vietnam is investing in improving power transmission lines to stabilize the power grid is highly appreciated by investors.
It has been said that Vietnam’s anti-corruption campaign has businesses worried about local officials being slow to make decisions for fear of making mistakes. Is this a big problem in the eyes of foreign investors?
This is not only a concern, but a major problem in making investment decisions. Not only slow decision-making, authorities also lack consistency in interpreting laws in many localities. Investors want a stable and clear investment environment, where the rules of the game apply equally to all domestic and foreign businesses.
In Southeast Asia, Indonesia has emerged as a star in attracting FDI. How does Vietnam compare in this regard?
Indonesia has been successful recently in attracting investment from some leading American technology companies. This is not only because their investment environment is stable and attractive, but also because Indonesia’s Government and businesses have coordinated well in marketing investment opportunities to large private corporations in the U.S. and Europe.
To compete successfully, Vietnam needs to enhance infrastructure quality, professionalism of industrial parks, the quality of human resources, and above all, maintain economic and political stability.
Vietnam possesses great advantages that are highly appreciated by foreign investors, like political stability, rapid and sustainable economic growth as well as comprehensive strategic partnerships with many powerhouses.
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