Vietnam high tech sector appealing to FDI firms: analysts

High technology is continuing to attract foreign-invested enterprises in Vietnam this year, which in turn will give a boost to the country’s economic growth, analysts have said.

“Foreign direct investment (FDI) will continue to rise significantly in Q2/2024, with disbursement expected to rise 4% year-on-year to $5.93 billion,” wrote analysts with WiResearch under data provider WiGroup in a recent note.

Government data showed that registered FDI increased 4.5% year-on-year to $9.27 billion in the first four months of this year, while disbursed FDI reached $6.28 billion, up 7.4%.

Semiconductors have made headlines in Vietnam over the past two years, especially after U.S. President Biden’s Hanoi visit last September, opening wider doors to high-tech cooperation between the two countries.

The WiGroup analysts pointed out that real estate was a magnet for FDI between January and April, with foreign investors committing $1.73 billion in the period, up 78% year-on-year. “This indicates foreign investor confidence in the long-term outlook of Vietnam’s housing market,” they said.

The government’s Decree 10/2024/ND-CP on high-tech parks, which entered into force on March 25, 2024, offers a series of incentives to encourage more foreign investment in the high-tech sector, the analysts added.

They were also upbeat about FDI inflows, driven by the new decree and an abundant workforce, stable politics, a favorable strategic location, and a host of free trade agreements.

The analysts forecast bright prospects for Vietnam’s economy, with an anticipated growth rate of 6% year-on-year in Q2 and 6.2% for the whole-year, higher than the 5.05% posted in 2023.

Retail sales are expected to be a major driver for the local economy in Q2, they said.