Vietnam’s ambition to become Southeast Asia’s primary manufacturing hub is facing headwinds as global demand contracts, according to data released by Hanoi on March 9. Foreign direct investment pledges for January and February totaled US$3.1 billion, a 38 percent decline compared to the same period last year. While the drop is steep, analysts note it aligns with broader economic trends.
Export revenue from foreign-invested enterprises fell 5.3 percent to US$38.4 billion, reflecting reduced orders from major markets, including US technology brands. Despite this, some companies remain committed to expanding in Vietnam.
Jabil, a contract manufacturer, is doubling its factory space near Ho Chi Minh City. “Clients want resilience, not just cheap labour,” a regional supply-chain director stated at the Nikkei Asia forum on March 2. The majority of pledged capital—US$2.17 billion, or roughly 70 percent—was directed into manufacturing. This includes investments in metal products, electronics, and automotive components.
Real estate attracted just over US$390 million, while wholesale and retail received more than US$200 million. The sector distribution reflects Hanoi’s long-standing strategy to position Vietnam as a key beneficiary of the China-plus-one supply-chain shift, with factories as the primary target.
The largest single project registered during the period was a US$600 million semiconductor packaging plant in Bac Giang province, backed by Singaporean investors. This facility accounts for nearly one-fifth of all pledged capital. Singapore led the list of investing nations with close to US$1.2 billion in new commitments.
Taiwan followed with US$370 million, primarily in footwear and precision plastics, while the Netherlands contributed US$260 million, led by a dairy complex in Long An province. Smaller sums came from South Korea, Sweden, and mainland China.
However, actual capital disbursed—money put to work—slipped 4.9 percent to US$2.55 billion. The widening gap between pledges and disbursement underscores that many projects remain unbuilt. This is critical as Vietnam competes with Thailand, Indonesia, and India for factory relocations.
The 38 percent drop in pledges raises the stakes for Hanoi. Export data further highlights the challenge.
Foreign-invested firms, including those in crude oil, shipped US$38.4 billion worth of goods in the first two months, down 5.3 percent year-on-year. The factories Vietnam is banking on produce for markets that are buying less. The Jabil director’s emphasis on resilience is tied to whether Vietnam can retain existing factories while attracting new ones.
Investment distribution remains uneven. Northern provinces like Bac Giang are drawing heavy industry, while the south remains a hub for consumer electronics and components.
Hanoi is not picking winners but betting on overall manufacturing expansion. The first two months of 2023 suggest that bet is being tested.
