Green FDI attraction: Vietnam needs strategic solutions over incentives at all costs

While the country consistently registers high volumes of inbound investment, the actual proportion of green capital remains modest. In 2025, total registered foreign direct investment reached US$38.42 billion, with realized capital hitting a five-year high of US$27.62 billion.

This growth momentum carried into the first half of 2026 as total registered capital climbed to US$34.65 billion, marking a 61 percent year-on-year increase, led by US$10.76 billion in newly registered manufacturing and processing capital. Yet behind these multi-billion-dollar figures, eco-friendly, clean technology, and renewable energy ventures have not yet commanded a large share.

Cumulative data from 1988 to 2024 reveals that Vietnam approved just 5,079 green investments totaling nearly US$51 billion, heavily concentrated in utility distribution, specialized scientific activities, and waste management. The bulk of inbound capital remains focused on traditional, labor-intensive sectors like textiles, footwear, and electronics assembly.

Experts identify three core bottlenecks stifling the arrival of high-quality, sustainable capital, chief among which is an unsynchronized technical infrastructure. Existing eco-industrial parks lack the scale to create a meaningful impact, while delays in upgrading renewable energy infrastructure directly hinder green projects by complicating corporate clean-energy self-sufficiency targets.

Furthermore, high logistics costs driven by fragmented transport networks, disconnected warehousing, and slow digital adoption create substantial operational friction. Compounding these physical infrastructure gaps is a qualitative and quantitative shortage in the workforce required to operate modern technologies and manage green supply chains. On the regulatory front, complex administrative procedures, protracted project approval timelines, a lack of inter-agency coordination, and the absence of a national investment database prevent efficient project screening and appraisal.

To preserve its competitiveness as global green supply chains relocate, Vietnam must move from an incentive-driven approach to building a sustainable investment environment. Strategically, this requires upgrading and linking transport networks to optimize logistics, alongside the urgent development of international-standard eco-industrial zones.

Simultaneously, the country must accelerate the commercialization and grid integration of wind and solar power under Power Development Plan VIII to meet the stringent clean energy mandates of multinational corporations.

Institutional breakthroughs are equally critical, starting with a clear-cut set of national criteria to filter incoming projects from the outset, reinforcing the stance against trading environmental health for baseline economic growth.

Finally, replacing corporate income tax exemptions and low labor costs with targeted tax incentives for research and development and innovation is essential to capturing high-value-added projects and core global technologies.

Vietnam reshapes FDI strategy with focus on technology, innovation

Vietnam is entering a new phase in attracting foreign direct investment (FDI), with the emphasis shifting from the volume of capital inflows to technology, innovation and added value creation, following the issuance of Politburo Resolution No. 10-NQ/TW on developing the foreign-invested sector.

Vietnam shifts from attracting FDI to selecting high-quality investment

VOV.VN - Vietnam is reshaping its foreign investment strategy under the Politburo’s Resolution 10, shifting from attracting as much foreign direct investment (FDI) as possible to selectively targeting high-quality projects that can drive technology transfer, innovation and long-term economic competitiveness.