Kenno Vietnam Pulse | November 2024

As Vietnam continues to thrive among Asia’s top destinations for foreign investment, we remain committed to keeping our global audience informed about key developments through the Kenno Vietnam Pulse series. In November 2024, Vietnam saw significant FDI inflows and plans to create thousands of jobs in the manufacturing sector. It also greenlit a new nationwide railway infrastructure project and extended favourable tax policies to stimulate domestic consumption. Additionally, and most recently, the country set new economic goals and proposed a major government overhaul.

Macroeconomic Highlights

On December 1st, Vietnam's Prime Minister declared the target of 8% GDP growth in 2025, surpassing the rate of 6.5%-7.0% approved by the parliament in November 2024. The government sees 2025 as "the year of acceleration," prioritizing economic growth while controlling inflation and ensuring that the budget deficit and public debt remain within reasonable limits. The Prime Minister also announced several other socio-economic goals for the next year, including the construction of at least 3,000 km of expressways across the country, and the completion of certain components at Long Thanh Airport in southern Dong Nai Province – a national infrastructure priority.

On the same day, the Politburo requested an overhaul of several ministries and government bodies. This is an unprecedented change in the Vietnamese government, aiming to streamline the organizational structure of the country’s political system and demonstrating the pro-business stance of its new leadership. The most notable proposed changes include:

• Merging the Ministry of Planning and Investment with the Ministry of Finance
• Merging the Ministry of Transport with the Ministry of Construction
• Merging the Ministry of Information and Communications with the Ministry of Science and Technology
• Merging the Ministry of Natural Resources and Environment with the Ministry of Agriculture and Rural Development
• Dismantling the Ministry of Labor, Invalids, and Social Affairs

LG Display to Invest Additional $1 Billion in Vietnam

In November, South Korea's LG Display finalized paperwork to raise an additional USD 1 billion to expand operations in Hai Phong Province, bringing its total investment in Vietnam to over USD 5.6 billion. This marks another significant FDI boost following Hyosung Corporation's recent investment, reflecting the growing appeal of Vietnam’s manufacturing market to South Korea and other global investors.

LG Display’s factory in Hai Phong, one of LG's largest projects in Vietnam.
Photo: LG Display Vietnam Hai Phong

LG Display's factory, located in the Trang Due Industrial Zone in Hai Phong, is one of the company's largest investments in Vietnam. The latest capital increase aims to boost OLED display production, currently at 14 million units per month. Since its establishment in 2016, the project has created over 22,000 jobs.

Kenno maintains a positive outlook on Vietnam's production and export landscape, driven by continuous expansions from global manufacturers such as LG, Samsung, Amkor, LEGO, and Foxconn. Manufacturing FDI is a key driver of Vietnam's economy, contributing to better employment, higher wages, and increased domestic consumption.

Pegatron Vietnam Plans to Increase Staff Size by 400%

Taiwanese electronics manufacturer Pegatron recently revealed a plan to quadruple the workforce of its Vietnam subsidiary, from 3,000 current employees to potentially 12,000. This growth is intended to support its existing USD 800 million project in Hai Phong.

Pegatron’s factory in Dinh Vu – Cat Hai Economic Zone, Hai Phong, Vietnam.
Photo: Pegatron Vietnam

Pegatron Corporation, known for supplying tech giants like Apple, Microsoft, Sony, and Tesla, focuses its manufacturing project in Vietnam on computers and accessories, electronic goods, telecommunications products, health tracking devices, and plastic components. From an output of 12.3 million items (8,767 tons) in 2023, the 4x staff expansion aims to achieve a target annual production of 104.9 million items (36,869 tons).

Hai Phong Province, one of Vietnam's industrial powerhouses, is home to some of its biggest FDI magnets. Considering Pegatron Vietnam's goal to reach a maximum capacity of 202 million items (97,837 tons) by Q1 2026, we anticipate further job creation from this project in the future, contributing to regional growth and the broader economy of Vietnam.

Vietnam Approves $67 billion High-Speed Railway

On November 30th, the National Assembly of Vietnam approved an investment plan of USD 67 billion for its North-South express railway system. This project aims to connect economic hubs, streamline supply chains, and support domestic travel.

Overview of Vietnam’s North-South High-Speed Railway.
Photo: VnExpress

The 1,541-km high-speed rail, passing through over 20 provincial stations, is set to provide a quick, direct, and affordable transport method between Hanoi and Ho Chi Minh City. The development timeline includes two main phases: USD 33 billion during 2026-2030 and USD 34 billion during 2031-2035, with construction scheduled to start in 2027.

Analysts at Kenno see substantial opportunities for FDI inflows thanks to this upgrade to national transportation infrastructure, with significant logistics obstacles being removed. Domestic trade, tourism, and consumer spending are also expected to benefit significantly from this project in the medium to long term.

Vietnam Maintains 8% VAT Policy for H1 2025

The Vietnamese government has extended the 2% value-added tax (VAT) cut until the end of June 2025 to support businesses and consumers amid global economic challenges. The reduction from the usual 10% to 8% applies across a wide range of goods and services.

VAT cut policy facilitates Vietnam’s domestic consumption.
Photo: Vietnam Government Portal

Drawing approximately USD 1 billion from the state budget in the first six months of 2025, this policy is expected to further stimulate consumer spending and reduce production costs for businesses. Since its introduction in 2022 as a post-pandemic recovery program, Vietnam has recorded continuous annual growth in retail sales.

This is a positive move for Vietnam's retail market and demonstrates the government's commitment to supporting domestic consumption growth. It also aligns with Kenno's investments in various consumer companies, which can continue to benefit from lower costs of goods and services, as well as higher demand.

Stay in the know!

And that’s a wrap for this month’s edition of Kenno Vietnam Pulse. We hope you enjoyed reading and found valuable insights into Vietnam’s market landscape. Feel free to subscribe to our monthly newsletter more timely, factual, and actionable updates. If you would like closer look at investment opportunities in Vietnam, we invite you connect with us for more information and tailored advice.

Laura Ranin

Disclaimer:

This document is prepared by Kenno Asset Management Pte. Ltd. ("Kenno"), the investment advisor for the Asia Top Picks Fund which is open only to professional investors. This marketing communication does not constitute investment advice. Please refer to Kenno’s official fund documents before making any final investment decision. The information provided in this document is accurate as of the time of writing. Kenno does not guarantee the ongoing accuracy or completeness of this information and is not responsible for updates or changes after publication.