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Supply chain shifts are a boon for hedging, foreign exchange ( FX ) and financing, and Vietnam is a prime example. With foreign direct investment ( FDI ) topping US$38 billion in 2024, companies establishing a presence have to learn to navigate the evolving regulatory and financing market landscape.
The majority of investments are denominated in US dollars or other G3 currencies due to their higher liquidity, according to Ngo Thi Hong Minh, head of markets and country treasurer at Citibank Vietnam. “For multinational companies hedging is a key focus.”
However, tools available are limited and rules relating to hedging can be complicated. “Vietnam’s regulations for FX swaps and forwards related to the Vietnamese dong allow a maximum tenor of one year,” she explains. “However, businesses typically operate within their own cycles and find that more liquid tenors are usually up to six months.”
Nonetheless, liquidity has increased significantly compared with the past, she points out. This is in part a reflection of the growing hedging and financing activity as FDI inflow accelerates on the back of the China+1 strategy, particularly in the manufacturing sector.
An increasing number of foreign investors are also demanding more sophisticated banking solutions, including liquidity management, market products and structured financing. These services are essential to ensure seamless transactions and better support for foreign investors.
While last year’s FDI represents a 3% decrease compared with the total reported in 2023, realized FDI hit a record high of over US$25.35 billion, highlighting strong investor confidence in Vietnam’s economic environment, according to the latest data from the General Statistics Office ( GSO ) of Vietnam.
“Two-thirds of the FDI is in manufacturing with the majority focused on electronics, computers and semiconductors,” Minh relates. South Korea’s Samsung Electronics, which is among the first to enter the Vietnam market, is now joined by the likes of Intel and ASE in making substantial investments.
Vietnam’s semiconductor market was valued at US$18.6 billion in 2024 and, according to TechSci Research, is projected to reach US$28.8 billion by 2030, registering robust growth with a compound annual growth rate of 7.4% during the forecast period.
The manufacturing and processing sector attracted US$13.44 billion, which accounted for 68.1% of new FDI registrations. Real estate ranked second, with US$3.72 billion ( 18.8% ), while other sectors contributed US$2.57 billion ( 13.1% ), data from the GSO shows.
The country’s magnet for FDI is on the back of lower labour costs, a young and dynamic workforce, improving infrastructure and its proximity to China. As a result, Vietnam is enjoying one the fastest GDP growth rates in the Asean region. In 2024, it posted an over 7% growth, beating government estimates.
Among the 80 countries and territories investing in Vietnam in 2024, Singapore stood out as the largest investor, with US$6.26 billion in registered capital, accounting for 31.7% of total new registrations. South Korea followed with US$2.89 billion ( 14.6% ), while China ranked third with US$2.84 billion ( 14.4% ). Hong Kong came in fourth with US$2.17 billion, representing 11.0%.
The sources and industries driving FDI in Vietnam are also diversifying. “Japan was a key investor in Vietnam a few years ago, but the sources of investment have since diversified,” Minh continues. “Over the last decade, there was an increase in South Korean investors entering the market. And, in 2024, there has also been an emergence of investment from Singapore, primarily focused on the real estate sector.”
