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Asia infrastructure spend is Vietnam’s race to attract manufacturers

By VentureOutsource.com Staff

Vietnam has a growing infrastructure spend compared with its regional neighbors. According to Asian Development Bank (ADB), this is one of the key reasons many companies are attracted to Vietnam.

In addition to Vietnam manufacturing wages, which can be 1/3 of wages in China, as a percentage of GDP, Vietnam’s infrastructure spending in 2017 was 5.8% for the nation. This is more than twice the amount of spend for its major ASEAN peers like Indonesia, Myanmar, Singapore, Philippines, Malaysia, and Thailand.

Vietnam’s infrastructure spending as % of GDP is highest in ASEAN


Vietnam government also has an aggressive plan for future infrastructure development.

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In fact, last year Vietnam Prime Minister Nguyen Xuan Phuc gave approval for US$921 million investment for the development of economic zones over the next two to three years.

According to ADB the funds will focus on five broad areas:

  • coastal economic zones
  • border gate economic zones
  • industrial parks and industrial clusters
  • hi-tech parks
  • hi-tech agriculture zones

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Additionally, plans are materializing for Vietnam government to develop the North-South expressway network with US$5 billion (long-term) targeted for 659 km of expressways in Central Vietnam between 2021 and 2025. This, in addition to another US$3 billion spend for improvements in a phase 2 after 2025.

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Vietnam Ministry of Planning and Investment has also been working with foreign direct investment to help bolster Vietnam’s manufacturing capabilities and infrastructure, with Japan and Korea being the largest contributors, below.

Registered foreign direct investment (FDI) in Vietnam by country (US$B)

Vietnam foreign direct investment (FDI) capital flows led by manufacturing

Below displays manufacturing attracting the majority of FDI among capital flows coming from foreign investment into various Vietnam industries.

Vietnam capital raising activities 2005-2018

There are 63 administrative units including five municipalities and 58 provinces in Vietnam, which individually have a high degree of fiscal decentralization. (View Vietnam political system structure here)

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