Vietnam Reshapes FDI Strategy, Prioritizing Technology and Innovation

Resolution No. 10-NQ/TW, issued by the Politburo in 2026 on the development of the foreign-invested sector, identifies foreign direct investment (FDI) as “an important component of the national economy” and “a key driver of economic development and international integration.” Vietnam reshapes FDI strategy with focus on technology, innovation Ho Chi Minh City targets high-quality FDI to drive green growth, sustainable development Record FDI Inflows signal strong investor confidence, but absorptive capacity remains key In line with this resolution, Vietnam is reshaping its FDI strategy, shifting its focus from quantitative expansion to qualitative improvement. The nation is prioritizing the attraction of high-tech industries, research and development (R&D), innovation, and skilled human resources. This strategic move aims to elevate Vietnam's position in global supply chains and transition to a more value-added economic structure. Major cities like Ho Chi Minh City have already set targets to attract high-quality FDI to drive green growth and sustainable development. This reflects a move beyond merely attracting manufacturing, seeking investments that contribute to reducing environmental impact and ensuring social sustainability. Record FDI inflows signal strong investor confidence in the Vietnamese economy. However, enhancing the "absorptive capacity"—the ability to effectively integrate attracted investments and translate them into domestic economic development—remains a key challenge. Facilitating technology transfer, strengthening linkages with domestic suppliers, and improving infrastructure are crucial for boosting this capacity. Under Vietnam's one-party system, such national strategies are driven by the strong leadership of the Politburo. In its relations with China, enhancing FDI quality is significant for increasing self-reliance while exploring diverse partnerships. Attracting investment with advanced technology and know-how from developed countries, including Japan, will be essential for the success of Vietnam's long-term economic development strategy.