FDI from the Netherlands to Vietnam: The Situation and Reality of Attraction

The cooperation relationship between Vietnam and the Netherlands has gone through many important development stages, especially in the field of Foreign Direct Investment (FDI). This article will analyze in detail the milestones of bilateral cooperation, the fields and localities that attract investment from the Netherlands, and the prospects for future development.

1. Introduction to Dutch FDI in Vietnam

Diplomatic relations between Vietnam and the Netherlands were established on April 9, 1973. Since then, the two countries have signed many important agreements to promote economic cooperation and investment. In 1994, the Bilateral Investment Promotion and Protection Agreement (BIT) was signed, providing a legal foundation for investment activities between the two countries. Subsequently, in 2010, the two parties established a Strategic Partnership on Climate Change Adaptation and Water Management, and in 2014, a Strategic Partnership on Sustainable Agriculture and Food Security was formed. By 2019, the bilateral relationship was upgraded to a Comprehensive Partnership, marking a new step in multi-sector cooperation.

As of December 2024, the Netherlands ranked first among EU countries and 11th among the countries with FDI in Vietnam, with 24 new projects and a total newly registered capital of 546.05 million USD (up 56.3% compared to the same period last year). Cumulatively, as of December 2024, the Netherlands ranked 8th among the countries with FDI in Vietnam, with a total of 456 projects and total registered capital of 14.8 billion USD. Key investment sectors include manufacturing, electricity, gas, water production and distribution, and agriculture. Notable companies such as Heineken and FrieslandCampina have been present and actively operating in Vietnam.

2. Detailed Sectors and Localities Attracting Investment from the Netherlands, Advantages and Challenges

Main Sectors of Dutch Investment

The Netherlands is currently focusing its investment on several key sectors, including manufacturing, electricity, gas, water production and distribution, and agriculture. Major Dutch companies such as FrieslandCampina and Heineken have established production facilities in Vietnam, contributing significantly to the development of these industries. Dutch companies generally emphasize improving production technology, protecting the environment, and enhancing product quality.

Regarding localities, provinces and cities such as Binh Duong, Dong Nai, and Ho Chi Minh City are attractive destinations for Dutch investors. For example, FrieslandCampina has established factories in Binh Duong and Ha Nam, contributing significantly to Vietnam’s dairy industry.

Advantages and Challenges for Dutch Investors

Advantages:

• Young and dynamic workforce: Vietnam has a young and growing population, creating favorable conditions for Dutch companies to find high-quality labor at reasonable costs, especially in industries such as processing, manufacturing, and production.
• Large and growing consumer market: Vietnam is one of the fastest-growing economies in Southeast Asia, with a population of over 98 million people and increasing consumption levels. This provides an opportunity for Dutch products and services to penetrate further into the market.
• Stable political relations and cooperation agreements: Vietnam and the Netherlands have signed many trade agreements, especially the EVFTA, which allows Dutch investors to access the Vietnamese market with tariff benefits, giving them a competitive edge for their exports.
• Support from the Vietnamese government: Vietnam is actively improving the investment environment, simplifying administrative procedures, and upgrading infrastructure, especially in large industrial zones such as Binh Duong and Dong Nai, which attract foreign investors, including from the Netherlands.
• Potential in high-tech and renewable energy sectors: Vietnam is focusing on high-tech industries and renewable energy, two areas in which Dutch companies have strengths. This opens up significant opportunities for Dutch investment projects in the future, such as building factories for electronics components and developing clean energy.

Challenges:

• Underdeveloped infrastructure: While Vietnam has made improvements in infrastructure, areas outside major cities like Hanoi and Ho Chi Minh City still lack adequate transportation, logistics, and information technology infrastructure. This could complicate the operation and expansion of large-scale production projects.
• Complicated administrative and legal procedures: Despite reforms, administrative procedures in Vietnam remain complex, causing difficulties for foreign investors, especially in procedures related to environmental permits, labor rights protection, and tax regulations.
• Intense competition from other countries: Countries in the Southeast Asia region, such as Thailand, Singapore, and Malaysia, are also strongly attracting FDI, especially in manufacturing and technology sectors. Vietnam will need to compete with these nations in attracting FDI inflows.
• Climate change and environmental issues: Although Vietnam has started focusing on renewable energy projects, the country still faces significant challenges regarding climate change, rising sea levels, and environmental issues. These could impact FDI projects related to heavy industry or real estate, especially if not managed properly.
• Shortage of skilled labor in specialized fields: While Vietnam has a young and promising workforce, training and developing human resources in high-tech fields and senior management remain insufficient. This can reduce the effectiveness of FDI projects, especially for Dutch companies that require skilled labor and advanced technology.

3. Future Development Prospects and Commitments between the Two Governments in Promoting Investment

During the visit of Dutch Prime Minister Mark Rutte to Vietnam in November 2023, the two sides discussed expanding cooperation in various fields, particularly in the semiconductor industry and high technology. Dutch companies like VDL have announced plans to build semiconductor production facilities in Vietnam, marking an important step in technological cooperation between the two countries.

The two governments also signed the Action Program of the Netherlands-Vietnam Business Platform for the Mekong Delta in August 2021, aimed at promoting bilateral trade and investment in areas such as sustainable agriculture, water management, and logistics. This is a positive signal for future cooperation projects.

In conclusion, with a solid foundation of cooperation and strong commitments from both governments, the FDI relationship between Vietnam and the Netherlands is expected to continue developing robustly, opening up many opportunities for businesses and investors from both countries in the future.

Sources: Vietnamplus, Vietnam Credit, Vietnam Briefing,…