Vietnam’s industrial manufacturing
Industrial manufacturing in Vietnam is experiencing significant growth, driven by strategic development plans, technological advancements, and government support.
Sector development
According to a report from the Ministry of Planning and Investment, Vietnam’s Index of Industrial Production (IIP) in 2024 grew by 8.4% year-over-year, marking the highest increase since 2020. In 2025, Vietnam targets an IIP growth of 9% to 10%, building on 2024’s momentum. The sectors experiencing the most significant growth include (i) the manufacturing of rubber and plastic products, (ii) the production of furniture such as beds, cabinets, tables, and chairs, and (iii) motor vehicle manufacturing.
Several of Vietnam’s key export industries—such as textiles, footwear, and electronics—have strengthened their competitiveness and solidified their positions in the global supply chain. Meanwhile, fundamental industries like steel, chemicals, and mechanical engineering have increasingly met domestic demand for raw materials and production capacity. Additionally, supporting industries, as well as the manufacturing of components and component clusters, are becoming more localised, contributing greater value to production networks and the overall value chain.
IIP index growth/decrease rate in 2020-2024 of some key industries
%
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Mining of hard coal and lignite | 4.6 | 8.8 | 4.9 | -1.7 | -5.5 |
| Crude oil and natural gas extraction | -11.3 | -12.7 | 3.6 | -5.9 | -10.9 |
| Food processing and manufacturing | 4.5 | 2.8 | 8.8 | 5.5 | 7.4 |
| Beverage production | -5.1 | -4.0 | 25.1 | 1.0 | 1.4 |
| Weaving | -0.5 | 8.3 | 2.6 | 6.9 | 12.1 |
| Manufacture of leather and related products | -3.1 | 5.3 | 15.4 | 0.3 | 13.7 |
| Production of coke, refined petroleum products | 10.0 | 8.5 | 8.9 | 1.7 | 12.6 |
| Production of chemicals and chemical products | 6.7 | -0.5 | 2.9 | 9.0 | 11.9 |
| Manufacture of rubber and plastic products | 4.7 | 2.4 | -6.8 | 12.8 | 24.9 |
| Manufacture of other non-metallic mineral products | 1.6 | 1.8 | 6.1 | -3.7 | 0.9 |
| Manufacture of electronic products, computers and optical products | 12.0 | 9.6 | 6.7 | -0.8 | 8.3 |
| Electrical equipment manufacturing | 2.5 | -2.0 | 6.5 | 4.6 | 11.9 |
| Motor vehicle manufacturing | -6.7 | 10.1 | 6.8 | -3.0 | 21.1 |
| Production of beds, cabinets, tables and chairs | 6.0 | -0.7 | 3.1 | 7.6 | 23.8 |
| Repair, maintenance and installation of machinery and equipment | -10.6 | -10.1 | 9.8 | 4.8 | -5.1 |
Industrial infrastructure
Vietnam currently has 443 planned industrial parks, with approximately 301 already in operation, boasting an average occupancy rate of 83-92%. Key provinces and cities such as Binh Duong, Dong Nai, Bac Ninh, Hai Phong, and Long An continue to lead in attracting industrial investment. Recently, a number of major industrial park projects received investment approvals, including:
- Nghia Hung Industrial Park (149 ha) in Bac Giang province
- Song Mai – Nghia Trung Industrial Park (197 ha) in Bac Giang province
- Bac Dong Phu Industrial Park (317 ha), 2nd phase, in Binh Phuoc province
- Yen Binh 3 Industrial Park (295 ha) in Thai Nguyen province
- Hoa Dich Industrial Park (450 ha) in Ba Ria-Vung Tau province
- Nam Tan Uyen Industrial Park (345 ha), 2nd phase, in Binh Duong province
- Phuoc Binh 2 Industrial Park (287 ha) in Dong Nai province
- Binh Giang Industrial Park (245 ha) in Hai Duong province
The establishment of new and expansion of existing industrial parks/zones will significantly enhance the country’s production capacity and attract foreign investment. Along with the development of industrial hubs, efforts to enhance logistics and transportation networks help reduce operational costs and improve supply chain efficiency.
Government support
Vietnam has implemented several support policies to foster the growth of key manufacturing industries. These policies aim to enhance Vietnam’s industrial competitiveness, increase local content in manufacturing, and integrate domestic industries into global supply chains.
- Tax incentives: The government offers tax breaks, including reduced corporate income tax rates and exemptions on import duties for machinery and equipment, to encourage investment in priority sectors.
- Interest rate support loans: Many supporting industrial sectors, such as mechanical automation, rubber, plastics, pharmaceuticals, and electronics, are eligible for interest rate support loans to reduce financial burdens.
- Selective FDI policies: These policies encourage widespread investment opportunities, enabling Vietnamese enterprises to participate in higher-tech segments of the supply chain.
- Free Trade Agreements (FTAs): Vietnam’s participation in FTAs like the EU-Vietnam FTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provides preferential tariffs and access to international markets, attracting investment and promoting exports.
- Environmental Regulations: Stringent environmental protection laws ensure sustainable practices, while technology adoption programs support innovation and R&D activities within industrial sectors.
- Green Factory Initiatives: There is a push for sustainable growth through green factory initiatives, focusing on energy efficiency and emissions reductions.
Challenges of Vietnam’s industrial manufacturing
Industrial manufacturing in Vietnam faces a number of challenges as it continues to grow and evolve.
- International competition: Other countries in the region, such as China, Indonesia, Thailand, Cambodia, and India, offer a mix of low-cost labor, strategic locations, and favourable business environments that attract manufacturing investments, thus competing with Vietnam for industrial manufacturing opportunities.
- Material Sourcing and Machinery Access: Limited local availability of raw materials and advanced machinery requires reliance on imports, which can be costly and logistically complex
- Social Compliance and Quality Control: Ensuring compliance with international labor standards and maintaining consistent product quality are ongoing challenges
- Infrastructure Constraints: Inadequate transportation networks and power supply can pose logistical challenges for manufacturers.
Vietnam’s industrial manufacturing sector is set for substantial growth. To sustain its momentum, Vietnam must focus on workforce upskilling, infrastructure improvements, and policies that foster innovation and industrial upgrading.
