Vietnam's next cycle: capital shifts from low-cost manufacturing to higher-value investment and M&A

VIETNAM, [25 August 2026] - For two decades, international investors asked one question about Vietnam: where to put the factory. At the Singapore edition of Vietnam's Next Cycle, KPMG's regional briefing series, the question had visibly changed - to where to place technology, R&D, regional functions and capital. That shift, more than any single headline number, defines Vietnam's next investment cycle.

The briefing brought together investors, business leaders and senior advisers from across Southeast Asia. Singapore was chosen as the first stop for a simple reason: it is already one of Vietnam's largest investment partners. It is also a key regional centre for capital, business headquarters and cross-border deal activity.

Singapore is Vietnam's second-largest foreign investor, with cumulative registered investment capital of nearly US$97 billion across more than 4,500 projects. In the first seven months of 2026, it was the largest source of newly registered FDI, committing approximately US$7.5 billion, representing 35.6% of total newly registered capital in Vietnam during the period.

The relationship is also deepening structurally. In March 2025 the two countries elevated ties to a Comprehensive Strategic Partnership - Singapore's first with an ASEAN member state - building on the Strategic Partnership of 2013 and the Green-Digital Economic Partnership of 2023. The partnership broadens cooperation into areas such as energy connectivity, the digital economy, innovation and capital markets, including initiatives to enhance stock market connectivity and depository receipt arrangements.

Vietnam's economy reached approximately US$514 billion in 2025 on GDP growth of 8.02% - its second-strongest year since 2011 and among the strongest performances in Asia. Momentum has carried into 2026: registered FDI reached US$34.65 billion in the first half, up 61% year-on-year, while disbursed FDI rose 11.2% to US$13.03 billion, the highest first-half implementation in five years.

The gap between commitment and delivery is narrowing, a signal that matters more to investment committees than headline pledges.

Manufacturing still anchors inflows, but the sector mix is broadening. Investors are increasingly targeting advanced manufacturing, semiconductors, artificial intelligence, digital infrastructure, renewable energy, healthcare and financial services. Vietnam is moving from a low-cost production base to a more diversified investment ecosystem.

Three things underpin that shift:

Supply chain position: Vietnam remains one of the principal beneficiaries of the 'China Plus One' strategy, supported by 478 established industrial parks and one of the world's most extensive free trade agreement networks.

Infrastructure delivery: Around 3,345 kilometres of expressway were in operation at the end of 2025, against a 5,000-kilometre target for 2030. Seaport capacity has risen roughly 1.3 times since 2020, to about 930 million tons a year.

Domestic demand: A population of more than 100 million, competitive labour costs, rapid digital payment adoption and urbanisation forecast to exceed 50% by 2030 are creating opportunities in consumer, retail, healthcare, real estate and financial services.

Vietnam is running one of the most ambitious reform programmes in its modern history. Politburo resolutions on private sector development, science and technology, foreign direct investment and institutional reform are reshaping the operating environment, with a stated objective of attracting not just more capital but higher-quality capital.

The targets are demanding. Under Resolution 68, the private sector is to contribute 55-58% of GDP by 2030, rising above 60% by 2045. Resolution 10 sets registered FDI of US$200-300 billion for 2026-2030, with US$150-200 billion disbursed. Government growth ambitions run at approximately 10% a year over the same period, supported by a large-scale infrastructure programme spanning high-speed rail, airports, ports, digital infrastructure and renewable energy.

For investors, the practical implication is that Vietnam's policy direction is now legible enough to underwrite - while execution risk remains the live question.

Yap Wee Kee, Partner, Capital Markets Group and Private Enterprise, KPMG in Singapore added that each member state in ASEAN brings its own distinct sectoral strength.

“The opportunity for Singapore enterprises lies in understanding those strengths and aligning their regional strategy accordingly,” he said.

The strongest message from the Singapore discussion was the growing role of M&A. Discussion participants highlighted increasing interest in growth capital, strategic partnerships, succession transactions and platform acquisitions as Vietnamese enterprises scale and international investors seek established positions.

Succession planning was identified as an important consideration for many founder-led businesses, while policy reforms are encouraging greater institutionalisation of the private sector. Together, these factors may create additional opportunities for investment and transaction activity.

The terms of access are also changing. Capital is no longer allocated on growth prospects alone. Investors want demonstrable governance frameworks, reliable reporting and a credible value creation plan. For Vietnamese companies, governance has become a financing issue, not a compliance one.

Vietnam's next cycle is not simply a continuation of the last one. The opportunity will be defined less by capital inflows than by which businesses can scale, innovate, attract sophisticated capital and compete regionally. Investors who read those structural shifts early, and price governance into the equation, will be best positioned to capture value.

Vietnam's Next Cycle is KPMG in Vietnam's rolling series of executive briefings and leadership dialogues across major regional and global business hubs, designed to help investors and business leaders know the trends shaping Vietnam's next phase of growth. The series explores capital flows, M&A opportunities, regulatory developments, tax considerations and sector investment trends.

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With extensive experience advising multinational corporations, private equity investors, financial institutions and high-growth enterprises, KPMG's professionals in Vietnam and Singapore support clients throughout the investment lifecycle, from market entry and business establishment to transactions, value creation, expansion and exit planning.

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