This chapter analyses opportunities and challenges associated with leveraging investment to support Viet Nam's digital transformation. It assesses the contribution of foreign direct investment (FDI) to the digital economy, examining its impact on digital technology adoption, communications infrastructure development, and job creation in digital sectors. The chapter also reviews Viet Nam’s investment and digital policy frameworks, providing targeted recommendations on policy reforms to enhance investment attraction and bolster the development of the digital economy.
FDI Qualities Review of Viet Nam
Powering the Next Growth Phase
Abstract
Foreign direct investment (FDI) has become an important driver of Viet Nam’s digital transformation, with digital FDI rising sharply in both absolute and relative terms over the past decade. Greenfield investment in digital sectors–particularly ICT goods and electrical components–now represents a substantial share of total FDI inflows and has contributed significantly to productivity growth, export expansion, and job creation. In 2023 alone, digital greenfield FDI accounted for 45% of total FDI inflows, up from 24% in the previous decade. However, digital FDI remains heavily concentrated in hardware-oriented sectors, while investment in telecommunications and digital services has declined, falling from 8% to just 1% of total digital FDI. Despite improvements in mobile connectivity, Viet Nam continues to underperform in attracting FDI in ICT infrastructure, which remains at just 1% of total inflows–well below the ASEAN average. Foreign firms are playing a disproportionately large role in Viet Nam’s digital economy, not only in terms of output and exports but also through relatively strong local sourcing practices that could support technology diffusion. While digital FDI has historically generated high levels of employment, job intensity is declining as investment shifts toward more capital-intensive activities.
Viet Nam has made notable progress in building an institutional and strategic framework to support digital transformation and attract investment in digital sectors. The 2024 government restructuring streamlined responsibilities by placing most digital policy agencies under the Ministry of Science and Technology (MoST), which now oversees both regulatory and promotional functions related to the digital economy. This centralised model reflects institutional arrangements found in nearly half of OECD and partner economies and offers potential for improved policy coherence. However, overlapping agency mandates and limited inter-ministerial co-ordination continue to hinder effective implementation. At the strategic level, Viet Nam has adopted multiple national strategies focused on digital transformation, innovation, and FDI attraction, each with defined objectives and measurable indicators. Despite this strong commitment, co-ordination challenges persist, with unclear linkages between key institutions such as the Foreign Investment Agency (FIA) and high-level digital policy bodies. As digital FDI continues to rise, it will be important for Viet Nam to further strengthen institutional co-ordination, clarify agency mandates, and ensure that investment promotion bodies are meaningfully engaged in digital policy dialogue to translate digital investments into broad-based technological upgrading and inclusive economic growth.
Viet Nam has made meaningful progress in liberalising foreign investment in manufacturing-related digital sectors, particularly electronics and ICT equipment, which has helped position the country as a key player in global value chains. However, restrictions in digital services remain relatively high, especially in telecommunications and media. Foreign ownership in telecom infrastructure is capped at 49%, and investment in broadcasting and press is largely prohibited. These barriers contribute to Viet Nam’s comparatively high FDI restrictiveness in digital services, limiting the country’s ability to attract investment in higher value-added digital activities. While new legislation such as the 2024 Telecommunications Law and Decree 163 has created more flexible conditions for cloud and OTT services, infrastructure licensing remains heavily centralised and skewed toward state-owned incumbents, limiting competition and slowing infrastructure deployment.
At the same time, Viet Nam’s evolving data governance framework –anchored in the Cybersecurity Law, the Personal Data Protection Decree (PDPD), and the forthcoming Data Law–has introduced important regulatory standards but also created compliance burdens for foreign digital firms. Data localisation requirements and unclear rules on cross-border transfers have increased operational uncertainty, particularly for cloud-based and platform-driven business models. Recent institutional reforms have centralised digital policy functions under the Ministry of Science and Technology (MoST), but overlapping mandates and limited regulatory independence continue to hamper policy coherence. Further liberalising market access in digital services, clarifying data regulations, and establishing an independent telecom regulator could strengthen Viet Nam’s position as a competitive destination for digital FDI and support the broader goals of its digital transformation strategy.
Viet Nam has made digital economy development a strategic priority in its investment promotion and facilitation efforts. The Foreign Investment Agency (FIA) and provincial investment promotion bodies have increasingly prioritised digital sectors –such as e-commerce, cloud services, and software development– with the share of staff and resources allocated to these areas rising significantly between 2018 and 2023. Promotional activities now include support for digital clusters, incubators, and innovation hubs, and rely on a growing, though still limited, use of digital tools such as webinars and virtual fairs. While key procedures for business establishment and investment authorisation are now available online, gaps remain in service integration and digital payment options. Viet Nam lacks a fully unified investor portal or single window, and digital platforms are not yet leveraged for broader policy consultation or aftercare. Addressing these gaps–particularly through improved co-ordination with FIA and more systematic stakeholder engagement–would strengthen ability to attract and retain digital-intensive FDI.
In parallel, Viet Nam has introduced one of the most generous digital investment incentive regimes in the region, aimed at positioning the country as a hub for high-tech and innovation-driven activities. Recent reforms to the Investment and Corporate Income Tax Laws, as well as the adoption of the Law on Digital Technology Industry, provide multi-year tax holidays, preferential tax rates, and reduced land rental fees for qualifying projects in strategic digital sectors such as AI, semiconductors, and cloud computing. Larger projects can benefit from CIT rates as low as 5% for up to 37 years and land rent exemptions for more than two decades. Complementary measures include fast-tracked licensing procedures, financial support from the forthcoming Viet Nam Fund for Investment Support, and extended residence permits for foreign digital experts. These incentives are reinforced by the expansion of high-tech parks offering automatic eligibility and administrative facilitation. However, the effectiveness of these incentives depends on transparent implementation, clear eligibility criteria, and performance-based conditions that ensure alignment with national development objectives.
Viet Nam has taken important steps to develop a digitally skilled workforce in support of its growing digital economy and efforts to attract higher-value FDI. A whole-of-government approach has led to the rollout of national platforms such as One Touch and the Digital Literacy Platform, which provide online and in-person training opportunities across sectors and geographies. Ambitious goals have been set–for example, for 80% of the working-age population to acquire basic digital skills by 2030–and targeted programmes have been launched for strategic sectors like semiconductors, where shortages of highly skilled labour remain a growing concern globally and in Viet Nam (OECD, forthcoming[1]). Collaboration with multinational enterprises (MNEs), including training partnerships, further contributes to the development of digital skills aligned with global standards. Gaps remain in implementation, especially in ensuring regional access, reducing university–industry collaboration barriers, and promoting digital training within small and medium-sized enterprises (SMEs). Limited digital capabilities in domestic firms continue to constrain technology diffusion and reduce the potential for linkages with foreign investors. While the government has introduced support schemes to promote digital adoption among SMEs, awareness remains low and many firms lack access to the tools and guidance needed to navigate available programmes. Enhancing co-ordination between relevant ministries, improving outreach through a centralised digital platform, and facilitating greater engagement between MNEs and domestic firms–particularly in innovation and skills development–would help close these gaps and support a more inclusive and innovation-driven digital transformation.
Strengthen institutional accountability and cross-sectoral co-ordination in digital policy by considering the potential benefits of consolidating agencies with partly overlapping mandates, such as NATEC and SATI, and reducing fragmentation within MoST’s digital policy apparatus. Conisder establishing a dedicated working group on digital investment involving FIA, NIC, NSSC, NATIF, and other relevant agencies to align digital economy goals with investment promotion and regulatory implementation.
Focus on the effective implementation of existing digitalisation strategies to ensure regulatory certainty for investors, including Resolution No. 57-NQ/TW of 2024, Resolution No. 68-NQ/TW of 2025, and the Digital Economy Strategy. Develop annual action plans under the co-ordination of a designated inter-ministerial body–such as the Committee for Science, Technology and Digital Transformation–and publish regular implementation reviews to improve transparency, coherence, and investor confidence.
Clarify and strengthen the role of FIA in both investment promotion and facilitation for the digital economy, by mandating it to co-ordinate with VIETRADE, NIC, NSSC, and provincial IPAs, including on investor aftercare. This includes leading targeted promotion efforts in strategic digital sectors, streamlining facilitation services for digital investors, and improving internal capabilities to engage with fast-evolving technologies and firm needs.
Reduce regulatory barriers for FDI in digital sectors, particularly in telecommunications, by eliminating remaining foreign ownership limits and structurally separating regulatory and commercial functions within MoST. Strengthening the independence and mandate of the Telecommunications Authority would enhance regulatory credibility and competitive neutrality in a concentrated market.
Clarify and streamline rules for data localisation, cybersecurity, and digital services to reduce compliance burdens and legal uncertainty for foreign investors. Implementation guidance for the Digital Technology Law should prioritise policy coherence across ministries, particularly in domains overseen by MoPS, MoST, and Defence agencies.
Improve the design, targeting, and evaluation of investment incentives for digital sectors, with a stronger orientation toward high-quality FDI, by introducing clearer eligibility criteria and linking incentives to measurable outcomes such as technology transfer, domestic supplier development, R&D and workforce development, and establishing mechanisms for periodic performance reviews. Incentives should be complemented by broader innovation and skills policies to ensure they translate into inclusive and sustainable digital upgrading.
Enhance the digital facilitation capacity of Viet Nam’s investment climate by expanding the use of integrated digital tools (e.g. one-stop portals, online application tracking, virtual consultations), and by addressing remaining gaps such as fragmented online payment systems. Full end-to-end digitalisation of investment processes would improve service quality and responsiveness, especially for digital sector investors.
Leverage digital FDI to support workforce upskilling and reskilling, particularly in areas such as semiconductors, AI, and digital services. Promote co-investment models between MNEs and public agencies like NIC in training centres, and reduce administrative barriers that limit university–enterprise collaboration in workforce development initiatives.
Accelerate the digitalisation of domestic firms to foster linkages with foreign technology companies and enhance participation in FDI-led supply chains, by creating a user-friendly centralised portal that consolidates access to financial and non-financial support. Improving awareness and uptake of government programmes would allow more SMEs to meet the digital capability thresholds required for international partnerships.
Leverage Viet Nam’s vibrant tech start-up ecosystem to attract FDI in digital sectors, by institutionalising co-operation between FIA and NSSC to identify high-potential start-ups and promote them to international investors. Dedicated matchmaking platforms, investment showcases, or joint innovation challenges could help scale successful ventures and deepen FDI–start-up synergies.
Foreign investment can play a pivotal role in accelerating digital transformation by introducing new technologies, fostering knowledge transfer, and building local digital capabilities. MNEs can play a central role in this process by investing in broadband networks, cloud computing, and data centres, which expand connectivity and provide the backbone for digital services (OECD, 2026[2]). They can also contribute to digital adoption in traditional sectors, modernising industries such as manufacturing, finance, and logistics through automation, data-driven decision-making, and new business models. By collaborating with foreign MNEs, domestic firms can be exposed to new digital standards and technologies that they need to adopt to remain competitive (Box 3.2). As local firms become more digitally integrated, these partnerships boost productivity and foster broader digital innovation, driving the shift to a knowledge-based, tech-driven economy. In this chapter, digital services refer to activities such as telecommunications services, cloud computing, data centre services, digital platforms, e-commerce, fintech, and other ICT-enabled service activities, in contrast to ICT manufacturing activities such as computers, semiconductors, and electronic components.
3.2.1. FDI in Viet Nam’s digital economy is increasing and predominates in ICT manufacturing
Alongside Viet Nam’s broader openness to FDI, greenfield investment into digital sectors has increased significantly over the past two decades. As in many peer economies, the relative importance of digital sectors has accelerated over the last ten years (see Figure 3.1, Panel A). Greenfield FDI in Viet Nam’s digital sectors rose significantly, accounting for 24% of total inflows in 2014-2024, up from just 9% in 2003-2013. In 2023, greenfield FDI in digital sectors reached the highest point so far with influx of 14 779.1 USD million accounting for 45% of total FDI inflows during that year. This trend mirrors global developments, where investment in digital activities is growing increasingly fast partly driven by the digital acceleration associated with the COVID-19 pandemic. Globally, digital FDI has experienced 25% growth between 2019 and 2023, compared to a 16% increase during the 2014-2018 period (OECD, forthcoming[3]). In Viet Nam, as in other ASEAN economies, the recent growth has been particularly pronounced. Most ASEAN countries have at least doubled the share of digital investment in their total greenfield FDI compared to the previous decade. In 2024, greenfield FDI in digital sectors accounted for 42% of total greenfield FDI in Viet Nam and 55% in ASEAN overall.
Digital transformation is increasingly important in shaping Viet Nam’s FDI landscape. The increase of digital FDI is evident both in absolute terms and as a share of total FDI, underscoring the growing strategic role of digital investment within Viet Nam’s FDI-led development model (see Figure 3.1, Panel B). Since 2021, improvements in several digital transformation indicators –including internet speed, data centre expansion and the technological skills of the labour force– have been increasingly associated with higher overall FDI inflows in Viet Nam (Tran et al., 2025[4]). While this can be explained with the operations foreign MNEs undertake in digital sectors, it is also paramount to consider the effects of digital intensive activities in traditional sectors. For instance, 55% of foreign firms in Viet Nam have their own website relative to 44% of domestic firms (World Bank, 2023[5]).
With a substantial increase in the financing gap to meet the SDGs, and the urgent need to accelerate investment to combat climate change and support the green and digital transition, FDI is even more important. The FDI Qualities Indicators provide governments with essential data to gauge FDI’s impacts on the economy across four areas: decarbonisation, gender equality, job quality and upskilling, productivity and innovation. The first edition of the indicators was published in 2019 and the second in 2022. The 2025 edition includes a new impact area with indicators dedicated to the contribution of FDI to the digital transformation. The new indicators support and complement the policy framework on investment in digital transformation.
Covering a large number of OECD and non-OECD economies, the FDI Qualities Indicators on the digital transformation provide information on FDI flows into sectors that enable digital transformation, as well as into emerging digital technologies, including AI and data processing. They also assess the impact of FDI on the digitalisation of the broader economy, with a focus on the development of communication infrastructure and connectivity. Additionally, they allow investigating the varying levels of participation in the digital economy between foreign-owned and domestic firms, highlighting potential disparities.
Digital sectors are essential to digital transformation, involving the production of goods or services that form the backbone of digital ecosystems. These include computer, electronic and optical products; electrical equipment; publishing, audiovisual and broadcasting activities; telecommunications; and IT and other information services. Greenfield FDI in digital sectors has seen substantial growth, rising from 16% of greenfield FDI between 2014-2018 to 25% between 2019-2023, driven by ICT goods, including semiconductors, computers, and electronic/electrical components. Variations across countries are large, however. Economies like Japan, Ireland, or Malaysia, attract a large share of FDI in these industries, leveraging strong positioning in the digital-technology value chain. In contrast, some countries in Latin America and Sub-Saharan Africa have seen limited benefits from the surge in digital investments.
As digital technologies evolve, digital transformation extends beyond traditionally digital sectors, impacting all sectors of the economy. The extent to which sectors are exposed to digital technologies varies significantly. While digital sectors exhibit high adoption rates of digital technologies, more traditional sectors (e.g. automotive, finance, business services and retail trade), are increasingly incorporating digital technologies across various facets of their operations. Analysing FDI through the lens of sectoral digital intensity provides insights into its contribution to the broader digital economy. Digital-intensive sectors account for around 40% of total greenfield FDI. FDI in digital intensive sector varies significantly across countries, with some advanced markets like Singapore receiving over 50% of FDI in digital-intensive sectors. These disparities highlight the importance of host country’s economic structure and digital readiness to leverage the benefits of FDI. Similarly, countries with a more skilled workforce are better positioned to attract and leverage FDI in digital intensive sectors, while those with weaker capabilities risk falling behind.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
The bulk of Viet Nam’s digital FDI is concentrated in ICT goods and electrical components, two sectors that have been instrumental to broader economic growth. While ICT goods are a core part of the digital economy, electrical components, though not purely digital, play a critical enabling role in digital value chains and have become increasingly technology-intensive over time. Together, these two sectors accounted for 93% of Viet Nam’s total digital greenfield FDI in 2014-2024, up from 80% in 2003-2013 (Figure 3.2). The shift reflects a growing emphasis on hardware-based digital infrastructure, with FDI in electrical components increasing from 38% to 51% of total digital greenfield FDI over the period, while ICT goods held steady at 42%. Both sectors attracted substantial investment over the past decade and were key drivers of Viet Nam’s post-pandemic rebound in FDI inflows. Foreign investment in these sectors has contributed significantly to productivity gains and export expansion (Ha and Parsons, 2023[7]; Vu, Tram and Tung, 2025[8]). Within each, foreign-invested activities –such as ICT hardware manufacturing– also accounted for the highest value added (Vu and Nguyen, 2024[9]).
In contrast to hardware-related sectors, FDI in telecommunications and digital services in Viet Nam remains limited and has declined over time. Between 2014 and 2024, greenfield FDI in telecommunications fell to USD 449 million, down from USD 1.4 billion in the previous decade, despite absolute increases in all other digital sectors. As a share of total digital FDI, telecommunications dropped from 8% to just 1%, while digital services declined from 12% to 6% (Figure 3.2, Panel B). While global shifts may partly explain this trend, various factors –including regulatory restrictions on foreign investment and structural characteristics of the sector– may have influenced investment patterns. Although Viet Nam’s telecommunications market is characterised by strong competition among domestic operators, foreign participation in core telecom infrastructure remains limited, which may partly explain the relatively low levels of foreign investment. There also appears to be untapped potential in higher value-added segments of the digital economy, particularly in digital services. Although investment in this area remains relatively modest, Viet Nam’s growing digital infrastructure and skilled workforce present opportunities to attract more FDI in areas such as cloud services, e-commerce platforms, digital content, and fintech, where global investor interest is increasing. A more targeted policy approach could help Viet Nam better position itself in these expanding service segments.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
Within ICT and electrical manufacturing, the composition of greenfield FDI has shifted markedly over time, pointing to a gradual move toward more technologically sophisticated activities. While “other electronic components” remain the single largest sub-sector, their share of greenfield FDI in ICT goods and electrical components declined sharply from 71% in 2015-2019 to 44% in 2020-2024 (Figure 3.3, Panel A). Over the same period, investment became more diversified across higher value-added segments. Audio and video equipment increased from 8% to 27% of total inflows, while communications equipment remained broadly stable at around 11–12%. Notably, semiconductors –virtually absent from greenfield FDI prior to 2020– accounted for 9% of inflows in 2020-2024, reflecting Viet Nam’s growing integration into more advanced electronics and digital hardware value chains. Smaller but rising shares of investment in batteries and computer equipment further point to a broadening of Viet Nam’s ICT manufacturing base beyond low- and mid-range component assembly.
At the same time, greenfield FDI in selected digital technologies has expanded rapidly, albeit from a lower base and with a more uneven sectoral profile. Investment in data centres remained high and stable across periods, reaching around USD 950 million in both 2017-2020 and 2021-2024, underlining the importance of physical digital infrastructure in supporting Viet Nam’s digital economy (Figure 3.3, Panel B). In contrast, FDI in emerging digital technologies accelerated sharply in the most recent period. Greenfield investment in robotics increased more than seven-fold, while inflows into e-commerce, fintech and artificial intelligence also rose substantially between 2017-2020 and 2021-2024. These trends suggest growing investor interest in Viet Nam’s digital capabilities beyond hardware manufacturing, particularly in technology-enabled services and automation. However, investment patterns remain uneven: cybersecurity-related FDI declined significantly over the period, and overall inflows into digital technologies continue to lag far behind ICT manufacturing in scale. This underscores both the continued dominance of manufacturing-led digital FDI in Viet Nam and the scope to further strengthen the policy and regulatory conditions needed to attract more consistent investment into higher value-added digital technology segments.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
3.2.2. Viet Nam would benefit from further promoting investments in ICT infrastructure
Strengthening ICT infrastructure remains essential to unlocking Viet Nam’s digital economy potential and attracting further investment in high-value digital activities such as software development, cloud services, and high-tech manufacturing (OECD, forthcoming[10]; OECD, 2018[11]). Reliable, high-speed connectivity is particularly important for ensuring efficient data delivery and enabling the broader use of digital technologies. Although mobile broadband penetration is high –reaching 96.9 subscriptions per 100 inhabitants in 2022 –fixed broadband access remains limited, with only 21.7 subscriptions per 100 inhabitants, still below OECD and regional leaders such as Singapore (OECD, 2023[12]; MIC, 2023[13]). While 88% of households had internet access in 2022, 5G coverage remains in the trial phase and limited to urban areas, in contrast to countries like Singapore, Thailand, and the Philippines where nationwide deployment is underway (World Bank, 2020[14]; MIC, 2023[13]; World Bank, 2023[15]).
Despite these connectivity improvements, greenfield FDI in ICT and internet infrastructure in Viet Nam remains relatively low compared with peer economies. Over the period 2014-2024, such investment accounted for just 1% of total FDI –unchanged from 2003-2013 –making it the lowest among all peer economies and significantly below the ASEAN average (8%) and the OECD average (11%) (Figure 3.4). In contrast, economies such as Malaysia (21%), Colombia (19%), and Thailand (17%) have attracted markedly higher shares of greenfield ICT infrastructure investment over the same period. This suggests there is substantial untapped potential for Viet Nam to position itself more competitively as a destination for digital infrastructure FDI, which could in turn reinforce domestic digital capabilities and foster wider economic benefits.
Note: The ASEAN average does not include Brunei.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
3.2.3. Foreign firms are important contributors to Viet Nam’s digital economy
Foreign firms in Viet Nam are more concentrated in digital sectors than their domestic counterparts, both in terms of output and gross value added. This pattern is consistent with trends observed in peer economies: in OECD countries, the output share of foreign firms in digital sectors is nearly twice that of domestic firms, and in non-OECD economies, it is more than three times higher relative to their respective shares in the rest of the economy (Figure 3.5, Panel A). In Viet Nam, the foreign firm “premium” in digital sectors in terms of output is more than four times greater, with a similar pattern observed for gross value added. This suggests that foreign firms are playing a leading role in driving Viet Nam’s digital production and value creation –reflecting their greater specialisation in electronics, ICT equipment –while domestic firms remain less represented in these areas.
Unlike in many peer economies where foreign firms exhibit a stronger export premium in non-digital sectors, in Viet Nam this effect is more pronounced in digital sectors (Figure 3.5, Panels B and C). In many peer economies, especially amongst OECD countries, foreign digital firms tend to export less than those operating in traditional sectors. In these instances, FDI is often concentrated in less export intensive activities like digital services, consulting or R&D. In Viet Nam, however, where digital FDI is concentrated in ICT goods and electrical component production, the opposite is true since these elements are often a part of a supply chain of another end-product and thus are export oriented in their nature. Consistent with the findings of Ha and Parsons (2023[7]), this underscores the central role that foreign electronics firms play in driving Viet Nam’s export performance.
Foreign firms in digital sectors are more prone to source locally than those operating in non-digital sectors. For every unit of imported input, foreign firms in digital sectors source 2.2 units in Viet Nam, compared to just 1.3 units in non-digital sectors (Figure 3.5, Panel C). This strongly contrasts all peer economies (apart from Brunei and Singapore), since in most non-OECD economies digital firms are usually less likely to source locally compared to firms operating in the digital sector. This highlights a substantial opportunity to leverage foreign investment in digital sectors to foster knowledge transfer and technology spillovers through strengthened supplier linkages.
Note: A value of 1 in panel A indicates that the output and value-added share of foreign firms in digital sectors is double that of domestic firms compared to the respective shares of foreign firms in the rest of the economy. Box 1.2 in Chapter 1 provides additional details on the interpretation of the indicators related to output and value added. A value of 0.1 in panel B indicates that foreign firms are 10% more export-intensive than domestic firms.
Source: OECD calculations based on OECD (2025[16]), Analytical AMNE database,
https://www.oecd.org/en/data/datasets/multinational-enterprises-and-global-value-chains.html.
Understanding the extent of foreign firms’ engagement in digital sectors requires analysing their contribution to production and value creation, not only in absolute terms but also relative to domestic firms, and in comparison, to their contribution in the rest of the economy. For this purpose, the Output Share Index (OSI) and Value-Added Share Index (VASI) are developed as comparative measures to assess whether foreign firms are more prominent and impactful in digital sectors compared to domestic firms and their role in non-digital sectors.
The Output Share Index measures the relative importance of foreign firms in the digital sectors compared to their importance in the rest of the economy, with respect to domestic firms. It provides insights into whether foreign firms are more concentrated and contribute more significantly to output in these industries–such as telecommunications, digital services, ICT and electrical manufacturing–than they do in other sectors.
An OSI value greater than 1 indicates that foreign firms have a higher relative share of output in digital sectors compared to their presence in non-digital sectors, when benchmarked against the role of domestic firms. This suggests that foreign firms are more prominent in digital sectors relative to their overall presence in the economy.
Similarly, the Value-Added Share Index evaluates the relative contribution of foreign firms to value added in digital sectors compared to their contribution in the rest of the economy, with respect to domestic firms. Value added is a key measure of economic performance, as it reflects the net output of firms after accounting for intermediate inputs, thereby capturing the actual economic value generated by firms. The VASI helps assess whether foreign firms play a more significant role in creating value in digital sectors compared to other sectors, in relation to domestic firms’ contributions.
A VASI value greater than 1 indicates that foreign firms generate a higher relative share of value added in digital sectors compared to non-digital sectors, with respect to their domestic counterparts. This suggests that foreign firms are more influential and have a greater economic impact in digital sectors relative to their importance in the broader economy.
3.2.4. Digital FDI in Viet Nam has been instrumental for job creation
Digital FDI in Viet Nam has generated more jobs than in most peer economies; however, job creation intensity has declined over time. The strongest employment effects are observed in the digital sectors receiving the largest volumes of FDI such as ICT goods and electrical components. Between 2003 and 2024, greenfield FDI in electrical component manufacturing generated an average of 8.4 jobs per USD 1 million invested, while in the ICT industry the figure was even higher, at 10 jobs per USD 1 million. These figures stand in sharp contrast to non-digital sectors, where average job creation intensity over the same period was just 3.7 jobs per USD 1 million invested. Despite these strong outcomes, job creation intensity in digital sectors has declined over the past decade (2014-2024) compared to the earlier period (2003-2013), whereas it remained more stable in non-digital sectors (see Figure 3.6, Panel B). This trend reflects a broader global shift towards capital-intensive, higher productivity operations in digital industries.
As digital transformation automates some jobs while creating new ones in other sectors, upskilling and reskilling policies will be essential to sustain the positive employment effects traditionally associated with FDI. In peer economies such as Thailand, Indonesia, and Malaysia, the decline in job intensity from digital FDI over the past decade has been spread across multiple digital sectors. In Viet Nam, however, the decline has been more pronounced and consistent across all digital sectors –particularly in those where activity is concentrated in production and assembly. By contrast, economies that have seen an increase in digital job intensity often benefit from growth in digital services employment (OECD, forthcoming[3]). In Viet Nam’s telecommunications sector, where greenfield FDI remains relatively low, the employment effects have also been limited. To attract FDI in higher value-added segments of the digital economy and ensure broader employment benefits, strengthening the digital skills base of the domestic workforce will be increasingly important.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
3.2.5. Strengthening the scale of R&D investment remains key to upgrading digital FDI in Viet Nam
Digital FDI in Viet Nam is gradually incorporating R&D activities, but these remain limited in scale relative to total investment. Between 2021 and 2025, around 6% of digital-sector greenfield FDI capital expenditure in Viet Nam was directed to R&D activities, a share that has remained broadly stable compared to 2016-2020. While this is lower than in several comparator economies such as Serbia, Poland, Türkiye and Portugal, where a larger proportion of digital investment is oriented towards R&D, it is broadly in line with patterns observed in parts of Southeast Asia, including Malaysia and Indonesia. This suggests that digital FDI in the region, including Viet Nam, continues to play an important role in supporting production and operational activities, while gradually expanding into more knowledge-intensive functions.
R&D-related digital FDI in Viet Nam is relatively frequent but tends to be smaller in scale. Approximately 16% of digital FDI projects between 2021 and 2025 involve R&D activities, a slight increase from 14% in 2016-2020 and comparable to several peer economies such as Mexico and Malaysia. The higher share of projects relative to capital expenditure indicates that these investments are often more modest in size, for example involving engineering, design or applied development functions within multinational firms rather than large R&D centres. At the same time, the presence and gradual increase of such activities point to Viet Nam’s growing integration into the innovation segments of digital value chains. Continued improvements in skills, research capabilities and linkages between foreign firms and the domestic innovation ecosystem could support a further expansion and deepening of these activities over time.
Source: OECD based on Financial Times (2024[6]), fDi Markets database, https://www.fdimarkets.com.
The impact of FDI on digital transformation is shaped not only by the scale and nature of investment flows, but also by the host economy’s capacity to absorb, adapt, and diffuse digital technologies. This capacity depends on several enabling factors, including widespread connectivity, targeted investments in digital skills development, and coherent policy and regulatory frameworks that foster innovation and competition (OECD, forthcoming[10]). Without these foundations, the potential benefits of digital FDI –such as productivity gains, higher value-added activities, and enhanced service delivery– may remain concentrated in a few regions or sectors, exacerbating existing inequalities. Bridging these gaps is therefore critical to ensure that digitalisation contributes to more inclusive and sustainable growth across the entire economy.
3.3.1. The institutional framework for investment and digital policy has been streamlined, but agency mandates could be revised to ensure policy effectiveness and coherence
The Ministry of Science and Technology (MoST) serves as the central authority responsible for digital policy in Viet Nam. Most agencies directly involved in digitalisation activities operate under its supervision, positioning MoST as the lead ministry for setting regulatory standards, proposing investment incentives, and promoting the development of telecommunications, ICT manufacturing, and digital services and technologies. Within MoST, the Department of Digital Economy and Society is tasked with drafting legislation to support the growth of the digital economy. A similar mandate is held by the Department of Innovation, also known as the State Agency for Technology and Innovation (SATI), although its focus is more specifically geared towards advancing technological innovation, including market development and technology transfer. On the implementation side, key agencies supporting technology enterprises –such as the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) and the National Startup Support Centre (NSSC)– also operate under the authority of MoST.
While the Ministry of Industry and Trade (MoIT) does not oversee the information and digital technology industries–which fall under the mandate of MoST–it plays an essential role in advancing Viet Nam’s digital economy through its responsibilities in e-commerce policy, infrastructure, and regulation (Government of Viet Nam, 2025[17]; 2025[18]). MoIT is tasked with facilitating business linkages, supporting enterprise integration into global value chains, and strengthening the export capacity of Vietnamese firms –functions that are increasingly dependent on robust digital trade and e-commerce ecosystems (Government of Viet Nam, 2025[18]). Through Vietrade, MoIT supports domestic firms by delivering training and promotional activities aimed at enhancing their competitiveness in digital markets. In parallel, the E-commerce and Digital Economy Agency, also under MoIT, leads the development and regulation of Viet Nam’s e-commerce ecosystem. Its mandate includes promoting cross-border e-commerce, supporting the development of e-commerce platforms, and enabling SMEs to effectively access and benefit from online trade opportunities.
The Ministry of Finance (MoF) remains a key actor in investment promotion and facilitation but also contributes to Viet Nam’s digital transformation agenda. The Foreign Investment Agency (FIA), which operates under MoF, is formally tasked with co-ordinating foreign investment promotion, advising on investment policies, and serving as a point of contact for foreign investors. While FIA’s digital-specific activities appear limited in practice, its potential role in supporting the attraction of FDI in digital and high-tech sectors could be strengthened through closer co-ordination with line ministries and digital economy agencies. The National Innovation Centre (NIC), also under MoF, plays a more visible role in this regard, with a dedicated mandate to attract foreign investment across nine strategic high-tech sectors –such as artificial intelligence, smart manufacturing, digital media, health technology, cybersecurity, smart city development, environmental technologies, green hydrogen, and semiconductors– aimed at boosting Viet Nam’s innovation ecosystem. MoF also oversees the Agency for Information Technology and Digital Transformation, although its specific responsibilities and activities remain unclear.
Co-ordination of digital policies takes place across multiple institutions. In 2021, the National Committee on Digital Transformation was established, evolving from the former National Committee on Electronic Government (Prime Minister of Viet Nam, 2021[19]). The committee is chaired by the Prime Minister with the Deputy Prime Minister and the Minister responsible for Information and Communication serving as vice chairs (ITA, 2024[20]; MIC, 2023[13]). Following subsequent government reforms, the Ministry of Science and Technology (MoST) was designated as the standing agency of the committee, thereby assuming a central role in the implementation of digital policy. MoST is tasked with leading the development of strategies, action plans, and legal reforms to support the country’s digital transformation agenda. The committee is also responsible for co-ordinating cross-sectoral implementation across line ministries, central agencies, and subnational governments (Government of Viet Nam, 2025[17]).
In 2024, the Government established the National Council for Science, Technology and Innovation as an additional high-level co-ordinating body. While also chaired by the Prime Minister, the Council focuses more specifically on policy initiatives supporting the development of science, technology, and innovation. Complementing these structures, the Party has established the Central Steering Committee for the Development of Science, Technology, Innovation, and Digital Transformation (Socialist Republic of Viet Nam, 2025[21]). This Steering Committee is supported by an advisory body composed of 18 representatives from the business and academic communities, providing strategic input to strengthen implementation and stakeholder engagement (Thuong, 2025[22]).
Source: OECD elaboration.
The 2025 government restructuring has streamlined the institutional framework for digital policy by placing most agencies implementing digital policy under the MoST; yet, overlapping mandates of these agencies might cause implementation bottlenecks. Assigning a central role to the MoST reflects an institutional model adopted by nearly half of OECD and partner economies, where digital governance responsibilities are consolidated under a dedicated ministry (OECD, 2025[23]; OECD, 2024[24]). In Viet Nam, this approach has led to the relocation of most relevant agencies under MoST’s oversight, but institutional fragmentation persists, with several agencies and departments operating in parallel without clearly delineated mandates. For example, the respective functions of the Department of Economy and Digital Society and the National Authority of Digital Transformation remain unclear. Similarly, the Authority for Information Technology Industry and the Information Technology Centre operate concurrently within the same policy domain, without a clearly articulated division of responsibilities. In addition to the agencies under MoST, the Agency for Information Technology and Digital Transformation operates under MoF. While it is expected that multiple agencies contribute to digital transformation, given its cross-cutting nature, the absence of clearly defined mandates risks duplication of efforts, diminished accountability, and reduced policy coherence. Streamlining institutional responsibilities and enhancing inter-agency co-ordination would help to improve the overall efficiency and effectiveness of digital policy implementation.
To avoid inefficiencies and duplication of functions, Viet Nam would benefit from rationalising the institutional landscape for digital policy –particularly by reviewing the mandates of government agencies that separately draft legislation, provide technical support, and deliver financial assistance to digital industries. As part of the ongoing reform process, the government could consider either strengthening co-ordination mechanisms between relevant departments or, where feasible, consolidating agencies with overlapping functions. For example, merging the National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) with the State Agency for Technology and Innovation (SATI) could streamline legislative and programmatic support for technology enterprises, reduce administrative redundancies, and improve policy coherence. Similarly, clarifying the respective roles of agencies involved in digital economy policymaking–such as the Department of Digital Economy and Society, the National Authority of Digital Transformation, and the Agency for Information Technology and Digital Transformation–would help ensure more efficient implementation and enhance accountability. A more coherent and well-aligned institutional framework would ultimately enable Viet Nam to more effectively mobilise investment in digital transformation and maximise the benefits of digitalisation across the economy.
Placing the majority of digital policy functions under the Ministry of Science and Technology (MoST) has the potential to enhance policy coherence, particularly following the 2024 government restructuring that transferred key agencies –such as the Department of Digital Economy and Society and the National Authority for Digital Transformation–from the Ministry of Information and Communications (MIC) to MoST. This institutional arrangement makes the digital economy one of the few sectors in Viet Nam where both industry development and some investment-related responsibilities are overseen by the same ministry. While this creates a more consolidated governance structure, it also places increased responsibility on MoST to co-ordinate effectively with other ministries and agencies. Functions such as digital investment and trade promotion, skills development, and technology certification remain within the remit of other entities –such as the Ministry of Industry and Trade (MoIT), the Ministry of Finance (MoF), the Foreign Investment Agency (FIA), and Vietrade– whose expertise and mandates are essential to a comprehensive digital transformation agenda. Ensuring close co-ordination between MoST and these agencies is critical to avoid fragmentation and to align digital economy strategies with broader national objectives. Similarly, given the strategic role of the National Innovation Centre (NIC) in strengthening the innovation capacity of Vietnamese enterprises, aligning its activities with the work of MoST agencies involved in digitalisation would help maximise synergies and impact.
The establishment of high-level advisory and co-ordination bodies in the digital policy space is a positive development, with the potential to strengthen the strategic coherence and quality of policymaking. Several of these bodies include mechanisms for stakeholder consultation, involving representatives from the private sector and academia. This inclusive approach can enhance policy relevance and effectiveness and is therefore strongly encouraged. In the case of the Central Steering Committee for the Development of Science, Technology, Innovation and Digital Transformation, established in December 2024 and chaired by the Party General Secretary, stakeholder engagement is institutionalised through a dedicated advisory council. Similarly, the National Council for Science, Technology and Innovation includes a broad range of members alongside ministry representatives, reinforcing a multi-actor approach to policy development. The practice of linking the strategic co-ordination body directly with the highest political authority is also common in peer economies and is a good practise that can overcome ministerial biases and intra-governmental competition for resources (ITU, World Bank, 2023[25]).
While several high-level bodies provide strategic direction on digital transformation –such as the Central Steering Committee for Science, Technology, Innovation and Digital Transformation, the National Council for Science, Technology and Innovation, and the National Committee on Digital Transformation– the extent of co-ordination among them remains unclear. Notably, it is also not evident whether the Foreign Investment Agency (FIA), or representatives of foreign-invested enterprises more broadly, participate in these advisory and co-ordinating bodies. This presents a missed opportunity, given the important role of foreign direct investment in driving digital transformation in Viet Nam, particularly in the electronics and ICT sectors. FDI plays a central role in technology diffusion, global value chain integration, and innovation capacity building. Ensuring that institutions responsible for investment promotion and facilitation –such as FIA– are meaningfully engaged in digital policy dialogue would strengthen the coherence of strategic guidance and help align innovation and digitalisation policies with investor needs and global industry trends. Greater inclusion of investment-related agencies and foreign-invested firms could also support a more responsive and integrated approach to shaping Viet Nam’s digital future.
3.3.2. Viet Nam has a comprehensive strategic framework to support digital transformation
Viet Nam’s strategic framework related to investment in the digital economy, as summarised in Box 3.4, demonstrates progress in clarifying institutional responsibilities and setting measurable targets. The National Strategy for the Development of the Digital Economy and Digital Society, along with the Programme for National Digital Transformation, exemplify good practice in this regard. Both strategies delineate the specific roles and responsibilities of line ministries for each component of implementation, while also identifying the key actors with whom ministries should co-ordinate. This structured allocation of responsibilities supports more effective policy execution and inter-agency collaboration. In addition to clarifying mandates, these strategies establish concrete policy objectives–for example, the delivery of specific public services through digital channels, publication of reports online, and the availability of publicly accessible national databases. Furthermore, both strategies incorporate mechanisms for monitoring and evaluation. Performance is tracked using established indices such as the Provincial Competitiveness Index, the Public Administration Reform Index, and the Information and Communications Technology Index, enabling regular assessment of progress and facilitating evidence-based policy adjustments.
Strategy for foreign investment co-operation for the period 2021-2030 aims to attract FDI projects with high added value that expand technology usage in the domestic market. It also aims to increase Vietnamese domestic enterprise involvement in GVC and emphasises promotion of technology transfer between foreign and domestic firms. It also outlines the need to build domestic enterprise digital technology skills to do that (Prime Minister of Viet Nam, 2022[26]).
Project for encouraging Vietnamese enterprises in directly participating in foreign distribution networks by 2030 was adopted in 2022 with the objective to develop and expand Viet Nam's import and export markets. The strategy focuses on supporting Vietnamese enterprises to become active participants in GVC by providing market information, training and consultation services and matchmaking opportunities. One of the strategies tasks includes a support for enterprises to participate in cross border e-commerce (Prime Minister of Viet Nam, 2022[27]).
National strategy for the Fourth Industrial Revolution was adopted in 2020 to encourage economy wide adaptation to new technologies. Its primary objectives are to improve the business environment for adaption of new technologies. It also sets objectives for increasing Viet Nam’s innovation capacity, developing an e-government and growing the digital economy (Prime Minister of Viet Nam, 2020[28]).
National Strategy for Development of Digital Economy and Digital Society by 2025, Orientation Towards 2030 calls for the need for advancing R&D in the digital economy and in doing so outlines both public and private sources as necessary. In the field specific sections, it calls for the need to attract investment from technology enterprises in the fields of agriculture, health, education and training, tourism (Prime Minister of Viet Nam, 2022[29]).
Program for National Digital Transformation by 2025 with orientations towards 2030 sets broad objectives for digitalisation of public services, enhancing the economy’s competitiveness through developing the digital economy, and developing a digital society. It also includes provisions to amend investment regulations to achieve this goal (Prime Minister, 2020[30]).
Strategy for breakthrough in the development of science, technology, innovation and national digital transformation (Resolution No. 57-NQ/TW) focuses on strengthening Viet Nam’s technological potential with the aim to restructure the economy. Its key objectives are strengthening technological innovation in universities, research centres and enterprises, by providing the necessary infrastructure and conducting institutional, policy and regulatory reforms. It aims to facilitate knowledge transfer from FDI enterprises to the domestic economy (Central Executive Committee, 2024[31]).
Strategy for Development of Viet Nam’s Semiconductor Industry to 2030 and vision to 2050 sets out ambitious objectives to develop Viet Nam’s semiconductor industry. It outlines the need to develop human resources and talents, create an attractive investment environment and support the technology business environment to do so (Prime Minister of Viet Nam, 2024[32]).
Several strategies relevant to FDI attraction and the internationalisation of Vietnamese enterprises incorporate provisions supporting the development of the digital economy. The Strategy for Foreign Investment Cooperation 2021-2030, for example, identifies digital sectors as a key element within broader efforts to build science, technology, and innovation ecosystems in Viet Nam. It also prioritises infrastructure investments in telecommunications and information. In addition, the strategy calls for digital skills development among domestic enterprises, with the aim of strengthening their absorptive capacity and enabling them to derive greater benefits from FDI. Similarly, the strategy aimed at encouraging Vietnamese enterprises to engage directly in foreign distribution networks by 2030 highlights the need to support e-commerce adoption among domestic firms. These initiatives can help generate synergies between FDI policy and digital industry development.
Nonetheless, strategies for digital economy development could more explicitly recognise and integrate the role of foreign-invested enterprises, particularly given their central position in Viet Nam’s ICT manufacturing sector. While the Strategy for the Fourth Industrial Revolution refers broadly to the need for policies encouraging both domestic and foreign enterprises to establish innovation centres in Viet Nam, it does not assign a specific role or define enabling conditions for FDI actors. The Strategy for the Development of the Digital Economy and Digital Society acknowledges the importance of engaging with foreign enterprises to facilitate technology transfer but lacks detail on the mechanisms through which this co-operation is to be achieved. More targeted provisions in this respect are found in the Strategy for Breakthrough in the Development of Science, Technology, Innovation and National Digital Transformation (Resolution No. 57-NQ/TW), which includes measures to adapt technologies from foreign companies, incentivise the establishment of data centres, and build digital skills by leveraging international expertise. Sector-specific strategies –such as the national semiconductor strategy– also present opportunities to more clearly define how FDI can contribute to achieving sectoral digital transformation objectives.
These strategies would be further strengthened by explicitly recognising the role of institutions responsible for investment promotion and facilitation –such as the Foreign Investment Agency (FIA) and provincial investment promotion agencies (IPAs). Clarifying how these bodies can support the attraction, retention, and strategic engagement of digital FDI –through tailored promotion efforts, policy advocacy, or co-ordination with line ministries–would help bridge the gap between high-level digital transformation goals and practical investment facilitation on the ground. More integrated approaches could also ensure that digital economy strategies are aligned with Viet Nam’s broader investment policy and promotion framework.
To increase regulatory certainty and better attract and retain FDI in digital sectors, Viet Nam should prioritise the effective implementation of its existing digital strategies. Since 2020, the government has adopted multiple strategies and action plans demonstrating strong political commitment to the Fourth Industrial Revolution. However, the proliferation of strategic documents has not always been matched by clear implementation pathways, creating uncertainty for investors. Rather than issuing additional strategies that reaffirm long-term ambitions, efforts should focus on clarifying responsibilities, monitoring progress, and ensuring the timely execution of existing plans. One practical option to enhance transparency and accountability is to establish a publicly accessible online platform that consolidates information on current strategies, accompanying action plans, and implementation progress. Switzerland, for example, maintains a regularly updated platform detailing actions taken by each responsible agency and the results achieved (Confederation Suisse, 2025[33]).
As the government focuses on implementing Resolution No. 57-NQ/TW, accompanying short-term implementation plans could support this process. Outlining concrete actions and linking them to necessary departmental goals can make the strategy more viable and implementable. For instance Germany’s digital strategy included 134 tasks allocated to individual governmental departments, while the Netherlands makes its digital strategy implementable by issuing annual action plans (ITU, World Bank, 2023[25]; Ministry of Economic Affairs and Climate Policy, 2019[34]). These action plans would also improve the ability for the government to monitor the strategies implementation. The Action Plan to implement Resolution has potential to serve as a guide through implementation (Government of Viet Nam, 2025[35]). In particular, the practice of creating a list with measurable targets to be achieved in five years’ and twenty tear’s time and indicating the responsible ministry is welcomed. However, to further facilitate impermeability setting out yearly action plans and ensuring a monitoring mechanism can help Viet Nam to stay on track.
3.3.3. Market access restrictions for foreign investors are concentrated in telecommunications and media activities
To fully harness the potential of foreign investment in the digital economy, governments need to periodically evaluate the impact of FDI regulatory restrictions on digital sectors. Policies that restrict foreign equity ownership, implement screening requirements, or limit the operations of foreign investors in key digital activities may deter investment. Additionally, restrictions in non-digital sectors can create broader economic inefficiencies, such as misallocation of capital and reduced competitive pressures, which can indirectly hinder the growth and competitiveness of the digital economy. This, in turn, could constrain opportunities for countries to benefit from the technological innovation, advanced expertise, and productivity gains that multinational technology companies can bring. OECD analysis indicates that countries with fewer restrictions on investments in core digital sectors tend to attract a higher share of greenfield FDI in these sectors (OECD, forthcoming[10]; OECD, forthcoming[3]). Market openness can support digitalisation by fostering a competitive environment where foreign and domestic firms operate on an equal footing on the basis of innovative and digitally enabled business models.
Viet Nam has made steady progress over the past two decades in reducing restrictions on FDI, particularly in ICT manufacturing. The overall FDI Regulatory Restrictiveness Index (FDIRR) for Viet Nam has declined substantially since the late 1990s, reflecting reforms across multiple sectors. Within digital sectors, however, progress has been uneven. While Viet Nam significantly liberalised entry conditions in electrical and electronic equipment manufacturing in the early 2000s, regulatory restrictiveness in media and telecommunications has generally remained high, despite some recent liberalisation in selected digital infrastructure services (Figure 3.9). Compared to the OECD average and most ASEAN peers, Viet Nam maintains more stringent restrictions on FDI in digital services, notably in media and telecommunications. A cross-country comparison shows Viet Nam’s cumulative restrictiveness score across digital sectors to be significantly higher than the ASEAN and non-OECD averages, and closer to levels observed in countries like Brunei and Thailand. While manufacturing-related digital sectors (such as computers and electronics) are largely open, barriers persist in digital infrastructure and content services.
The restrictiveness of digital services reflects both horizontal and sector-specific constraints. In the telecommunications sector, foreign ownership remains limited in traditional telecom services, including 49% in facilities-based services and up to 65–70% in certain non-facilities-based segments. Investments in telecoms with network infrastructure additionally require prior approval from the Prime Minister. At the same time, the Telecommunications Law 2023 introduced new categories of services –including basic telecommunications services on the Internet as well as data centre and cloud computing services– which may be provided without limitation on foreign ownership. Despite these reforms, foreign majority ownership remains restricted in facilities-based telecommunications services (National Assembly, 2023[36]). In media services, foreign investment in free-to-air broadcasting, press, and publishing is effectively prohibited, with only partial openings in paid broadcasting subject to stringent screening and content localisation rules. Foreign participation in press agencies or as senior editorial personnel is not allowed, and foreign channels on paid services are capped and must be translated and distributed by licensed Vietnamese entities. These constraints continue to weigh on Viet Nam’s overall FDI openness in digital sectors.
Despite these limitations, Viet Nam’s overall reform trajectory has been positive. The rapid reduction in FDI restrictions in manufacturing-related digital sectors positions the country well to attract investment in electronics and semiconductors, which are already strong export drivers. However, maintaining momentum in broader digital transformation will require continued efforts to liberalise and clarify market access conditions in digital services, particularly to enable cross-border partnerships in telecom and media and to improve the business environment for global digital firms. Reducing market access barriers and ensuring transparent, non-discriminatory regulatory frameworks in these areas could unlock new sources of innovation and investment in support of Viet Nam’s digital economy objectives.
OECD FDI Regulatory Restrictiveness Index, 2023
Note: The OECD FDI Regulatory Restrictiveness Index only covers statutory measures discriminating against foreign investors, which are evaluated on a scale from 0 (fully open to FDI) to 1 (fully closed to FDI).
Source: OECD (2026[37]), FDI Regulatory Restrictiveness Index,
www.oecd.org/en/topics/sub-issues/sustainable-investment/fdi-regulatory-restrictiveness-index.html.
3.3.4. Viet Nam has developed a comprehensive legal framework for the digital economy; yet, data localisation requirements may affect investment decisions of foreign tech firms
Viet Nam's legal framework for the digital economy has evolved significantly in recent years, aiming to balance cybersecurity, data sovereignty, and digital innovation. Under the 2018 Cybersecurity Law and its implementing Decree 53, introduced in 2022, both domestic and foreign companies offering specific digital services, including telecommunications, cloud computing, social media, e-commerce, and payment services, are required to store personal data, user-generated content, and user relationship data locally. While domestic providers are broadly obligated, foreign firms trigger localisation requirements upon specific circumstances, such as violations of cybersecurity provisions and subsequent failure to comply with formal requests from the Ministry of Public Security. The localisation mandates outlined in Decree 53 stipulate that covered data must be stored within Viet Nam for a minimum of 24 months. Furthermore, foreign entities impacted by these regulations must establish a physical presence, either through a local branch or representative office, within 12 months following official notification. These obligations aim primarily at ensuring governmental oversight and ease of access to critical data for law enforcement and national security purposes.
Complementing this framework, the Personal Data Protection Decree (PDPD), effective from July 2023, aligns closely with international standards such as the European Union’s GDPR by defining explicit roles for data controllers and processors and applying rules extraterritorially. The PDPD can enhance transparency and accountability in data processing, contributing positively to consumer trust and aligning Viet Nam with global best practices. Nonetheless, the PDPD also introduces complexities, particularly around cross-border data transfers. Organisations handling personal data must undertake comprehensive transfer impact assessments, with criteria that remain partially unclear. These assessment obligations, while not explicitly mandating data localisation, create significant procedural and compliance hurdles that encourage firms to retain data domestically to avoid regulatory uncertainty. The upcoming Data Law, effective July 2025, further expands the data governance framework by introducing the concepts of "important data" and "core data," which explicitly prioritise national security, public order, and public interest considerations. Under this law, data categorised within these classifications may face additional transfer restrictions and prior governmental approval requirements. The precise definitions and the operational details of these categories await clarification through supplementary implementing regulations, thus currently leaving businesses with substantial uncertainty regarding compliance strategies.
From an investment perspective, Viet Nam's data localisation policies impose considerable compliance costs, particularly for smaller or mid-sized enterprises and foreign tech firms reliant on cloud-based solutions or cross-border digital operations. The required physical presence and local data infrastructure create significant entry and operational barriers, potentially limiting market competition and innovation. Stringent and ambiguous rules could discourage investment, particularly affecting sectors such as data centres and digital platforms reliant on efficient cross-border data flows. To mitigate the adverse impacts of these policies and improve the investment climate, it is crucial for Vietnamese policymakers to introduce clear, transparent, and predictable guidelines, particularly regarding the categorisation of data types and specific transfer approval procedures. Ensuring a balanced approach–one that maintains necessary oversight and security without disproportionately burdening enterprises–will be essential in fostering a competitive and innovative digital economy environment in Viet Nam.
Viet Nam's Digital Technology Law, effective from January 2026, introduces comprehensive regulation aimed at fostering innovation and enhancing the regulatory clarity surrounding digital technologies. By formally recognising digital assets, including cryptocurrencies, as property under civil law, the legislation provides a foundational legal certainty crucial for businesses operating in emerging sectors. Moreover, the law institutes a structured licensing regime aligned with international anti-money laundering and cybersecurity standards, enhancing the credibility and stability of Viet Nam's digital markets while addressing compliance expectations from international bodies like the Financial Action Task Force (FATF). From an investment perspective, these provisions represent significant progress. They offer clear incentives–including support for R&D and streamlined procedures for attracting foreign digital specialists–that could significantly boost Viet Nam's attractiveness as a regional digital hub. The regulatory sandbox mechanism and differentiated AI risk classifications provide flexibility for innovation, allowing controlled experimentation while managing potential risks effectively. Nevertheless, the specific compliance details, such as licensing criteria, capital adequacy thresholds, and operational requirements, have yet to be fully detailed and clarified, potentially introducing uncertainties and compliance burdens, especially for smaller enterprises or new market entrants.
To maximise investment inflows and innovation outcomes, further policy reform efforts should focus on rapidly clarifying the detailed implementation decrees, particularly around licensing, reporting obligations, and the scope of digital asset transactions. Ensuring transparency and predictability in these regulatory specifics, combined with active stakeholder engagement–including both domestic firms and foreign investors–will be critical. Aligning these detailed regulatory frameworks closely with international best practices while maintaining flexibility for market responsiveness will further enhance Viet Nam's competitiveness in the digital economy landscape.
3.3.5. Competition rules for the telecommunications sector could be strengthened to attract investment in ICT infrastructure
The limited investments in Viet Nam’s ICT infrastructure could be explained by regulatory barriers and limited competitive neutrality in the telecommunications market. The current regulator, the Authority of Telecommunications, is embedded within the Ministry of Science and Technology (MoST), shortly after the former Ministry of Information and Communications was merged into MoST in early 2025. This arrangement creates conflicts of interest, as most leading operators –Viettel, MobiFone, VNPT, and now FPT Telecom– are also state‑controlled via the Ministry of Defence, Public Security or the State Capital Investment Corporation. Such vertical integration between policymaking, regulation, and ownership impedes competitive neutrality –understood here as the principle that public and private enterprises should operate under equal, fair and non-discriminatory competitive conditions, consistent with the principles set out in Viet Nam’s 2018 Law on Competition– and limits new entrant potential. In November 2023, Viet Nam passed a new Telecommunications Law, effective in mid‑2024, with specific provisions coming into force by early 2025. Decree 163/2024‑ND‑CP, issued in December 2024, implements the law, including streamlined registration for offshore OTT, cloud and data centre services. For instance, foreign providers no longer need local partnerships to provide services, only a notification to the regulator is required. This opens new channels for digital FDI, though infrastructure‑based services remain tightly regulated.
Viet Nam has established a comprehensive legal framework to promote competition and ensure a fair and non-discriminatory business environment. The 2018 Law on Competition guarantees enterprises the right to freely compete and sets out principles of honesty, fairness and transparency in market conduct. It also affirms the State’s role in establishing and maintaining a healthy, equal and competitive market environment, enhancing market access, improving economic efficiency and protecting consumer interests. These principles apply economy-wide, including to state-owned and private enterprises, and provide an important legal basis for competition policy enforcement across sectors.
State policy frameworks such as the Information and Communications Infrastructure Plan 2021-2030 and the Digital Infrastructure Strategy up to 2030 set ambitious targets (e.g. universal 1 Gb/s fixed broadband, 99 % population access to 5G) (Prime Minister of Viet Nam, 2024[38]; Prime Minister of Viet Nam, 2024[39]). Subsidy schemes reward providers deploying at least 20 000 5G sites with 15 % of deployment costs reimbursed, yet the strategy relies principally on existing SOEs rather than consciously opening the market to new players. This reinforces entrenched market concentration despite growing capacity. Viet Nam’s digital divide remains pronounced: internet access and quality lag in rural and remote areas, despite widespread population coverage. The dominance of SOEs and insufficient competitive pressure may result in uneven geographic roll‑out, slower uptake of emerging infrastructure, and higher pricing, all of which may depress broader adoption and cloud or platform‑based investment.
Strengthening the independence and effectiveness of Viet Nam’s telecommunications regulatory framework would be a critical step toward enhancing investor confidence and attracting higher levels of FDI in digital infrastructure. The current institutional arrangement, in which the Authority of Telecommunications operates under the Ministry of Science and Technology (MoST), while major telecommunications providers remain state-owned, raises concerns about conflicts of interest and limited competitive neutrality. Establishing an independent regulatory authority –functionally and institutionally separate from ministerial control and insulated from state ownership– would help align Viet Nam’s governance framework with international good practices, contributing to a more transparent and predictable investment environment.
Experience from regional peers suggests that independent regulators, supported by transparent licensing regimes and well-designed universal service mechanisms, can accelerate infrastructure deployment, promote competition, and reduce end-user costs. Viet Nam’s current approach, which continues to vest infrastructure licensing and oversight within executive ministries, may limit market openness and flexibility, particularly for new entrants. Although recent reforms, including the 2024 Telecommunications Law and Decree 163, have expanded opportunities for foreign participation – particularly in over-the-top (OTT), cloud, and data centre services– regulatory burdens remain substantial. Investors continue to face complex and often overlapping obligations related to data localisation, cybersecurity, and privacy protection, with compliance frameworks administered by multiple authorities, including the Ministry of Public Security and MoST. These requirements can generate legal uncertainty, elevate operational risks, and ultimately deter investment in the broader digital ecosystem.
Further progress could be achieved by reinforcing the functional independence of the telecommunications regulator, liberalising infrastructure licensing procedures, and aligning regulatory practices with Viet Nam’s international commitments under agreements such as the CPTPP and ASEAN frameworks. In parallel, expanding the use of targeted investment support mechanisms –such as universal service funds or performance-based incentives– could facilitate the deployment of high-quality digital infrastructure in underserved regions without reinforcing market concentration. Clarifying and harmonising data governance provisions, including on localisation and cybersecurity, in line with international standards, would further contribute to a more enabling and investment-friendly digital policy environment.
Singapore
Singapore’s telecommunications reform began in the early 1990s with the creation of the Telecommunication Authority of Singapore (TAS), which separated regulatory functions from the operational roles formerly embedded in the national incumbent operator (ITU, 2001[40]) . This regulatory body, later formalised under the Info‑communications Development Authority (IDA) and now the Infocomm Media Development Authority (IMDA), is structurally and financially independent from both government ministries and commercial operators. It operates on transparent, publicly codified licensing procedures, with appeal mechanisms and clear criteria, following ITU best practice models (MANOA, 2011[41]). Over time, this governance set-up boosted investor confidence, permitted foreign participation in telecom and digital services, and facilitated the emergence of competitive new entrants alongside the national operator.
Malaysia
Malaysia established the Malaysian Communications and Multimedia Commission (MCMC) under the Communications and Multimedia Act 1998 to oversee the converged telecommunications, broadcasting and postal sectors (ASEAN, 2022[42]). MCMC is operationally separate from the Ministry of Communications and functions under a clear legal mandate, allowing it to regulate licensing, spectrum allocation, and consumer protection. It also oversees universal service initiatives and infrastructure deployment planning through guidelines such as the Infrastructure Communications Development Plan, which enhances both service coverage and platform choice for consumers. While the regulatory regime retains government oversight, MCMC’s autonomy –even in budget and enforcement– has been important in moderating market concentration and supporting investor entry.
Philippines
The National Telecommunications Commission (NTC) in the Philippines was originally created under the State regulatory framework in 1979 and functions under the Department of Information and Communications Technology (DICT), yet retains quasi‑judicial authority on licensing and spectrum. Major reform arrived in the mid‑1990s with Republic Act 7925, which removed most direct state participation in telecom operations and introduced deregulation, though keeping long, politicised franchise requirements (World Bank, 2024[43]). More recently, in 2018–19, the government broke the PLDT–Globe duopoly by competitively awarding a third major telecom license to DITO Telecommunity via transparent bidding, imposing coverage, speed and investment conditions. Proposed legislative reforms under the Konektadong Pinoy Act (Open Access in Data Transmission) aim to simplify licensing, remove barriers to market entry, and promote competition in underserved areas.
3.3.6. Investment promotion and facilitation could be better co-ordinated and targeted to attract digital-intensive investments
Viet Nam has made digital economy development a centrepiece of its FDI attraction strategy. The government launched a National Digital Transformation Programme toward 2030, aiming to have the digital economy contribute 30% of GDP by that year (Bao, 2024[44]). In October 2024, the Prime Minister approved a comprehensive Digital Infrastructure Strategy to 2025, with vision to 2030, outlining priority investments in ICT infrastructure (Nguyen Hanh, 2024[45]). By creating a world-class digital infrastructure backbone, Viet Nam signals to foreign tech companies that the country is ready for investments in 5G, data centres, cloud services, and IoT. The ultimate goal is to position Viet Nam among the top 50 countries in e-government and digital economy readiness, which in turn makes it an attractive destination for FDI in digital industries (ibid.).
The IPA aligns with the government’s strategy by prioritising digital transformation and directing resources toward attracting FDI in digital sectors. The digital transformation is one of the three main drivers guiding the prioritisation of sectors in Viet Nam’s IPA reform efforts, aligning with the growing emphasis placed on digitalisation in approximately 50% of OECD countries and 56% of ASEAN countries (Figure 3.10) (Sztajerowska and Martincus, 2021[46]; OECD, 2023[47]). In particular, the IPA actively promotes and targets sectors within the digital economy such as e-commerce and software development. In recent years, the allocation of resources toward attracting FDI in digital sectors has risen notably. While the share of time and staff dedicated to digital sector promotion was estimated at 10-25% during 2018-2019, this figure increased significantly to 50–75% during 2022-2023. This shift reflects the IPA’s growing recognition of digital sectors as strategic priorities for the country's economic development.
Source: OECD based on OECD (2022[48]), Survey on Investment Promotion and Digitalisation.
To attract digital FDI, Viet Nam’s IPA primarily employs non-fiscal incentives, including grants, loans, and subsidies. These incentives are targeted at specific sectors, particularly high-tech industries, as well as others like agriculture and rural development. The recently passed Law on the Digital Technology Industry reflects the government’s commitment to developing the digital sector. Viet Nam will offer multi-year corporate tax reductions and generous incentives – similar to those provided in disadvantaged zones – for foreign investors that transfer technology or establish digital production in dedicated tech zones. Additionally, personal income tax exemptions are available for high-quality tech professionals during their first five years in the country (Dung, 2025[49]; Vietnam Investment Review, 2025[50]).
In its promotional efforts, the IPA also promotes the development of digital clusters, incubators, and hubs, aiming to foster an ecosystem conducive to innovation and entrepreneurship. According to survey responses, Viet Nam’s IPA perceives the country as an attractive destination for digital investment. This perception is primarily based on a strong legal framework, featuring comprehensive laws and regulations on cybersecurity, data protection, intellectual property rights, consumer protection, and competition. The presence of a favourable innovation ecosystem, comprising R&D centres, universities, and technology clusters, is seen as a secondary but complementary strength. Additionally, the IPA makes active use of digital tools in a basic and limited manner, such as videoconferencing, e-meetings, webinars, virtual fairs, and social media campaigns. Looking ahead, the agency plans to expand the use of digital technologies and processes further to enhance investment generation, targeting, and attraction.
In parallel, Viet Nam’s investment promotion efforts are increasingly supported by digital platforms that enhance the visibility and accessibility of investment opportunities. In particular, VIETRADE operates the Viet Nam Industrial Investment Promotion Portal (investvietnam.gov.vn), which provides regularly updated information on industrial parks, clusters and production zones across the country. The platform is designed to support both domestic and foreign investors in identifying suitable locations, sectoral specialisations and potential partners, thereby complementing traditional promotion activities. As digital-intensive investors increasingly rely on online channels for location screening and partner search, such platforms can play an important role in strengthening Viet Nam’s digital investment promotion toolkit. Further integration of this portal with broader investment facilitation services –such as investor guidance, aftercare support and linkages to innovation or supplier databases– could enhance its effectiveness in attracting and anchoring digital-intensive investments.
Viet Nam’s IPA has made notable progress in the digitalisation of investment facilitation processes. The procedures to establish a business and obtain investment authorisation, where required, are fully available online, reflecting an important step toward improving investor experience and reducing administrative burdens. Nevertheless, important gaps remain. Only part of the payments required during the investment process can currently be completed electronically, limiting the seamlessness of the overall digital experience. Furthermore, while the IPA has digitalised certain services, it does not yet host a fully integrated investor portal or single window for the digital delivery of services. As a result, investors still face some fragmentation when navigating administrative procedures, in contrast to international good practices.
The IPA is considering expanding its use of digital tools for investment facilitation and investor servicing. However, there are no current plans to leverage digital platforms for policy advocacy or consultations with government, which could further strengthen Viet Nam’s investment climate, particularly for fast-moving digital sectors. According to the IPA, the key challenges hindering greater digital integration are high technology costs, a lack of resources, insufficient experience, and a shortage of adequate skills and training. Addressing these barriers could open the door to a more comprehensive digital facilitation strategy, better aligned with international good practices. To ensure that investment promotion activities address industry needs and challenges effectively, the IPA should establish regular consultations with digital sector stakeholders.
Addressing these challenges could benefit from a more active role from FIA in investment facilitation and aftercare, particularly in the specific needs of digital investors. Country examples such as Malaysia’s Digital Investment Office, Estonia’s e-Residency program, and Lithuania’s regulatory sandboxes demonstrate how strong digital facilitation mechanisms – including integrated portals, streamlined services, and proactive digital engagement – can significantly enhance a country's attractiveness for digital FDI (see Box 3.6). These models offer valuable lessons as Viet Nam seeks to further digitalised its investment facilitation efforts.
Digital-focused initiatives in investment facilitation refer to strategies employed by IPAs to integrate digital transformation into the attraction and retention of FDI. By supporting investors in adopting digital technologies and promoting investment in digital sectors, IPAs can enhance innovation, accelerate economic modernisation, and foster more competitive, future-ready economies
3.3.7. Viet Nam pursues a whole-of-government approach to digital skills development, yet there is further scope to leverage FDI for workforce upskilling
As digital FDI plays an increasingly important role in job creation in Viet Nam–particularly in high-value sectors such as electronics, ICT, and software development–investing in digital skills development is essential to ensure that the domestic workforce can fully benefit from these opportunities (see Figure 3.2 and Figure 3.6). Digital FDI jobs typically demand medium to advanced digital competencies, making the availability of skilled labour a key factor in both attracting and retaining investors. Firm-level surveys confirm that digital talent is among the top criteria influencing investor decisions in the digital economy (Stephenson, 2020[53]). Strengthening digital capabilities within the local workforce would enable foreign-invested firms to hire locally rather than rely on expatriates, thereby supporting broader employment outcomes. At the same time, higher digital skills within domestic firms are closely linked to greater adoption of advanced technologies, including AI, cloud computing, and big data analytics (Minh et al., 2024[54]; Nguyen and Nguyen, 2022[55]). This, in turn, increases the likelihood of linkages between foreign and domestic firms, as foreign technology companies are more inclined to source locally when domestic suppliers demonstrate higher digital maturity. Investing in digital skills is therefore not only essential for employment but also for fostering deeper integration of domestic firms into digital value chains (OECD, forthcoming[10]).
Given the cross-cutting nature of digital transformation, Viet Nam’s efforts to adopt a whole-of-government approach to reskilling and upskilling are encouraging. As in many OECD and partner economies, digital skills development is integrated into broader digitalisation strategies. The Strategy for the Development of the Digital Economy and Digital Society, for example, sets a target for 80% of the working-age population to have received basic digital skills training by 2030 (Prime Minister of Viet Nam, 2022[29]). To support this objective, the One Touch platform was launched by the Ministry of Information and Communications (now under the Ministry of Science and Technology), in collaboration with private sector partners. This platform delivers digital training programmes to national and local government agencies, large corporations, state-owned enterprises, and media organisations either online or through in-person consultations (MIC, 2024[56]). In March 2025, these policy efforts were further reinforced with the launch of the Digital Literacy Platform, which was developed by the Ministry of Public Security and offers a wide range of free courses, from basic programming for secondary school students to AI applications in product design for businesses (EdTech Centre, 2025[57]).
Viet Nam’s targeted efforts to develop digital skills in the semiconductor industry are a welcome step toward building long-term competitiveness in this strategic sector. In 2024, the government launched the programme “Developing Human Resources for the Semiconductor Industry to 2030, with a Vision to 2050” (Prime Minister of Viet Nam, 2024[58]), outlining a comprehensive plan to expand the domestic talent pool for semiconductor design, manufacturing, packaging, and testing. The programme sets out a range of co-ordinated actions to strengthen workforce capabilities, including upgrading university laboratory equipment, funding scholarships, expanding international academic collaboration, supporting on-the-job training, and establishing incubation opportunities for start-ups. It also promotes stronger engagement between training institutions and industry through workforce commitment agreements with both domestic and foreign companies. Given the programme’s ambitious scope, the next critical step is ensuring effective implementation. Clear accountability mechanisms and close monitoring of progress by responsible agencies will be essential to translate this strategy into tangible workforce outcomes and meet the growing demand for skilled talent in the semiconductor sector (OECD, forthcoming[1]).
Strengthening co-operation with multinational enterprises (MNEs) to deliver digital skills training can generate long-term benefits for Viet Nam’s innovation ecosystem. As global technology firms often operate at the frontier of digital knowledge, addressing the skills gaps identified by these firms can help align domestic human capital with evolving industry needs (OECD, forthcoming[10]). Several promising initiatives are already underway, including digital training programmes delivered by the National Innovation Centre (NIC) in partnership with Google, and the Innovation Campus launched in collaboration with Samsung. However, data from the National Employment Centre suggests that many foreign firms operating in digital sectors continue to prefer hiring pre-trained workers, and in some cases, rely on expatriates or intra-company transfers rather than invest in local training. Integrating digital skills development more systematically into Viet Nam’s investment promotion and policy framework could help close this gap.
Costa Rica’s IPA co-operation with foreign MNEs to support the development of skills
The Costa Rican Foreign Trade and Investment Promotion Agency (PROCOMER) has developed initiatives to support skills development and attract foreign direct investment (FDI) by ensuring a workforce aligned with the needs of multiple industries. In collaboration with FDI companies, training centres, and public and private organisations, PROCOMER has facilitated upskilling and reskilling programmes for over 4 500 individuals, delivering more than 2 000 training courses in high-demand areas related to technical skills, power skills, and language competencies. PROCOMER provided partial funding–covering up to 90% of costs–to companies that designed training programmes tailored to their business needs and learning and development plans. This approach has been critical in closing knowledge gaps. The benefits of these programmes include: i) Improvement of the technical and professional profile of beneficiaries (employees/job seekers); ii) Reduction in employee turnover rates; iii) Savings in rework and personnel training; iv) Increased specialisation of human talent; v) Support to workforce located outside Great Metropolitan Area of Costa Rica.
Domestic capacity building through Egypt’s Industry 4.0 Innovation Centre
The Industry 4.0 Innovation Centre (IIC) in Egypt is a collaborative initiative established by ITIDA, the Industrial Modernisation Centre (IMC), and a German electronics manufacturer. Located in the Knowledge City at the New Administrative Capital, the IIC aims to promote the adoption of Fourth Industrial Revolution (4IR) technologies and practical applications in smart factories (ITIDA, 2022[59]). ITIDA has contracted with 26 local and international companies specialised in designing electronics to establish their branches in the IIC. The centre focuses on 1) Training and Capacity Building: Providing training in automation and digitisation techniques to enhance the skills of the local workforce; 2) Technology Adoption: Encouraging the integration of advanced technologies in local manufacturing processes to improve efficiency and competitiveness; and 3) Industrial Innovation: Supporting the design and development of smart factories, fostering innovation within the industrial sector.
The IIC is part of the broader "Egypt Makes Electronics" initiative, which aims to transform traditional manufacturing practices into Industry 4.0 techniques, positioning Egypt as a leading regional hub for innovative electronic designs. The German electronics manufacturer contributes its extensive expertise in automation and digitisation to the IIC, providing advanced technologies and equipment such as 3D printers, robotics, and automation systems (ITIDA, 2021[60]) These resources are integral to the centre’s mission of training local manufacturers and facilitating the transition to smart factory practices. Beyond technological support, the manufacturer actively engages in educational initiatives, offering training programmes and technical workshops to enhance the skills of the local workforce. This commitment to knowledge transfer is designed to stimulate industrial innovation and support the development of smart factories.
Given the fast-evolving nature of digital technologies, it is important that the wider economy has access to continuous skill development opportunities. Vietnamese SMEs that adopt digital practices either in management or production processes, are associated with higher innovation capabilities (Hoang et al., 2024[61]). Digital skill development in SMEs is rising in importance as a tool to seize market opportunities provided by the presence of FDI companies. Some initiatives to increase SME digital capabilities include the IT trainings for e-commerce opportunities provided by Vietrade or the Digital Transformation Centre operated by the Agency for Private Enterprise Development and Collective Economy (APED) with the support of GIZ, where SMEs can receive consultations on digitalisation as a tool to optimise their production processes (GIZ, 2024[62]). Yet, consultations with stakeholders indicate that remote areas are less likely to use basic digital technologies, including smart phone applications. Such regional disparities must be considered in policy design to avoid adverse effects of digital FDI. Ensuring free online training provision, or access to such trainings on a local level across provinces could support this objective.
Bureaucratic burden should be reduced for universities to seek collaborative projects with business enterprises, including foreign MNEs. Collaboration between foreign and domestic private firms, universities and training centres is an underlying feature of comprehensive digital skills strategies (OECD, forthcoming[10]).There are good examples in Viet Nam of successful university collaboration with MNEs in the digital skill landscape, such as the R&D centre Samsung established in the Post and Telecommunications Institute of Technology. However, consultations with stakeholders indicate that despite the government allocating budget for university collaborations with private companies, these funds are often difficult to spend due to bureaucratic hurdles. Lengthy processing times and requirements to receive ministry approvals make these collaborations unattractive for universities and the private sector. The adoption of Resolution No. 57-NQ/TW is a step in the right direction to address these concerns since it suggests increasing autonomy of research institutions and allowing the use of state budget funds for collaboration with enterprises (Central Executive Committee, 2024[31]). Viet Nam should focus on the resolutions implementation to reduce the bureaucratic burden associated with obtaining the funds necessary for collaborative activities.
3.3.8. Viet Nam offers generous incentives to attract digital investment, but effective implementation and performance-based conditions will be key to maximising impact.
Viet Nam has introduced an ambitious set of investment incentives to accelerate its digital transformation and position itself as a regional hub for emerging technologies. Recent reforms to the Law on Investment and the Corporate Income Tax Law, combined with the adoption of the Law on Digital Technology Industry in June 2025, signal a shift toward more targeted support for innovation-driven activities. These reforms aim to attract high-value investments in artificial intelligence (AI), semiconductors, cloud computing, digital platforms, and other core components of the digital economy, in line with the government’s objective of nurturing 150 000 digital technology firms by 2035.
The new incentive framework offers a range of tax benefits tailored to digital and high-tech sectors. Qualifying projects benefit from a full corporate income tax (CIT) exemption for the first two years, followed by a 50% reduction over the subsequent four years. For more strategic sectors–such as software development, cybersecurity, data centre services, and AI-related R&D–a preferential CIT rate of 10% is granted for up to 15 years. Larger-scale investments meeting capital thresholds of VND 6 trillion (approximately USD 230 million) are eligible for even more generous terms, including a CIT rate of 5% for 37 years, a six-year tax holiday, and a 13-year 50% reduction. In addition, land and water surface rental fees may be waived for up to 22 years and significantly discounted thereafter. These measures are designed to attract both greenfield investment and technological upgrading by existing firms, and are among the most generous incentive packages currently offered in the ASEAN region.
The effectiveness of Viet Nam’s incentive regime for digital investment may also be influenced by evolving international tax rules, notably the implementation of the Global Minimum Tax (GMT) under the OECD/G20 Inclusive Framework. The GMT introduces a minimum effective tax rate of 15% for large MNEs with consolidated revenues above EUR 750 million, which are likely to account for a substantial share of investment in capital-intensive digital activities such as semiconductors and data centres. In this context, generous income-based incentives –such as prolonged corporate income tax holidays and reduced statutory rates– may no longer significantly affect investment decisions for in-scope MNEs if any resulting tax savings are offset by top-up taxes applied in the investor’s home jurisdiction or elsewhere. This raises the risk that foregone tax revenues do not translate into additional investment or technology upgrading domestically. At the same time, expenditure-based and non-tax incentives –such as grants, co‑financing, R&D support, skills development subsidies and infrastructure provision– are less affected by the GMT and may therefore play a more effective role in attracting and anchoring high-quality digital FDI. Viet Nam’s recent move toward financial support instruments, including the planned Viet Nam Fund for Investment Support, could help mitigate potential GMT effects while aligning incentives more closely with policy objectives related to innovation and technology transfer. As implementation of the GMT advances globally, a systematic review of the incentive mix for digital sectors –taking into account investor profiles, fiscal costs and development outcomes– would help ensure that Viet Nam’s incentive framework remains both competitive and fiscally sustainable.
Beyond tax-related measures, Viet Nam’s digital investment incentives include non-fiscal support designed to improve the ease and attractiveness of investing in digital infrastructure and innovation. These include reduced or exempted land rental costs in designated high-tech zones, expedited customs procedures for importing specialised digital equipment, and simplified licensing pathways for digital and semiconductor enterprises. The government has also introduced special investment procedures for high-tech projects, allowing qualified investors to commence operations up to a year earlier than standard processes would permit. Such measures aim to reduce the administrative burden on investors, accelerate project implementation, and improve the predictability of investment outcomes. To complement these incentives, the government is preparing the launch of the Viet Nam Fund for Investment Support, a state-backed financing vehicle intended to channel financial assistance to large-scale innovation projects. The fund is expected to provide grants or co-financing for capital-intensive projects in key digital sectors such as semiconductors, R&D centres, and AI applications, particularly in cases where investment costs are affected by global minimum tax arrangements. These financial tools are further supported by recent efforts to attract digital talent through extended residence permits for foreign experts and their families, helping to address persistent skill shortages in the digital economy.
Digital economy investments are also being promoted through the expansion of dedicated high-tech zones. Investors locating in the Saigon Hi-Tech Park, Hoa Lac Hi-Tech Park, or the Da Nang Hi-Tech Park benefit from streamlined administrative procedures, access to shared infrastructure, and automatic eligibility for enhanced incentives. These zones are increasingly being positioned not only as manufacturing clusters but as full-service innovation ecosystems, supporting both domestic start-ups and foreign investors engaged in R&D, prototyping, and advanced digital services.
While these efforts represent a significant advancement in Viet Nam’s investment policy, effective implementation will be essential to ensure their impact. International experience suggests that generous incentives alone are not sufficient to attract high-quality digital FDI if administrative procedures remain complex or if policy interpretation is inconsistent across agencies. In this regard, Viet Nam could further strengthen the transparency and accessibility of its incentive regime by publishing detailed eligibility guidelines and maintaining a centralised digital portal for investors. Coordination between the Foreign Investment Agency (FIA), the Ministry of Planning and Investment, and the Ministry of Science and Technology could also be enhanced to ensure that promotional efforts are aligned with sectoral priorities and that investors receive timely and coherent information. Moreover, to ensure that incentives contribute meaningfully to long-term development goals, Viet Nam could consider introducing performance-based criteria linked to technology transfer, skills development, or local R&D spending. Establishing periodic evaluations of incentive effectiveness would also support better policy learning and enable adjustments based on real-world outcomes. As global competition for digital investment intensifies, Viet Nam’s ability to combine attractive incentives with transparent governance, skilled talent, and a reliable digital infrastructure will be a key determinant of its success in moving up the digital value chain.
3.3.9. Strengthening the digital capacities of Vietnamese enterprises to collaborate with foreign tech firms
While most foreign multinational enterprises (MNEs) in Viet Nam are active in ICT manufacturing, domestic enterprises have yet to fully embrace digital transformation. Despite near-universal internet access, a pre-COVID-19 survey by the General Statistics Office and the World Bank revealed that very few domestic firms had established a web or social media presence–particularly among small enterprises, where fewer than 30% reported having either (Cirera et al., 2021[63]). Digital technologies also remain underutilised in core business operations and production processes. Key barriers include limited awareness of the benefits of digitalisation, high adoption costs, and a shortage of digital skills within the workforce (Thanh et al., 2025[64]). In addition, the lack of adaptive managerial human capital further constrains technology uptake in many domestic firms (Cirera et al., 2021[63]). These challenges are not unique to Viet Nam; SMEs in OECD economies also face similar constraints, particularly related to skills and affordability (OECD, 2024[65]). In the Vietnamese context, these barriers are particularly concerning given the growing dominance of digital FDI (see Figure 3.1). The limited digital maturity of domestic firms undermines their ability to form linkages with foreign investors, who often require local partners to meet certain technological standards. Accelerating the digitalisation of domestic firms would not only improve production efficiency and scalability, but also enhance their suitability for collaboration with foreign firms. Empirical evidence confirms that Vietnamese SMEs that integrate digital tools into their operations are significantly more likely to participate in international trade (Thanh et al., 2025[64]).
While the government has increasingly prioritised the digitalisation of the domestic economy, many support measures still fail to reach the majority of SMEs. Key programmes are delivered through the National Authority of Information Technology Industry, which assists firms in their digital transformation efforts and in aligning with the needs of FDI companies. Among its initiatives is a government-backed scheme that subsidises ICT service purchases and IT system upgrades for SMEs, covering up to 50% of outsourcing costs. Recent policy developments have further elevated ambitions. Resolution No. 57-NQ/TW outlines new mechanisms to encourage the scaling up of digital enterprises (Central Executive Committee, 2024[31]), while the upcoming Digital Technology Industry Law, set to take effect in January 2026, provides both financial and non-financial incentives to accelerate digital adoption. These include corporate income tax (CIT) deductions for R&D spending, expanded access to skilled workforce training, and greater use of public digital infrastructure by private enterprises. However, low awareness among businesses significantly limits the impact of these initiatives. Empirical studies estimate that fewer than 10% of firms are aware of available government support for technology adoption, with awareness levels even lower among SMEs (Cirera et al., 2021[63]). Bridging this information gap will be essential to ensure that digitalisation support programmes are accessible, inclusive, and effective in reaching the firms that need them most.
Creating a centralised digital platform that consolidates information on available government support for domestic technology firms –including eligibility criteria, application procedures, and contact points– could significantly improve outreach and uptake of support measures. Such a platform could be housed within the National Startup Support Centre (NSSC) or the Agency for Private Enterprise Development and Collective Economy (APED), and should include not only national-level programmes but also support schemes offered by provincial governments. To maximise accessibility and impact, the platform should be user-friendly, regularly updated, and integrated with other government portals used by SMEs and entrepreneurs. Several Southeast Asian countries have already adopted similar approaches. For example, Singapore’s SME Portal, maintained by Enterprise Singapore, offers a centralised repository of tools, grants, training programmes, and step-by-step guides for firms at different stages of digitalisation. In Malaysia, the Malaysia Digital Economy Corporation (MDEC) operates a "Digital Investment Office" that consolidates information on incentives, facilitates applications, and connects firms to advisory services. Meanwhile, Thailand’s Digital Economy Promotion Agency (DEPA) provides a dedicated platform offering digital maturity assessments, matching grants for SMEs, and a searchable database of accredited service providers. Drawing on these models, Viet Nam could develop a tailored, centralised platform to serve as a one-stop shop for digital economy support–helping domestic firms, particularly SMEs, navigate complex support landscapes and better engage in digital transformation efforts.
Viet Nam would benefit from increasing MNE awareness of potential domestic suppliers operating in ICT sectors. MoST has created an online portal which publishes information on science, technology, innovation and digital transformation products that are created in Viet Nam. The portal was designed to serve as a bridge between the ministry, businesses and research organisations, creating a space for policy proposals and information exchange between stakeholders. It already includes some features useful to increase domestic company awareness of the services available to them, such as a link to the Intellectual Property Office of Viet Nam which provides information on how to receive consultations on IPR protection. MoST could consider further building on this tool and integrate foreign firms in this ecosystem. The portal could serve as an informative tool also to foreign tech firms looking for domestic partners. The platform could thus serve as a comprehensive technology exchange system involving all relevant actors.
Beyond broad-based digital adoption support, Viet Nam could adopt more targeted instruments to actively catalyse linkages between foreign digital MNEs and domestic firms, particularly in ICT services, software and emerging digital technologies. One option would be to promote structured co‑innovation and supplier development programmes that bring together foreign tech investors, domestic SMEs and start-ups, and public agencies around clearly defined technology challenges or market opportunities. As illustrated by Egypt’s ICT partnership initiatives (Box 3.8), government-facilitated programmes that incentivise MNEs to provide domestic firms with access to cloud infrastructure, technical training, mentoring and co-creation opportunities can accelerate capability upgrading while lowering entry barriers for local firms. In the Vietnamese context, such programmes could be implemented in priority digital domains– such as AI-enabled manufacturing, data services, fintech or smart logistics– and anchored in existing innovation institutions, industrial parks or digital hubs, with participation by foreign investors already active in the country.
Viet Nam could explore procurement-based mechanisms to encourage foreign investors to deepen local sourcing and partnerships in digital activities. Voluntary reporting, certification, or regulatory schemes that recognise and reward local digital sourcing, R&D collaboration and supplier development efforts could help align MNE incentives with domestic ecosystem development. The UAE’s ICV Programme (Box 3.8) illustrates how procurement scoring and certification can encourage firms to embed local partnerships into their business models without prescribing specific technologies or suppliers. Adapted to the Vietnamese context, similar mechanisms could be piloted within public procurement or investment promotion frameworks, complemented by targeted support to help domestic digital firms meet international standards. Together, these measures would move beyond general digitalisation support towards active facilitation of technology transfer, co-innovation and sustained linkages between foreign investors and domestic digital enterprises.
Supporting R&D and technology partnerships with startups
In August 2022, Egypt’s Information Technology Industry Development Agency (ITIDA) and a technology multinational signed a memorandum of understanding (MoU) to launch a collaborative initiative in Egypt. This initiative aims to support deep-tech startups by providing them with opportunities to establish roots in new markets, expand their client reach, and engage in co-creation projects with the multinational. The programme focuses on startups operating in areas such as artificial intelligence (AI), data management, gaming, and e-commerce. Selected startups gain free access to the MNE’s cloud resources and training programmes, including technical support in cloud and AI technologies. This support enables startups to develop their own applications, services, and appliances, thereby enhancing their technological capabilities and market competitiveness. By collaborating with the MNE, ITIDA aims to significantly impact Egypt's entrepreneurship ecosystem, boosting innovation and building the capacities of young talent on the latest ICT technologies.
Leveraging public procurement to encourage local sourcing by foreign investors: The UAE’s ICV Programme
In the United Arab Emirates, the National In-Country Value (ICV) Programme is a government-led initiative designed to strengthen the domestic economy by encouraging companies operating in the UAE –including foreign multinational enterprises (MNEs)– to increase the economic value they retain within the country. Managed by the Ministry of Industry and Advanced Technology (MoIAT), the ICV Programme evaluates and certifies firms based on how much of their procurement, investment, employment and operational activity is conducted locally (MOIAT, 2025[66]). Certified companies are issued an ICV certificate that reflects their contribution to the UAE economy through local sourcing of goods and services, capital investment, workforce development (including Emiratisation) and related value-add measures. This certificate has become an important competitive signal: major government and semi-government entities factor ICV scores into tender evaluations, giving preference or higher scoring to suppliers with higher local economic contribution.
ICV aims to redirect procurement spending and investment to domestic firms and industries, thereby localising supply chains, fostering the growth of local suppliers and services, and reducing dependence on imports. It also seeks to diversify the UAE’s economic base beyond hydrocarbons by attracting investment, stimulating new industries and services, and boosting private-sector participation in the national GDP. The programme supports job creation for UAE nationals and encourages knowledge and technology transfer through local partnerships. While the ICV framework does not segregate a distinct “digital economy” stream, it explicitly rewards activities linked to R&D, advanced technology adoption and innovation, thereby incentivising firms –including foreign MNEs– to invest in local capabilities that align with broader digital transformation goals. By quantifying and scoring these local contributions, the ICV Programme creates tangible procurement incentives for MNEs to embed local supplier engagement and ecosystem development into their UAE operations.
Source: OECD (2026[67]), Investment Policy Perspectives in the United Arab Emirates, https://doi.org/10.1787/d83cbff3-en, and OECD (2026[2]), FDI Qualities Review of Egypt: Connecting Foreign and Domestic Firms for Productivity and Better Jobs, https://doi.org/10.1787/04ed341a-en.
3.3.10. Viet Nam could leverage its tech startup ecosystem to attract FDI in digital sectors
Viet Nam has a growing tech start-up ecosystem which it could leverage to attract digital FDI. Viet Nam’s startup ecosystem is the third largest in Southeast Asia in terms of VC investments (2020-2022) and fourth largest in terms of number of start-ups (Crunchbase, 2024[68]; OECD, 2025[69]). Start-ups can play a crucial role in driving the technological growth and innovation of an economy, but often rely on well-developed government support schemes or access to funding in financial markets. Viet Nam could leverage its nascent start-up ecosystem to attract digital FDI. Already in the 2020-2022 period, 55% of all VC deals made in Viet Nam, came from foreign funds, largely based in Singapore or the United States (OECD, 2025[69]). The share of VC deals involving foreign funds is the highest in the ASEAN region, followed by Thailand with 50% and Indonesia where 45% of all VC deals were made through foreign funds.
Viet Nam has taken several steps to support the development of its tech start-up ecosystem and should continue strengthening these efforts. The Law on Support for Small and Medium-sized Enterprises (SMEs) introduced a wide range of support mechanisms, both for SMEs more broadly and specifically targeted at start-ups (National Assembly, 2017[70]). These include assistance for technological research and development (R&D) as well as support for developing and commercialising intellectual property. Implementation is led by institutions such as the National Technology Innovation Fund and the National Agency for Technology Entrepreneurship and Commercialisation Development, which also monitor the effectiveness of start-up support programmes (OECD, 2025[69]). In addition, the National Start-up Support Centre (NSSC) implements initiatives to promote international co-operation. A major development was the adoption of Resolution 68-NQ/TW, which introduced a suite of financial and non-financial incentives for innovative start-ups. For example, it provides Corporate Income Tax (CIT) reductions and enables private enterprises to access publicly owned laboratories, testing facilities and research equipment (Central Committee, 2025[71]). In line with this, Resolution 68-NQ/TW further specifies a set of tax exemptions and reductions for innovative start-ups and support organisations. These include CIT exemptions and reductions for start-up enterprises, venture capital fund management companies, and intermediary organisations supporting start-ups and innovation. As well as personal income tax exemptions for experts and scientists working in R&D centres, innovation centres, and intermediary organisations supporting innovation.
To maximise the impact of start-up support initiatives, improvements in service quality and access to information are needed. Despite the presence of over 1 400 incubators, accelerators and co-working spaces as of 2022, only 22% of start-ups report having received support from an accelerator (World Bank, 2023[72]; Pham and Tan, 2022[73]). This suggests a gap in the effectiveness and reach of these programmes. In particular, it is essential that shared equipment and facilities are aligned with the needs of high-tech and innovation-driven start-ups. Partnerships with private sector actors could help improve the quality of incubation and acceleration services. Moreover, a more systematic mechanism should be put in place to inform start-ups about available support programmes and facilitate their access. The NSSC could play a central role by strengthening its consultancy services and acting as a hub for information dissemination.
Viet Nam could consider operationalising a regulatory sandbox to facilitate innovation in high-tech sectors and enhance the country’s attractiveness for digital FDI. The legal framework for a sandbox mechanism, introduced under Resolution 68-NQ/TW, provides a foundation to test new business models in areas such as artificial intelligence, blockchain, big data, fintech and smart healthcare (Central Committee, 2025[71]). Regulatory sandboxes have been implemented in a number of OECD economies as a way to reduce regulatory uncertainty and allow for agile policy responses. For instance, Korea’s ICT sandbox, launched in 2019, grants temporary exemptions from specific regulations to enable start-ups to test innovative products and services across sectors such as AI, robotics and 5G (OECD, 2023[74]). In its first four years, the initiative resulted in 162 permits granted and nearly USD 130 million in private investment (Tae-yeol, 2023[75]). Importantly, it also enabled the government to assess which regulations were outdated or overly restrictive, providing a feedback loop for regulatory reform (OECD, 2023[76]). Implementing a similar model in Viet Nam–starting, for instance, in fintech–could allow for experimentation in a controlled environment and, if successful, be scaled to other sectors.
Despite Viet Nam’s vibrant start-up ecosystem, synergies with foreign direct investment are not yet fully realised. While many start-ups operate in high-tech and service-based fields–such as IT and software (25% of all start-ups), fintech, and business services (12% each)–most FDI remains concentrated in the manufacturing of electronics and ICT hardware. This sectoral misalignment may explain the limited integration between start-ups and foreign investors. In addition, multinational enterprises often rely on internalised innovation models and may prefer wholly owned investment structures when operating in technology-intensive sectors. In such cases, firms may limit technology sharing with external partners due to concerns about intellectual property protection, the protection of trade secrets, or the enforceability of contractual arrangements. Nevertheless, Vietnamese start-ups have shown strong performance in digital services, particularly e-commerce and fintech, often building on internationally validated business models. These characteristics may help explain their relative success in attracting foreign venture capital (VC), especially from Singapore and the United States (World Bank, 2023[72]).
Viet Nam could more actively leverage its high-tech start-up ecosystem to attract digital FDI, particularly by facilitating connections between foreign investors and local entrepreneurs. International investors can play a key role in scaling innovative start-ups or supporting exit strategies, which are often prerequisites for more mature VC ecosystems. While some foreign firms have already engaged in this space–for example, Samsung has supported start-up development activities, and others have launched incubation programmes and innovation challenges–a more co-ordinated and strategic effort is needed. In particular, the Foreign Investment Agency (FIA) could collaborate more closely with the National Start-up Support Centre (NSSC) to identify promising ventures and promote them to potential foreign investors. Establishing formal matchmaking mechanisms, innovation showcases, or public–private platforms could help unlock the untapped potential of start-ups as a channel for digital FDI. At the same time, strengthening the protection and enforcement of intellectual property rights, including trade secrets, would further support technology collaboration between foreign investors and domestic start-ups by increasing confidence in knowledge-sharing partnerships. Stronger IPR frameworks can help reduce incentives for multinational firms to rely exclusively on internalised innovation strategies and facilitate more effective technology transfer.
The Investment Office of Türkiye promoting foreign investments in start-ups
In its 2024-2028 FDI Strategy, Türkiye has included a pillar on high-quality financial FDI attraction in a form of investments in Türkiye’s start-up ecosystem, investments in seed funding, crowdfunding ecosystems and business angel networks. In its first Action Plan of 2024, Investment Office of Türkiye was assigned the task to actively promote the countries high-growth potential technology start-ups on an international scale. To implement this action, the Investment and Finance Office is now bringing start-ups to leading international technology and entrepreneurship conferences to connect them with international investors. On the other side, the Turkish IPA has also brought international VCs on visits to Türkiye to familiarise themselves with the Turkish start-up ecosystems. The IPA has also conducted policy advocacy campaigns to improve Türkiye’s start-ups legislation and make the foreign investments less burdensome.
Thailand’s Start-up Platform
The Start-up Thailand was created in 2016 and is being co-ordinated by the countries National Innovation Agency. The platform includes a start-up directory which enables investors to search start-ups by industry (ranging across fields like AI Robotic, Telecommunications, Health Tech and Clean Tech) and by status. The status function allows investors to identify which start-ups are at the seed funding stage and which have already entered Series A, B and C. Creating the website in English has allowed Thailand to showcase its start-ups also to international investors. In addition, the platform organises annual events bringing together start-ups with potential investors.
Source: OECD (2025[69]) Start-up Asia: Chasing the Innovation Frontier, https://doi.org/10.1787/a9b71040-en, Thai Startup (2024[77]), Thai Startup Directory, https://data.thaistartup.org/, Türkiye Investment Office (2024[78]), Türkiye Foreign Direct Investment Strategy 2024-2028, https://www.invest.gov.tr/en/pages/fdi-strategy.aspx, Türkiye Investment Office (2025[79]), Action Plan 2024, Türkiye Foreign Direct Investment Strategy 2024-2028, https://www.invest.gov.tr/en/Documents/turkiye-fdi-strategy-action-plans-2024.pdf?download, Türkiye Investment Office (2025[80]), FDI Agenda - July 2025, https://www.invest.gov.tr/en/publications/investment-office-july-2025-newsletter.html, Dağlıoğlu, A. Burak (2022[81]), In the era of the global start-up, countries must step up their game to attract FDI, https://www.weforum.org/stories/2022/07/globalized-startup-countries-attract-fdi/#:~:text=Start%2Dups%20%E2%80%94%20whether%20they%20work,sell%20them%20to%20the%20world
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