An Investor’s Guide to Vietnam’s Vinh Phuc Province

Vinh Phuc is becoming an increasingly important manufacturing hub in Vietnam with a slew of big firms starting new projects in the province in 2023. Here’s why.

Located around 50 kilometers north-west of Hanoi, Vinh Phuc province is a mountainous region, buzzing with economic activity. Just a stone’s throw from Vietnam’s capital, Vinh Phuc has access to a huge, youthful workforce, it’s well connected to the city and one of Vietnam’s biggest ports in Hai Phong, as well as the broader world via Noi Bai International Airport just 40 kilometers away.

This puts it in good stead with neighboring foreign direct investment (FDI) hotspots like Bac Ninh and Thai Nguyen. With this in mind, the Vietnam Briefing looks at how Vinh Phuc stacks up in terms of doing business in Vietnam.

Public Administration Performance Index

The Vietnam Provincial Governance and Public Administration Performance Index (PAPI), initiated by the United Nations Development Programs, benchmarks Vietnam’s 63 provincial governments.

In 2022, Vinh Phuc scored 44 on the PAPI Index. It achieved its best scores in ‘participation at local level’ and ‘control of corruption’. It did, however, perform poorly in ‘environmental governance’ and ‘public service delivery’. Notably, on the latter, it still performed significantly better than it did in 2018. On ‘environmental governance’, however, its 2022 score of three signified an ongoing slide over the past five years.

PAPI, Vinh Phuc, 2018 to 2022

Source: The Viet Nam Provincial Governance and Public Administration Performance Index

Provincial Competitiveness Index

The Provincial Competitiveness Index (PCI) was first conducted in 2005. The PCI measures the competitiveness of each of Vietnam’s provinces and ranks them against each other.

In 2022 Vinh Phuc came in 8th place trailing only FDI heavyweights Quang Ninh, Bac Giang, Hai Phong, Bia Ria-Vung Tau, Dong Thap, TT-Hue, and Bac Ninh. This was a marked improvement from 2020 when the province came in position 29.

‘Law and Order’ has been one key stand-out metric in Vinh Phuc. From a score of 5.82 in 2018 it reached 8.23 in 2022. This was its highest score on any of the ten key metrics included in the CPI.

PCI, Vinh Phuc, 2018 to 2022

Source: The Provincial Competitiveness Index 2022

Foreign direct investment

In the first 11 months of 2023, Vinh Phuc recorded US$556 million worth of new investment in the province. This included 21 projects alongside an increased investment in 39 existing projects.

Key projects announced for Vinh Phuc include:

• Italian motorcycle maker, Piaggio, secured an investment registration certificate in February of 2023. This was for an additional investment in Vinh Phuc of US$75 million on top of the US$90 million it had already invested. This investment was reportedly to increase its output to 400,000 units.
• Japan’s Kitz announced in 2023 that it was establishing a manufacturing presence in Vietnam’s Vinh Phuc province to produce stainless steel valves. Its initial investment is expected to be VND 429.7 billion (US$18.23 million). This firm will be another in a long line of Japanese firms that have set up their Vietnam operations in Vinh Phuc, including Sumimoto, Toyota, and Honda.
• United States-based automaker Polaris, also received an investment certificate in 2023 approving a US$30 million investment in Vinh Phuc. Polaris’ new factory is set to be established in Ba Thien II Industrial Park. It is estimated that the factory could generate up to US$500 million in revenue for the firm by 2030.
• South Korea’s East-West Power Company announced its ambitions to build a waste-to-power plant in the northern Vietnam provinces. The plant, if it goes ahead, would produce 10 to 30 megawatts of power by incinerating 200 to 600 tons of waste every day. The estimated cost of the project is US$40 million to US$120 million.

More information

Vinh Phuc, though less well known than some of its neighbors, has become a hub of manufacturing and investment activity. Firms from all over the world–Italy, Japan, the US, and South Korea, for example–are establishing themselves in the province. This is for a number of reasons among them the performance of its public administration and its competitiveness.

Foreign firms considering a Vietnam market entry would do well to think seriously about Vinh Phuc as an option. That said, there are a number of similar, good-value options among Vietnam’s other provinces. With this in mind, foreign firms should contact the business advisory experts at Dezan Shira and Associates for an on-the-ground assessment of which location is right for them.

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