EVFTA is a meaningful increase in both volume and quality

Looking back over the six years since the EVFTA came into force, how would you assess the evolution of European Union investment into Vietnam?

The EVFTA has improved the quality of EU investment in Vietnam, although foreign direct investment (FDI) growth has been more gradual than initially expected. Since entering into force in August 2020, the agreement has provided a more predictable framework for trade and investment.

The EU remains a key economic and investment partner. EU FDI rose from $2.5 billion in 2022 to approximately $3.25 billion in 2024, with growing investment in clean energy, high technology, semiconductors and infrastructure. Bilateral trade also reached nearly $74 billion in 2025, with Vietnam recording a record $38.6 billion trade surplus.

While the EU’s share of Vietnam’s total FDI remains modest compared with major Asian investors, European projects are increasingly concentrated in high-value sectors such as advanced manufacturing, pharmaceuticals, renewable energy, logistics and digital services. EU companies also bring stronger environmental, social, and governance standards, corporate governance, technology transfer and intellectual property protection.

Overall, the EVFTA has been more effective in improving the quality of EU investment than simply increasing its volume. However, investors continue to stress that administrative reform, infrastructure, skilled labour and regulatory predictability are equally important to investment decisions.

Compared with six years ago, have you observed any significant shifts in the profile of EU investors entering Vietnam?

The profile of EU investors has changed significantly over the past six years. While investment was once concentrated in traditional manufacturing sectors such as garments, footwear, furniture and food processing, EU investors are now increasingly active in industrial automation, precision engineering, semiconductors, renewable energy, medical devices, pharmaceuticals, environmental technologies, smart logistics and digital transformation.

A growing number of small and medium-sized EU enterprises are establishing representative offices, engineering centres or strategic partnerships before expanding production. At the same time, more suppliers are following existing multinational customers into Vietnam, particularly in electronics, automotive and industrial equipment.

This shift is driven by geopolitical diversification, stricter EU sustainability regulations and Vietnam’s growing attractiveness. China+1 and China+N strategies are encouraging supply chain diversification, while regulations such as Carbon Border Adjustment Mechanism, Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive are pushing companies towards cleaner and more resilient supply chains.

Vietnam’s 17 FTAs, political stability, competitive manufacturing base and expanding domestic market further strengthen its appeal. According to EuroCham’s latest Business Confidence Index, 66 per cent of surveyed EU companies are involved in EU-Vietnam trade or supply chains, while 98.2 per cent are familiar with the EVFTA, underscoring the agreement’s growing business relevance.

Beyond capital inflows, has the EVFTA contributed to deeper technology transfer, higher sustainability standards, stronger local supply chain integration, or greater value creation for Vietnam?

The greatest contribution goes well beyond attracting capital. European investment has accelerated technology transfer in sectors including industrial machinery, automation, pharmaceuticals, renewable energy equipment and food processing by introducing advanced production technologies, international quality certifications, lean manufacturing systems and digital production processes.

Perhaps even more significant has been the improvement in sustainability standards. EU companies increasingly require compliance with carbon reporting, product traceability, energy efficiency, and responsible sourcing. These requirements are encouraging Vietnamese suppliers to upgrade production processes to remain competitive in the EU market.

Supply chain integration has also improved, particularly in furniture, food processing and industrial components. Nevertheless, Vietnam continues to rely heavily on imported intermediate inputs in advanced industries such as semiconductors and precision engineering, indicating that domestic supplier capability remains limited.

Looking ahead, Vietnam's next challenge is to move from being primarily a manufacturing base towards becoming an innovation hub. This requires stronger investment in engineering education, vocational training, research and development, university-industry collaboration and intellectual property commercialisation.

What should be the country's priorities to position itself as the preferred destination for the next wave of European investment over the coming decade?

Vietnam has a strong opportunity to become Europe’s leading investment destination in Southeast Asia, but competition from Malaysia, Indonesia, Thailand and India is intensifying.

To strengthen its competitiveness, Vietnam should accelerate administrative reform, develop skilled human capital, upgrade infrastructure, and make investment incentives more performance-based, rewarding technology transfer, local supplier development, innovation and sustainability.

Policy stability, transparency and predictable regulations will also be crucial, while full ratification of the EU-Vietnam Investment Protection Agreement would further boost investor confidence.

EuroCham Whitebook positioning Vietnam for next wave of investment The European Chamber of Commerce in Vietnam (EuroCham) has launched the 17th edition of its Whitebook, a flagship publication supporting the effective deployment of landmark EU investments in the country.

EVFTA deepens Vietnam-EU relations after six years The EU-Vietnam Free Trade Agreement marks six years of implementation on August 1, delivering significant gains in bilateral trade and investment.

Six years of EVFTA reshape Vietnam-EU trade ties Six years after entering into force, the EU-Vietnam Free Trade Agreement has boosted trade, strengthened investor confidence, and accelerated Vietnam's integration into global supply chains.