Contributing to Vietnam's growing position as a "new economic and industrial hub" by attracting a high volume of foreign direct investment (FDI) capital in recent years, Hanoi is drawing on its own advantages to become a preferable destination for ASEAN businesses.

A textile factory in Hanoi. Garments and textiles are among the most favorite Vietnamese exports in ASEAN markets. Photo: Chien Cong

According to the Hanoi Department of Planning and Investment, Hanoi was Vietnam's third biggest FDI magnet in the first seven months of the year. Some US$980 million worth of FDI capital has been injected into the city during this period.

Of the total, some $130.5 million was used to finance 201 new projects and some $375.7 million was spent on increasing capital for existing projects.

Hanoi is one of the most important destinations in Vietnam to foreign investors, Marko Walde, Chief Representative of the Delegate of German Industry and Commerce in Vietnam, told The Hanoi Times.

The city has its own advantages in human resources supply, infrastructure development, good investment conditions, and socio-political sustainability, he said.

“Over the last decade, Vietnam has become a top destination for investment in manufacturing – more desirable than other Southeast Asian nations like the ASEAN-4 countries (Indonesia, Malaysia, Thailand, and the Philippines),” the global business-to-business (B2B) fintech firm Trade Finance Global said in July 2022.

The reasons are “lower labor costs, simpler supply chain integration, better free trade access, and relative political stability,” the fintech business said.

“Key sustainable products produced by local companies are competitively stronger in ASEAN,” Mac Quoc Anh, Vice President and General Secretary of the Hanoi Small and Medium-sized Enterprises Association (HANOISME), told The Hanoi Times.

Local companies target to increase their market shares in Indonesia, Singapore, Malaysia, and Thailand, where consumers are quite open to Vietnamese exports, he said.

ASEAN markets are highly potential with a total population of 600 million people. Outstanding Vietnamese products in ASEAN markets include home appliances, foods, garments, and textiles, agricultural outputs, and pharmaceutical products.

New-generation products in the fields of renewable technology and information and technology become more reputable while Vietnamese startups have gained high attention from the regional business community.

Anh said that Hanoi-based companies have overhauled their operations to meet new standards and requirements in a “new normal” economy and satisfy different behaviors and tastes of customers, especially amid the Covid-19 pandemic.

"Local businesses have maintained their reliability despite the pandemic and its severe repercussions, thus keeping the supply chain stable and ensuring cooperation with ASEAN partners," Anh said.

In addition, Vietnamese businesses have seen strong improvements in the quality of financial management, human resources management, and corporate governance, the official said.