Thua Thien Hue: Vietnam’s Emerging FDI Hub and Future Centrally Governed City
Viettonkin Consulting
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Thua Thien Hue, known for its rich cultural heritage, is on the cusp of a major transformation as it moves closer to becoming Vietnam’s next centrally governed city. With strategic location, evolving infrastructure, and promising growth, the province is attracting significant attention from foreign investors.
A Pivotal Moment: Hue's Path to Becoming a Centrally Governed City
In 2003, when the 11th National Assembly elevated Can Tho to centrally governed status, Thua Thien Hue was also a candidate. However, the province’s underdeveloped districts, such as A Sau and A Luoi, were seen as a barrier to this transition. Fast forward to 2024, these areas have significantly improved, contributing to a strong overall economic performance for the province. Thua Thien Hue’s Gross Regional Domestic Product (GRDP) growth in 2023 exceeded the national average at 7.03%, and its state budget revenues reached VND 11,350 billion, with local expenditures amounting to VND 10,487 billion.
With the Prime Minister’s Decision No. 924/Q?-TTg on August 30, 2024, officially recognizing Thua Thien Hue as meeting the criteria for a Type I urban area, the province has been propelled toward becoming Vietnam's sixth centrally governed city. The decision is expected to stimulate economic growth, drive real estate development, and attract capital from both local and international investors. Chairman of the Provincial People's Committee Nguyen Van Phuong has emphasized that every year, the province builds a comprehensive investment promotion program, setting out goals and orientations for attracting both domestic and foreign investors. Key to these efforts is the province’s commitment to promoting administrative reforms and improving infrastructure to support a favorable investment environment.
Strategic Advantages for Foreign Direct Investment (FDI)
Thua Thien Hue’s transformation into a centrally governed city offers considerable opportunities for FDI, thanks to its strategic location on Vietnam's North Central Coast. The province covers an area of 4,902 km2, has a 120 km-long coastline, and is positioned as a gateway to the East-West Economic Corridor, linking countries like Myanmar, Thailand, Laos, and Vietnam. Hue is also located close to major economic hubs like Da Nang and Hoi An, further enhancing its attractiveness to investors.
By the end of May 2024, Thua Thien Hue had granted 20 new projects with a total registered capital of over VND 5,200 billion. Among these, eight were FDI projects, accounting for more than USD 33 million. To date, the province has attracted around USD 35.92 million from 135 FDI projects, with the average capital per project being USD 32 million—higher than the national average of USD 11.7 million.
Accumulated to September 2024, the province has attracted 132 FDI projects with a total registered investment capital of USD 4.558 billion. The FDI sector contributes 10% to the province's GRDP and over VND 4,000 billion annually to the provincial budget, making up 35% of total budget revenue. Notably, Carlsberg Vietnam Beer Company Limited (Denmark) has contributed over VND 3,500 billion each year, accounting for 85% of the FDI sector’s total budget contribution.
Key projects include:
Key Sectors Driving Thua Thien Hue’s Economic Growth
Tourism: Hue’s rich cultural heritage, including the UNESCO-recognized Imperial Citadel, makes it a major tourist attraction. In the first nine months of 2024, the province welcomed nearly 3.1 million visitors, a 26.7% increase compared to the same period last year, with 996,300 international visitors—marking a 33.6% rise. During the September 2nd holidays alone, accommodation establishments in Hue served around 16,000 international visitors, an impressive increase of 49.7% over the previous year.
Tourism is a key economic driver, and projects like the Laguna Lang Co resort highlight the province’s appeal for entertainment and recreational investments. From 2021 to 2025, Thua Thien Hue aims to attract over 7 million tourists, with an annual growth rate of 12%.
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Logistics: The deep-water port of Chan May is another vital asset for the province. The port can handle vessels up to 70,000 tons, and ongoing construction of terminals 2 and 3 will further enhance its capacity. This logistical infrastructure positions Hue as a key player in the East-West Economic Corridor, boosting its regional connectivity and potential for FDI in logistics and infrastructure projects.
High-Tech Industry: The province has also seen a surge in high-tech investments, particularly in the manufacturing and environmental sectors. Notable examples include the Phu Son Solid Waste Treatment Plant in Huong Thuy town, with a registered capital of USD 74.5 million, and the ongoing interest from large-scale industrial players.
Challenges and the Need for Breakthrough Policies
While the growth potential is significant, Thua Thien Hue faces several challenges as it prepares for its centrally governed city status. Despite preferential policies and favorable conditions, attracting FDI has not yielded clear results. As of September 2024, Thua Thien Hue ranked 31st in the country in terms of total FDI capital, with the number of FDI projects remaining relatively low. Furthermore, the actual investment capital deployed in the province accounts for a modest proportion compared to the registered capital.
The province must develop a suitable governance model and shift its economic structure to match the demands of a larger, urbanized population. Vice Chairman of the National Assembly Tran Quang Phuong emphasized that, despite the thorough preparations, the province could face practical challenges in adapting to its new governance structure.
Some centrally governed cities in Vietnam, such as Hanoi, Da Nang, and Ho Chi Minh City, follow governance models that eliminate People's Councils at certain levels. The Law Committee of the National Assembly has requested that Thua Thien Hue clarify its proposed governance model to ensure smooth functioning post-upgrade.
Additionally, the province must implement breakthrough policies to attract investment and accelerate growth. Secretary of the Thua Thien Hue Provincial Party Committee, Le Truong Luu, highlighted that the centrally governed city status would provide momentum for faster, sustainable development and help transform Hue into a smart, eco-friendly city. However, this will require innovative policies in economic, social, and technological development, aligned with the Politburo's Resolution No. 54-NQ/TW for Thua Thien Hue’s growth by 2030, with a vision to 2045.
FDI Contributions and the Way Forward
Foreign investments have already contributed significantly to Thua Thien Hue’s development. Companies like Scavi, operating three factories in Phong Dien Industrial Park, employ over 6,300 workers and pay an average salary of VND 6.2 million (USD 258). However, the number of FDI projects remains relatively low, and the actual capital deployed compared to the registered capital is still modest. The province has acknowledged these challenges and is working to accelerate project approvals and land-use planning while streamlining administrative processes to attract more investors.
Conclusion
As Thua Thien Hue prepares to become a centrally governed city, the stage is set for rapid growth and increased foreign investment. With its unique cultural heritage, strategic location, and improving infrastructure, the province offers a wealth of opportunities for FDI. Key sectors like tourism, logistics, and high-tech industries are already thriving, and the government's commitment to urban and economic reform will only enhance the province’s appeal.
Investors looking for a dynamic, future-forward location in Vietnam would do well to consider Thua Thien Hue—a city poised to make history once again.