Why Hai Phong is a Magnet for Investors: A Deep Dive into Vietnam’s Rising Star

Introduction: From Gateway to Cat Ba Island to Economic Powerhouse

Hai Phong, located in the northern region of Vietnam, is a port city with immense strategic and economic importance. While often overshadowed by its role as a jumping-off point for the picturesque Cat Ba Island for tourists, Hai Phong itself is a hidden gem with untapped potential that has recently caught the eye of global investors.

The city spans a natural area of 1,52 km2 and is home to 2.09 million residents. Its labour force, slightly more than half its residents, of 1.05 million has been a key driver in its impressive economic trajectory. In 2024, Hai Phong’s GDP reached VND 288.5 trillion (US$11.4 billion), marking an 11% increase from 2023. This robust growth placed Hai Phong among the top five provinces and cities with the largest economies in Vietnam for the first time in history according to the Vietnam News (VNN).

Trade activity also highlights Hai Phong’s significance. By June 2024, the city’s total import-export turnover exceeded US$11 billion, showcasing a 24.7% increase from the same period in 2023 according to both CUSTOMSNEWS and the United States Department of Agriculture (USDA) quoting Hai Phong Customs Department. Despite fluctuations in certain sectors like automobiles and petroleum, both Hai Phong’s customs department and Vietnam Chamber of Commerce and Industry (VCCI) also reported an annual revenue increase of 4%, collecting VND 34,570.7 billion by mid-2024.

These impressive figures make Hai Phong far more than a tourism gateway; it’s an economic hub ripe with opportunities for savvy investors.

Development policies

The Vietnamese Government has reaffirmed its commitment to Hai Phong’s development through Resolution No.07/NQ-CP, issued on January 10, 2025. This Action Program is designed to implement Conclusion No. 96-KL/TW (dated September 30, 2024), which builds on Resolution No. 45-NQ/TW (January 24, 2019), setting the course for Hai Phong’s growth to 2030, with a vision toward 2045.

The resolution outlines several key priorities aimed at enhancing Hai Phong’s economic, social, and technological landscape :

• Economic Restructuring & Innovation: The city will focus on modernizing its economic structure by leveraging science, technology, and innovation as key drivers of digital transformation and energy transition. The adoption of green and circular economy models will be accelerated to promote sustainable growth.
• Investment in Infrastructure & Regional Connectivity: Hai Phong aims to attract greater development investment, particularly in key infrastructure projects that enhance inter-regional connectivity and foster stronger economic linkages with surrounding provinces.
• Comprehensive Development Approach: Economic growth will be integrated with advancements in culture, education, healthcare, social security, and environmental management. The resolution also prioritizes responsible resource management, investment in tourism development, and strengthening science, technology, and innovation to elevate Hai Phong’s global competitiveness.

With this strategic roadmap, Hai Phong is positioning itself as a leading economic and industrial center while maintaining a sustainable and inclusive development approach. These policies set the foundation for long-term investment opportunities and enhanced regional and international integration.

High-Profile Investments: Driving Hai Phong’s Economic Success

Hai Phong has firmly established itself as a hotspot for foreign direct investment (FDI), investment data further underscores its appeal. Hai Phong attracted over VND 211 trillion (US$8.3 billion) in total investment capital in 2024, representing a 10% increase from 2023. Of this, nearly US$5 billion came from foreign direct investment (FDI), reflecting a 7% increase compared to 2023. Notably, this included 126 new projects with registered capital exceeding US$750 million and 72 adjusted projects worth US$3.7 billion (VNN).

This success is underpinned by several high-profile projects that highlight the city’s appeal to multinational corporations and its capacity for large-scale industrial operations.

Notable Investment Projects:

• LG Electronics Complex: Comprising multiple subsidiaries, including LG Electronics, LG Display, LG Innotek, LG CNS, LG Chemical, and two additional LG International projects, this complex represents an investment of US$8.24 billion.
• Bridgestone Tire Manufacturing: This US$1.22 billion project is a key player in the city’s manufacturing sector.
• Regina Miracle Group: With an investment of US$1 billion, this project further enhances Hai Phong’s reputation as a manufacturing hub.

Investment Trends in Context:

The city’s growing importance is evident in its share of total registered FDI capital. As shown in the graphs:

1. Comparison of Investment Capital Across Provinces: Hai Phong stands out with significant total registered investment capital, rivaling other major economic hubs in Vietnam.
2. Registered FDI Capital Over Time: The upward trajectory in registered FDI capital underscores Hai Phong’s sustained growth and its attractiveness to investors seeking long-term returns.

These developments underscore Hai Phong’s pivotal role in Vietnam’s economic landscape, particularly in high-tech and manufacturing sectors.

Key Economic Sectors: A Balanced Growth Approach

Hai Phong’s economy is characterized by its diverse contributions across agriculture, industry and construction, and services, as well as tax revenues. The following pie chart, based on data from June 2023, illustrates the composition of these sectors in the city's GDP:

Sector Breakdown:

Based on the available data from Hai Phong’s Economic Profile, the city's GRDP is primarily driven by Industry and Construction, which accounts for 52.86% of the economy, making it the dominant sector. This reflects Hai Phong’s strong industrial base, supported by key industries such as shipbuilding, steel, cement production, chemicals, and textiles. The Service sector contributes 37.35%, highlighting Hai Phong’s strategic role as a major port city facilitating trade and logistics. Meanwhile, Agriculture, forestry, and fisheries make up 3.97% of the economy, indicating a smaller but still present role in local employment and food supply. This economic structure underscores Hai Phong’s position as a key industrial and trade hub in Vietnam, with its growth being largely fueled by manufacturing, logistics, and foreign direct investment (FDI).

Implications for Investors:

Hai Phong’s diversified economy offers resilience and opportunities across multiple sectors. The dominance of industry and services underscores the city’s ability to attract high-value investments, while agriculture and tax revenues provide stability. For investors, this balanced growth ensures a reliable return on investment across varying market conditions.

Infrastructure: A Gateway to Connectivity and Growth?

Building on its robust economic sectors, Hai Phong’s infrastructure plays a pivotal role in attracting investment. The city has leveraged its strategic geographical location and comprehensive transportation systems to create unparalleled connectivity.

Comprehensive Transportation Systems:

Hai Phong is one of the few cities in Vietnam that boasts a fully integrated transportation network, including sea routes, roads, railways, inland waterways, and airways. Key highlights include:

• Hai Phong Port: A vital gateway for international maritime trade, serving Northern provinces.
• Cat Bi International Airport: Facilitating both domestic and international air travel.
• National Highways and Expressways: Including National Highway 5, National Highway 10, and the Hanoi-Hai Phong Expressway.
• Hanoi-Hai Phong Railway: Enhancing connectivity between the capital and the port city.

Ongoing Infrastructure Development:

Recognizing its strategic advantages, Hai Phong has undertaken ambitious development projects:

• Construction of 46 new bridges and hundreds of kilometers of roads with a total investment of nearly VN?44 trillion.
• Expansion of the road network to nearly 8,000 kilometers.
• Collaboration with neighboring provinces, such as Quang Ninh, Thai Binh, and Hai Duong, to enhance regional connectivity.

Industrial Zone Support:

Hai Phong places significant emphasis on infrastructure investments to support industrial zones. Examples include:

• Completing coastal road networks, such as those connecting the Langham Bridge to coastal roads.
• Expanding the coastal road section from Route 353 to the Thai Binh Bridge.

Socio-Economic Impact:

These infrastructure projects have been instrumental in boosting socio-economic development. By meeting growing demands for transportation and trade, Hai Phong ensures sustained growth and competitiveness in the region.

Investment Incentives: A Favourable Environment for Growth

The city’s government and local authorities have introduced a range of incentives to encourage foreign investors to expand their businesses into Hai Phong.

Key Incentives:

• Dinh Vu - Cat Hai Economic Zone: This zone offers numerous benefits, including exemptions for corporate income tax, personal income tax, import-export tax, value-added tax, and special consumption tax in non-tariff areas.
• Priority Sectors: Hai Phong actively attracts investment in cutting-edge economic sectors, particularly high technology, environmentally friendly projects, resource-efficient operations, and ventures that contribute significantly to the local budget. Investors are also encouraged to commit to transferring innovative technologies and integrating with domestic enterprises along the value chain.

Strategic Focus:

The city is prioritizing the development of three main pillars:

1. High-Tech Industry: Investments in electronics, IT, and high-tech manufacturing.
2. Seaport and Logistics: Strengthening Hai Phong’s position as a trade hub.
3. Tourism and Trade: Enhancing the city’s appeal as a regional tourism destination.

Industrial Restructuring:

Hai Phong is reshaping its industrial sector to focus on key industries, including:

• Automotive manufacturing.
• High-tech electronics and IT.
• Advanced manufacturing and industrial products.

By aligning its investment incentives with strategic economic goals, Hai Phong ensures long-term benefits for both investors and the local economy.?

Opportunities for Investors: Unlocking Hai Phong’s Potential?

Hai Phong’s economic landscape offers diverse opportunities for investors across various sectors, including tourism, logistics, and manufacturing.

1. Tourism:

Hai Phong is home to the Cat Ba archipelago, the only place in Vietnam that holds four national and international titles, as well as the Do Son Peninsula with its charming landscapes. The city also boasts numerous historical and cultural relics, hundreds of temples and pagodas with unique architecture, traditional craft villages, and vibrant folk festivals.

Hai Phong’s service infrastructure for tourism is highly developed, featuring 5-star hotels, amusement parks, resorts, and high-quality golf courses. Notable FDI projects in tourism include:

• International Gateway Port Passenger Terminal (US$20 million).
• Song Gia Lake Eco-Tourism Area (US$30 million).
• Do Son Entertainment Project (900-910 ha).

2. Logistics:

Strategically located near southern China, along Vietnam’s northern economic corridor, and in proximity to Hanoi, Hai Phong provides excellent opportunities for logistics companies to establish operations. With its well-connected transportation infrastructure, businesses can efficiently manage inbound and outbound services or develop warehousing projects.

Notable projects include:

• C.Steinweg Haiphong Co., Ltd. (US$40 million).
• Sembcorp Haiphong Infrastructure Services Co., Ltd. (US$20.7 million).
• SITC Logistics Co., Ltd. (US$20 million).
• SLP Park Haiphong 2 Project (US$17.26 million).

3. Manufacturing:

Located just 200 kilometers from the Chinese border, Hai Phong provides manufacturers with access to a diverse supply chain for raw materials. The city’s strategic position has attracted companies following the "China Plus One" strategy, leading to the establishment of large-scale manufacturing operations.

Key examples include:

• Bridgestone Tire Manufacturing Vietnam LLC: A US$1.22 billion tire manufacturing plant.
• LG Complex: US$8.24 billion invested in facilities including LG Electronics, LG Display, LG Innotek, LG CNS, and LG Chemical.
• Other notable projects include Panasonic Home Appliances and Foxconn Factory Projects.

By leveraging its strategic advantages and supportive business environment, Hai Phong offers a wealth of opportunities for investors across these dynamic sectors.

Conclusion: A Bright Future for Investors in Hai Phong

Hai Phong’s impressive economic performance, strategic location, and investment-friendly policies make it an irresistible destination for investors. As Vietnam continues to integrate into the global economy, Hai Phong stands as a shining example of the country’s potential.