Recently, the 7th session of the 15th National Assembly of Vietnam passed the Capital Law Amendment with high approval. Of the 470 representatives present, 462 voted in favor, accounting for 95.06% of the total number of National Assembly representatives. The Capital Law Amendment consists of 7 chapters and 54 articles, clearly stipulating the status and role of the capital, as well as policies and responsibilities for the construction, development, management, and protection of the capital. The law will take effect on January 1, 2025, with Article 54, Paragraph 2 coming into effect on July 1, 2025. The Capital Law only stipulates specific mechanisms and policies, reflecting the degree of decentralization of the Hanoi city government. Multiple special mechanisms have opened up more development directions for Hanoi, helping to increase its attractiveness to large investors.

Expansion of Investment Scale in Hanoi

According to statistics from the Hanoi Department of Planning and Investment, in the first seven months of 2024, the city attracted $1.3 billion in foreign investment, a 65% increase compared to the same period in 2023. Specifically, there were 143 newly approved projects with agreed capital reaching $1.1 billion; 102 capital increase projects with a total of $138 million; and 118 foreign investors contributing capital and purchasing shares, with a contribution amount of $77 million.

The sectors attracting the most funds were real estate, followed by manufacturing and processing, trade, services, construction, and technology. Among these, the Lumi apartment project invested by Singapore’s CapitaLand Group in South Tu Liem District along Thang Long Avenue, with a total investment of $662 million, is one of the largest foreign investment projects registered in Vietnam since early 2024.

For 2024, Hanoi aims to attract about $3.15 billion in foreign investment; of which, about $2.15 billion or more for land-based projects, and about $1 billion for commercial and service projects. In 2025, the city plans to continue attracting about $2.7 billion in foreign investment.

Acceleration of High-Tech Projects

According to data from the Hanoi Industrial and Export Processing Zones Authority, in 2023, a total of 18 high-tech projects were granted licenses and capital increase permits, with a total capital of $299 million. This includes 3 foreign investment projects in the Hanoi Supporting Industry Industrial Park (Phu Xuyen District) with a total investment of $167 million, and 4 high-tech and advanced technology expansion projects in industrial parks such as Quang Minh 1, Thach That-Quoc Oai, and Thang Long. Hanoi is accelerating the construction of the Hanoi Biotechnology Park (North Tu Liem District). The 36-hectare Hanoi Information Technology Park (Long Bien District) is continuously improving its infrastructure, ready to attract secondary investors for research and application of high technology, as well as mastering and developing transferred foreign technologies.

The Director of the Hanoi Department of Science and Technology stated that from 2021 to 2023, the department has supported 11 enterprises in carrying out 11 scientific and technological tasks (including 7 experimental production projects and 4 matching fund projects) to research and create solutions and technologies, with funding exceeding 66 billion VND, of which more than 22 billion VND was supported by the state. In 2023, the Hanoi Department of Science and Technology issued 14 technology transfer contracts. Hanoi is researching measures to improve the competitiveness and production technology capabilities of industrial enterprises in the city, having assessed 350 processing and manufacturing enterprises in various industrial clusters across the city. The government will continue to supplement special preferential policies to attract more advanced technology projects, formulate support policies suitable for the actual conditions of enterprises, and help them quickly enhance their technological capabilities.

Main Measures to Attract Foreign Investment

To attract more foreign investment, especially in high-tech fields, Hanoi has implemented a series of preferential policies and introduced the “Plan for Promoting Foreign Technology Transfer, Absorption, and Development in Priority Industries and Fields for 2020-2025 with a Vision to 2030”, providing clear policy guidance for foreign-invested enterprises.

Recently, the Capital Law 2024 passed by the 15th National Assembly of Vietnam has opened up more development directions for Hanoi, further increasing its attractiveness to large investors. Specific measures include:

Tax Incentives: For enterprises with large investment projects (total investment exceeding 4 trillion VND), the preferential period for income tax has been extended from 15 years to 30 years. For enterprises investing in “priority areas for attracting strategic investors”, a 5% corporate income tax rate can be applied, with tax exemption for four years and a 50% reduction for the next nine years.

Land Policies: For enterprises in “priority areas for attracting strategic investors”, the city government will waive land and water surface rent for 10 years, with a 50% reduction for the remaining period. For projects producing priority supporting industrial products such as electronics, mechanical manufacturing, and automotive parts, land lease periods of up to 70 years are available.

Infrastructure and Industrial Park Support: The Hanoi government is committed to improving the technical and social infrastructure of industrial parks to provide a favorable investment environment for investors. At the same time, it has focused on developing several high-tech industrial parks such as Hoa Lac High-Tech Park, Hanoi Southern Supporting Industry Park, Hanoi Biotechnology Park, and Hanoi Information Technology Park, creating favorable conditions for attracting foreign investment.

Accelerating the Removal of Development Obstacles

Some experts believe that despite certain achievements, the transfer of technology from abroad to Hanoi and Vietnam has not yet achieved the expected results. Therefore, various sectors are accelerating the proposal of precise measures:

Jin Liqun, President of the Asian Infrastructure Investment Bank (AIIB), in a working meeting with Hanoi city leaders, expressed AIIB’s desire to seek cooperation opportunities in Hanoi and readiness to become a reliable partner with long-term cooperation plans. However, the AIIB President also suggested that Hanoi reduce the complexity of administrative procedures to maximize cost and operational efficiency, emphasizing that projects should be carefully designed, quickly implemented, and completed on time after approval.

The Vietnam Institute of Economics stated that in the context of the wave of foreign investment moving to Southeast Asia, to compete with other locations, Hanoi needs to focus on training and developing high-quality human resources to acquire modern technology and meet the requirements of foreign direct investment enterprises.

Leaders from the Ministry of Finance, Ministry of Planning and Investment, Ministry of Science and Technology, and others have reiterated that they will actively cooperate with Hanoi to implement the Capital Law (Amendment) 2024, formulating special mechanisms and policies to attract large investors.

The Chairman of the Hanoi People’s Committee emphasized that Hanoi will focus on improving the mechanisms and policies for capital development; urgently organize the implementation of the Capital Law (Amendment), formulate multiple special policies on urban government organization, decentralization, authorization, attracting and using talents, and training high-quality human resources.

Key Analysis

1.Vietnam’s foreign direct investment funds are mainly concentrated in provinces and cities with good infrastructure advantages, stable human resources, strong administrative procedure reforms, and active investment promotion. Among these, Hanoi has consistently led the country in attracting foreign investment, with the scale of foreign investment continuously expanding.

2.Hanoi recognizes that foreign direct investment is an important driver of development and has attracted foreign investors, especially large enterprises and projects in high-tech fields, through a series of preferential policies and open mechanisms, achieving significant results in promoting technology transfer.

3.Hanoi occupies an important position in the national development strategy. The high approval of the Capital Law (Amendment) has accelerated the formulation of multiple special policies by the Hanoi city government regarding urban government organization, decentralization, authorization, attracting and training high-quality talents.

4.In the future, as the capital development mechanism continues to improve, Hanoi will continuously enhance its management and execution levels, creating favorable conditions for attracting development investment resources and promoting synchronized and sustainable development. The prospects for investing in Hanoi are promising.