Why does Singapore have such a strong investment presence in Vietnam?
The short answer is that Vietnam’s growth and supply-chain position made it attractive, but Singapore’s outsized presence comes from decades of government-to-government cooperation, deep business networks, and flagship projects such as the Vietnam-Singapore Industrial Park, better known as VSIP.
This is a relationship built deliberately over decades, and it shows in the numbers: in recent years Singapore has been Vietnam’s largest source of newly registered foreign investment.
The step-by-step process for foreign investors is set out in our guide to setting up a business in Vietnam. On the tax side, we set out what businesses need to know in our comparison of Singapore’s Goods and Services Tax (GST) and Vietnam’s Value-Added Tax (VAT).
So, what makes Vietnam attractive to investors, why has Singapore become such an important source of investment, and what does VSIP have to do with it?
TL;DR – Vietnam’s growing economy, strategic position and expanding investment ecosystem have attracted businesses from around the world, while Singapore’s long-standing relationship with Vietnam has helped make it one of the country’s most important sources of new foreign investment, with the Vietnam-Singapore Industrial Park (VSIP) its most visible symbol.
Why Is Vietnam Becoming So Popular With Businesses?
Vietnam has become an increasingly important destination for foreign investment, supported by both economic growth and its position within Asian supply chains.
Vietnam’s FDI Growth
Vietnam’s gross domestic product (GDP) grew by an estimated 8.02% in 2025. Total registered foreign investment reached US$38.42 billion, while realised Foreign Direct Investment (FDI) reached an estimated US$27.62 billion, the highest level in five years, according to the National Statistics Office.
There is also a strategic reason for the growing interest. Vietnam combines a large domestic market, an established manufacturing base and access to regional and global supply chains. Enterprise Singapore highlights the country’s expanding consumer market and manufacturing landscape, while Vietnam participates in major trade agreements including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), European Union-Vietnam Free Trade Agreement (EVFTA) and Regional Comprehensive Economic Partnership (RCEP), as outlined by the Vietnam Trade Repository.
For a Singaporean business considering Vietnam, that makes the question less about simply finding a lower-cost location and more about whether Vietnam fits the company’s long-term commercial strategy.
Of course, entering the market is not automatically straightforward. Licensing, tax, labour, location and compliance requirements can all shape how a foreign business operates. These considerations are important, but they are better treated as part of the market-entry process rather than the whole Vietnam story.
For more on these practical considerations, check our blog on Vietnam retail market entry in 2026 and our guide to Vietnam tax compliance for small and medium-sized enterprises (SMEs). If you are comparing the two markets directly, our Singapore GST versus Vietnam VAT comparison sets out the key tax differences. Our Central Provident Fund (CPF) versus social insurance (SHUI) guide sets out the key differences between the two systems.
So Why Is Singapore Investing So Heavily in Vietnam?
Why Singapore Leads Foreign Investment in Vietnam
In 2025, Singapore was Vietnam’s leading source of newly registered FDI, contributing US$4.84 billion, or 27.9% of newly registered capital that year. In the first eight months of 2026, Singapore again ranked first among sources of newly registered FDI, with US$7.62 billion, representing 35.1% of newly registered capital, according to Government News, reporting National Statistics Office data.
Singapore’s Top Investment Sectors in Vietnam
The distinction matters: Singapore is the second-largest cumulative foreign investor in Vietnam, behind only South Korea, with nearly US$97 billion in registered investment capital across more than 4,500 projects, according to KPMG’s 2026 Vietnam investment update. Singaporean investors are active across manufacturing, logistics, finance and high technology.
So why has Singapore remained so prominent?
Part of the answer is the depth of the bilateral relationship. Singapore and Vietnam established diplomatic relations in 1973, became Strategic Partners in 2013, and upgraded their relationship to a Comprehensive Strategic Partnership in March 2025.
The two governments have also built practical mechanisms to support business cooperation. These sit under the Singapore-Vietnam Connectivity Framework, agreed in 2005 and upgraded in 2023, which channels collaboration through regular Connectivity Ministerial Meetings across five pillars: energy, sustainability, infrastructure, digital innovation and connectivity, as set out in the Singapore-Vietnam joint statement.
What does that look like in practice? One example is the Singapore Unit, a dedicated single point of contact inside Vietnam’s Foreign Investment Agency, established with Enterprise Singapore to support Singapore companies investing in Vietnam, according to Singapore’s Ministry of Trade and Industry. The two countries have also launched a Singapore-Vietnam Innovation Talent Exchange Programme for technology and innovation professionals, and are working on initiatives covering low-carbon electricity exports to Singapore and bilateral carbon credits trading, opening up newer sectors such as renewable energy.
This means Singapore’s investment presence is not simply the result of companies independently choosing Vietnam. It has developed within a broader ecosystem of bilateral cooperation, business connections and infrastructure.
What Exactly Is VSIP, and Why Does Everyone Mention It?
One of the clearest examples of that relationship is VSIP, the Vietnam-Singapore Industrial Park network.
VSIP began in 1996 as a joint venture between Becamex and Sembcorp Development, with support from the governments of Vietnam and Singapore. What began as an industrial park has since grown into a much broader platform for investment and industrial development, according to VSIP Group’s history.
VSIP Industrial Parks Across Vietnam
By March 2025, there were 20 VSIPs across 14 Vietnamese provinces. Together, they had attracted more than US$23 billion in investment and supported more than 320,000 jobs, according to the Singapore Prime Minister’s Office. The parks host more than 1,000 tenant companies, from household names such as LEGO and Tetra Pak to hundreds of component makers producing electronics, precision-engineered parts, packaging, plastics and apparel inputs. Newer VSIPs are increasingly focused on high-value fields such as advanced manufacturing and information technology.
The latest VSIP Group figures show that the network has expanded further, with 30 projects across 19 provinces and cities, more than 1,000 clients from 30 countries, and US$31.2 billion in foreign direct investment attracted, according to VSIP Group’s project figures.
How VSIP Works for Singapore Companies
Why does this matter to an investor?
An industrial park is not simply a plot of land for a factory. Location, infrastructure, logistics, utilities and an existing business ecosystem can all affect the practical experience of setting up and operating a business.
That is part of VSIP’s significance. It provides a tangible example of how Singaporean expertise and investment have connected with Vietnam’s industrial capacity and economic growth.
For businesses considering manufacturing near Ho Chi Minh City (HCMC), practical questions such as land, infrastructure and setup costs also become important. Check our blog on Vietnam factory setup costs near HCMC and our complete guide to Vietnam industrial parks in 2026 for a closer look at some of these considerations.
Conclusion
For businesses looking at Vietnam, the main takeaway is that there is already a well-established investment ecosystem connecting the two countries.
The opportunity can look very different depending on the business. Some companies are entering Vietnam to reach local consumers, while others are looking at manufacturing, supply chains or long-term regional expansion. The right approach therefore depends on what the business is trying to achieve.
The practical questions come next:
- Where should the business operate?
- What investment structure makes sense?
- What regulatory, tax and employment requirements need to be addressed?
Our guide to Vietnam’s Law on Investment 2026 covers the investment framework itself.
Understanding the broader Singapore-Vietnam relationship helps put those decisions into context. Vietnam is not simply a lower-cost destination, and Singapore’s role is not simply about providing capital. The relationship has developed through decades of cooperation, with VSIP as one of its clearest examples.
For a closer look at one part of the compliance picture, check our blog on Vietnam tax compliance for SMEs.
Thinking about entering or expanding in Vietnam? Contact United Consulting to find out more about doing business in the Vietnam market.
