According to the bank, as foreign direct investment (FDI) inflows continue to add production capacity, Viet Nam's manufacturing sector is experiencing the green shoots of a rebound, bringing opportunities for its exports.

Both total and new FDI reached close to their respective historical highs in 2023, particularly with greenfield FDI jumping to a four-year-high of 5 percent of GDP.

Notably, new manufacturing FDI soared to a new peak of more than US$15 billion, 80 percent of which is concentrated in the manufacturing space. This continues to put Viet Nam in a leading position in ASEAN, just behind Malaysia.

Looking at the source of FDI, one interesting trend is worth noting. Japan and South Korea are both traditionally big investors in Viet Nam, but China has been expanding its FDI footprint quickly in Viet Nam.

In fact, 2023 marks the first time that mainland China has the largest share among investors, beating its two neighbors. Combined, Greater China accounted for almost half of Viet Nam's new FDI inflows in 2023.

Not surprisingly, the lion's share went to electronics, a sector that Viet Nam is fast becoming a rising star in. This is also an area where FDI inflows are more diversified, a reflection of Viet Nam's increasing significance in the global tech supply chain.

Outside of electronics, investors are increasingly being drawn to Viet Nam's promising consumer market, a trend heralded by Japanese corporates.

In terms of FDI, a key development to watch closely for in 2024 is the implementation of a minimum 15 percent corporate tax rate for multinational corporations (MNCs), effective from January 1. In Viet Nam, 122 foreign companies will face a steep rise in their tax costs, which is estimated to generate revenue worth US$600 million per year.

While it is key to watch how the minimum 15 percent corporate tax rate evolves, the impact should be manageable, HSBC recommended.

Viet Nam lured nearly US$36.61 billion in foreign investment in 2023, up 32.1 percent against the previous year, the Foreign Investment Agency under the Ministry of Planning and Investment revealed.

Meanwhile, total disbursed volume of FDI this year reached a new record of US$23.18 billion, up 3.5 percent from 2022./.VGP