Manufacturing in Vietnam 2025: Ultimate Guide

Vietnam’s manufacturing sector is in the middle of a boom period. In just over two decades the country has gone from relatively underdeveloped to a thriving hub of activity on the back of a manufacturing sector that has brought millions of jobs to the country.

In fact, 86 percent of Vietnam’s export merchandise came from the manufacturing sector in 2022, compared to just 49 percent in 2002. These exports have increased in value too.

In 2002, Vietnam exports of goods and services to the tune of US$19.19 billion. In 2022, that number had climbed to US$384.22 billion.

Indeed, the country and the sector have come a long way, but there is much more room to expand. In this article, we provide a broad overview of manufacturing in Vietnam including human resources, real estate costs, and tax and tax incentives.

Manufacturing in Vietnam in numbers

These numbers demonstrate the strategic importance of manufacturing in Vietnam’s economic landscape and underscore the sector’s potential for future growth, driven by both local and foreign investments and a growing workforce.

Foreign direct investment in Vietnam’s manufacturing industry

In November, the manufacturing and processing industry in Vietnam registered 106 new projects with US$3.13 billion in newly registered capital, according to Vietnam’s Ministry of Planning and Investment. This represents a 32.50 percent increase compared to October, which recorded 80 new projects and US$1.43 billion in newly registered capital.

Year-to-date (YTD), the sector has attracted a total of 1,030 new projects and US$20.2 billion in newly registered capital, demonstrating strong and consistent growth in the industry.

Vietnam manufacturing FDI by month

Manufacturing and Vietnam’s Industrial Production Index

Vietnam’s industrial production index rose by 0.8 percent in December 2024 compared to November 2024, according to Vietnam’s Industrial Production Index.

Year-on-year, the index saw a significant increase of 8.8 percent and for the entire year of 2024, cumulative growth stood at 8.4 percent compared to 2023, reflecting robust industrial performance throughout the year.

S&P Global’s Purchasing Managers’ Index

The S&P Global Vietnam Purchasing Managers’ Index is a key economic indicator that reflects the performance and health of Vietnam’s manufacturing sector. The PMI is derived from monthly surveys of private sector companies, covering various aspects of the manufacturing process, such as new orders, production, employment, supplier delivery times, and inventory levels.

The PMI is an index number ranging from 0 to 100. A PMI above 50 indicates expansion in the manufacturing sector compared to the previous month, while a reading below 50 suggests contraction. A reading of 50 indicates no change. The PMI is based on responses from purchasing managers in a panel of around 400 manufacturing companies in Vietnam. These managers are asked about various aspects of their operations compared to the previous month.

Vietnam PMI scores

Source: S&P Global Purchasing Managers’ Index

Manufacturing options in Vietnam for foreign firms

Foreign firms looking to manufacture goods in Vietnam generally either outsource their production utilising contract manufacturers or they fully invest in their own facilities. Most of the bigger brands tend to use a combination of the two.

Outsourcing

Companies looking to outsource have a number of options in Vietnam allowing for varying degrees of control over their product. Most big apparel brands like Nike and Adidas use contract manufacturers whereby almost everything is taken care of by the Vietnam-based factory. Note, however, that given the size of these big brands and their buying power gives them a lot of control over their contract manufacturers which exercise to ensure quality. Smaller outfits might, however, find that they have a lot less control using contract manufacturers than they would building their own operation.

Do-it-yourself

Whereas apparel brands tend to prefer contract manufacturing arrangements, a lot of big electronics brands–think LG or Samsung–run their own factories in Vietnam. Samsung, for example, has a factory in Vietnam’s Thai Nguyen, reportedly the biggest in its supply chain. 

Building a factory from scratch can be challenging with multiple moving parts and approvals, however, there are many firms experienced in finding and acquiring land, building factories, and fitting out said factories for use. There are also ready-to-go industrial parks scattered around the country that basically offer a plug-and-play option–there may be less control, but costs can be lower, and risks more so.

Human resources in Manufacturing in Vietnam

Wages in Vietnam are very-low compared to wages in the developed world. For context, the GDP per capita in Vietnam was around US$3,756 in 2021 whereas in the USA it was over US$70,000–the potential cost savings are clear. However, the human resources landscape can be vastly different in Vietnam to more developed economies. With this in mind, this section addresses wages, entitlements, and labour unions.

Minimum wage in Vietnam

Vietnam’s minimum wage is set by the National Wage Council which consists of a number of peak industry bodies and worker advocates. They meet every year or so and determine if a minimum wage rise is necessary, and if so, how much it should be and from when it should be implemented. The most recent wage rise was in July of 2024.

Vietnam minimum wage, current as of July 2024

*Hourly rate calculated on 196 hours per month

Minimum wage in Southeast Asia

For context, Vietnam’s minimum wage is at the lower end among its Southeast Asian peers.

Monthly minimum wage, Southeast Asia, August 2024

*Calculated using daily rate times 22.

Manufacturing wages in Vietnam

Whereas Vietnam’s minimum wage is low, in the manufacturing sector wages are generally much higher. Vietnam’s General Statistics Office tracks wages and usually reports changes quarterly.

Industrial and construction sector wages, 2023-2024

Source: Average Salary in Vietnam Tracker

Entitlements

Leave entitlements for Vietnamese workers are outlined in the Labour Code 2019.

Overtime

Businesses that employ workers in excess of their contract hours are required to pay overtime. Overtime rates are calculated as follows:

• Time and a half on regular working days,
• Double time on weekends, and
• Triple time on public holidays.

Note that many workers rely on overtime to supplement their income and the availability of overtime can be a major draw card in the hiring process.

Public Holidays

Vietnam has 11 public holidays each year. The longest of these is for the lunar new year, known locally as Tet, which runs for five days. Note that the actual dates of several public holidays vary from year to year. These are usually announced by the government in December of the year before.

Leave

There are a number of leave allowances codified in the labour code. The majority of workers are entitled to 12 days of annual leave, although there are some situations, usually working with dangerous goods, that mandate an additional day or two. In addition, factory workers in Vietnam are entitled to:

• 3 days of leave to get married and for the death of an immediate family member.
• 1 day off to attend the wedding of a child; the death of a grandparent or biological sibling, and the wedding of a parent or biological sibling.

Note that in Vietnam, it is not common to distinguish between blood relatives and in-laws, hence, the ‘biological’ distinction.

Bonuses

Bonuses are not enshrined in law and are at the discretion of the employer. That said, a 13 month salary at the end of the year is generally expected and usually included in most labour contracts. 

Industrial relations

Workers in Vietnam are represented by the Vietnam General Confederation of Labour (VGCL). This is an extension of the Government of Vietnam and is the only trade union in the country. The VGLC is involved in key negotiations between workers and their employers including wages and working conditions.

Industrial action in Vietnam is not uncommon. Reporting on industrial action in the mainstream media, however, is often limited if it happens at all. This can be because the authorities make overtures to media organisations to block reporting on these incidents or targets of said industrial action can pay the local media to stay quiet.

That said, the VGLC recorded a total of 157 incidents of workers taking strike action in 2022 with a number of these strikes involving foreign invested firms–in October of 2023, 7,000 workers of Taiwanese footwear maker Viet Glory in central Vietnam went on strike in search of a pay rise. This was successful with workers returning to work six days later for a bigger paycheck. Of note, workers at the factory were already on a wage about 13 percent higher than the regional minimum.

See also: Human Resources in Vietnam: Ultimate Guide 2024

Key manufactured goods

The two biggest sectors of Vietnam’s manufacturing industry are electronics, and garments and textiles (including footwear), accounting for around US$165 billion US$64.6 billion, respectively. That’s out of total exports of about US$371.3 billion. Of note, however, is that the manufacture of these two groups of goods is centred in different parts of the country.

Ceramics

Vietnamese ceramics constitute a significant and enduring facet of the nation’s cultural heritage. With a history tracing back over six millennia, this craft has undergone a continuous evolution, reflecting the socio-economic and cultural transformations of the country.

Most recently, ceramic tile manufacturing has become a key industry in Vietnam and ceramic tiles have become a key export. With this in mind, this article looks at Vietnam’s ceramics market, ceramics exports, and ceramics manufacturers.

See also: Vietnam Ceramics Manufacturing

Electronics

Electronics manufacturing in Vietnam is mostly concentrated in the north. Samsung, for example, has its biggest factory in Thai Nguyen a few clicks north of Hanoi with complimentary operations in neighbouring Bac Ninh, Bac Giang, and Vinh Phuc.

Samsung has invested billions in its northern Vietnam operations and its enormous size has seen a whole electronics eco-system spring up around it–northern Vietnam is well positioned geographically to seamlessly integrate into supply chains from both China and Korea. It’s also relatively easy to get manufactured goods to the coast and subsequently shipped to the rest of the world.

See also: Vietnam Electronics Manufacturing: Industry Overview

Garments and Textiles

Vietnam’s garment manufacturers are mostly made in and around Ho Chi Minh City.

Southern Vietnam is generally considered somewhat more progressive and forward thinking than the north and as a result, when the economy began to open up, firms dealing in low-cost manufactured goods–clothing and apparel–set up in the better prepared south.

Furthermore, Ho Chi Minh City is also well positioned to take deliveries of cotton from key producers in Australia and the US and then to turn those imports into clothing and apparel and send it back.

See also: Vietnam Garment Manufacturing

Footwear

Vietnam’s footwear manufacturing industry is among the biggest in the world. In fact, it generally comes in third place behind India and China which is a mean feat for a country with a population of just 100 million, a fraction of the billion-plus populations of the two industry leaders. 

In 2023, Vietnam exported US$19.94 billion worth of footwear for brands like Nike, Adidas, Crocs, Vans, and Timberland among a range others.

See also: Vietnam Footwear Manufacturers

Furniture

Vietnam has emerged as a significant global player in the furniture manufacturing industry. The country’s strategic geographic location, coupled with a relatively skilled workforce and competitive production costs, has positioned it as a preferred destination for furniture production and export. The furniture sector has experienced rapid growth, driven by increasing global demand for high-quality, yet affordable furniture.

See also: Vietnam Furniture Manufacturing

Comparison with Indonesia and the Philippines

Indonesia, Vietnam, and the Philippines represent three distinct but increasingly complementary manufacturing destinations within Southeast Asia. Each country offers unique strengths and faces distinct limitations, shaping their role in regional and global value chains. For foreign investors, understanding these dynamics is key to building a diversified, risk-balanced production footprint.

Labour and wage competitiveness

Vietnam continues to offer the lowest manufacturing wages among the three, particularly in northern provinces such as Bac Giang and Nghe An, where monthly wages can be under US$200. Indonesia remains competitive in lower-cost provinces like Central Java, with wages ranging from US$180–250, while Metro Jakarta is higher, at around US$320. The Philippines falls in the US$250–300 range in Metro Manila. Indonesia benefits from a large, young, and semi-skilled workforce, but Vietnam leads in vocational readiness for export manufacturing. The Philippines offers a stronger English-speaking talent pool and higher productivity in services-oriented manufacturing, like electronics.

Industrial infrastructure and logistics

Vietnam leads in port efficiency and integrated industrial zones, especially around Hai Phong and Ho Chi Minh City. Indonesia offers vast industrial estates in Java and Sumatra, but suffers from higher logistics costs due to geographic fragmentation and inter-island transport gaps. The Philippines is improving its infrastructure base under the “Build Better More” program, but still trails both Indonesia and Vietnam in logistics performance and inland connectivity.

Supply chain development and depth

Vietnam has built strong backward linkages in electronics, garments, and machinery, supported by deep integration into South Korean, Japanese, and Chinese supply chains. Indonesia is advancing fast in resource-based supply chains, particularly nickel and EV batteries, but is still import-dependent for many intermediate goods. The Philippines remains export-driven in semiconductors and electronics assembly, but has relatively shallow domestic linkages and a limited supplier ecosystem.

Export orientation and trade openness

Vietnam is by far the most export-oriented, with US$370+ billion in goods exports in 2023. Indonesia exported US$260+ billion, of which about US$190 billion came from manufactured goods. The Philippines’ total exports were approximately US$54 billion, heavily concentrated in electronics. Vietnam’s extensive use of free trade agreements (FTAs), including with the EU, UK, and CPTPP, enhances its trade appeal. Indonesia is part of RCEP and maintains bilateral FTAs with Japan, Australia, and Korea, but utilisation remains moderate.

Policy and regulatory environment

Indonesia has made significant progress through the Omnibus Law and OSS system, offering predictable incentives and broad foreign ownership. Vietnam is known for consistent industrial policy and quick licensing within economic zones, although bureaucracy still exists. The Philippines offers strong investor protections, rule of law, and fiscal transparency but struggles with regulatory overlap and local implementation inconsistencies.

Incentives and sectoral focus

Indonesia leads in fiscal incentives for downstream processing, EVs, and resource-intensive manufacturing. Vietnam focuses on high-tech manufacturing and export-driven sectors like electronics and garments, while the Philippines offers long-duration incentives through the CREATE Act and supports industries like aerospace, semiconductors, and food processing. All three have competitive SEZ regimes, but Vietnam’s industrial parks are often cited for best-in-class governance.

Energy and sustainability

Indonesia and Vietnam both face challenges in decarbonising their manufacturing sectors. Indonesia has higher fossil-fuel dependence but is expanding geothermal and solar capacity. Vietnam has made rapid gains in renewables but faces grid constraints. The Philippines offers high electricity costs but a more liberalised energy market and growing green energy opportunities.

Risks and resilience

Vietnam is viewed as the most stable in terms of policy continuity, Indonesia offers macroeconomic resilience and demographic scale, and the Philippines provides robust services-led growth but faces greater exposure to natural disasters and governance fragmentation.

Comparison with Indonesia and the Philippines

See also: Manufacturing in Indonesia | Manufacturing in the Philippines

Rent

Industrial real estate prices

Industrial real estate prices in Vietnam vary depending on the region. Typically in and around Ho Chi Minh City is the most expensive and then in and around Hanoi. These two cities have substantially more manufacturing infrastructure than other parts of the country and are large population centres filled with relatively young populations well suited to manufacturing work.

See also: Industrial Real Estate in Vietnam

Industrial rents per square metre

Source: CBRE Markets Report

Ready-built factory rents per square metre

Source: CBRE Markets Report

Taxes

New businesses will need to register with the General Department of Taxation in order to pay their taxes in Vietnam and ensure they are tax-compliant. There are also a number of recurring fees and taxes that proprietors of manufacturing businesses in Vietnam should be aware of.

Business licence fees

Limited liability companies in Vietnam are required to pay a business licence fee annually. This must be paid by January 30. These fees depend on the registered capital of the firm.

Business licence fees, 2025

Source: Decree No. 20/VBHN-BTC

Value-Added tax (VAT)

The specifics of the Value Added Tax in Vietnam are outlined in Law No. 13/2008/QH12. Broadly, this is a consumption-based tax on goods and services in Vietnam. It is generally charged at the point of sale for retail businesses. There are some exceptional circumstances in which VAT declarations and payments can be made quarterly, however, payments are usually made to the General Department of Taxation each month. VAT is generally charged at 10 percent of the sale price, though for select specialty items, it is only 5 percent, and some items are also exempt.

VAT refunds

Note that manufacturing firms producing goods for export can usually claim back VAT taxes they pay on their input materials used to create said goods. This is capped at 10 percent of the total value of the firm’s exports.

Personal Income Tax (PIT)

Personal Income Tax in Vietnam is levied on a worker’s wages. The amount to be collected is on a sliding scale, the more a worker earns the more PIT they pay. Employers are required to collect PIT on an employee’s wages and pay said tax to the General Department of Taxation each month. If approved by the authorities an enterprise may be able to make tax payments quarterly instead. The PIT is governed by Law No. 04/2007/QH12.

Corporate Income Tax (CIT)

Corporate Income Tax in Vietnam is the tax a company pays. The standard CIT payment is 20 percent of assessable income, however, on large investments foreign firms have been known to receive tax breaks. This tax is paid yearly though firms can make payments quarterly. The CIT is governed by Law 14/VBHN-VPQH.

Tax incentives

Foreign invested manufacturing enterprises in Vietnam have historically been able to receive a number of corporate income tax incentives. The extent of these incentives largely varies depending on a number of criteria, however, most manufacturing firms generally qualify for a 10 percent CIT rate for the first 15 years. 

That said, many foreign firms also often qualify for a 50 percent CIT reduction for the first four years which can be extended up to 9 years in some circumstances.

Furthermore, it is not unusual for individual provinces to provide their own tax incentives as well and the national government often affords foreign firms additional tax discounts on an ad-hoc basis.

Top-up Tax

All of that said, in 2023, a top-up tax was approved by Vietnam’s National Assembly in response to the OECD’s Global Minimum Tax initiative. This will see the biggest multinationals paying less than 15 percent tax, required to make up the difference in Vietnam. This is only a relatively new development and will likely have a substantial impact on the tax incentives outlined above. That said, the government intends to use the additional tax revenue to fund an Investment Support Fund that provides financial support for training and research and development to firms investing in certain sectors of the economy.

See also: Vietnam’s Investment Support Fund: Key Details

What’s next?

Manufacturing in Vietnam can be very cost effective, particularly when compared to manufacturing sectors in developed economies. Not only are labour prices and rent cheap, but there are also a number of tax incentives foreign manufacturing can access in order to reduce costs even further.

Key decision makers looking for support opening a factory in Vietnam can contact any number of market entry consultants. Keeping up with ongoing developments in Vietnam’s manufacturing sector, however, is best achieved by subscribing to the-shiv.

First published December 27, 2023. Last updated April 21, 2025.