Vietnam Makes Localisation Part of the Investment Bargain

On 22 September, Deputy Prime Minister Nguyen Van Thang signed Resolution 280, putting the Ministry of Finance in charge of checking whether foreign investors deliver what they promised in return for incentives. The ministry will draw up the criteria for which “core” projects qualify for a new tier of “outstanding” incentives and faster procedures. The criteria include technology transfer, R&D, training and the use of local suppliers. Provinces, meanwhile, must draw up lists of priority projects and include them in their annual and five-year plans. This principle was already in the law, but what is new is that a ministry now owns the job of enforcing it.

The context behind this is that Vietnam wants to move up the value chain. Foreign-invested firms produce about 70% of its exports, but the government wants more of the knowledge behind producing those exports to remain in the country. The Politburo’s June resolution, which Resolution 280 puts into practice, therefore set targets for 2030, including a localisation rate of 45–50% in key industries and some 10,000 Vietnamese firms in foreign supply chains.

These demands may look like another burden for foreign firms, so the plan also offers them something in return. It calls for a review of foreign-ownership caps in priority sectors, promises that rules will not be changed retroactively against a firm, and proposes letting provinces help pay for worker training. Part of the reason is that Vietnam has applied the 15% global minimum tax since 2024, reducing the value of the tax holidays it once offered. This means that it now needs other ways to reward investors.

In Southeast Asia, Vietnam is not alone in asking foreign investors to build more locally. Indonesia used access to its market, blocking iPhone 16 sales in October 2024 under local-content rules until Apple agreed to invest more; the ban was lifted in April 2025. Thailand asks electric-vehicle makers to build two cars locally for every one they import this year, and three next year. Malaysia is developing a scorecard to judge projects, starting with data centres, by the value they add rather than their size. Vietnam is doing the same thing as its neighbours through a much wider set of tools, bringing targets, funding and law into one national policy. At the very least, investors can now see more clearly what the government wants and what it is prepared to pay for.

Samsung shows that localisation can work when foreign investment is matched with capable local suppliers. The number of Vietnamese firms supplying the company’s operations in Vietnam rose from 25 in 2014 to more than 300 by 2023.

By contrast, Vietnam’s car industry presents a more mixed picture. The government targeted 30–40% localisation by 2020, but passenger cars reached only 7–10% and were still around 10% last year. Local factories made vehicle bodies and simpler components, while engines and electronics remained imported. The former measurement system counted designated groups of parts rather than value created in Vietnam and was dropped in 2022.

The rules for the new reviews are still being written. Investors should use that window to get the target, the way it will be measured and the conditions for changing it written into their licences before they commit capital. Otherwise, they may build first and discover the real value of the incentive later.