In recent years, Vietnam has emerged as a dynamic player in the global economic landscape, showcasing steady growth and attracting foreign direct investment (FDI) across various sectors. One industry that is gaining significant traction is the advanced materials sector, driven by increasing demand from sectors like electronics, healthcare, and transportation.
“Queen bee” players have significantly contributed to the growth of Vietnam’s advanced materials industry. These include Dow Advanced Materials Company (US) with their acrylic and styrene-acrylic polymers factory in Dong Nai, DuPont (US) with high-quality ceramic production facility in Binh Duong, and Showa Denko (Japan) operating a factory producing didymium and dysprosium in Ha Nam, among others.
With a strategic location, a substantial reserve of minerals, a skilled workforce, a commitment to innovation, and a wide network of free trade agreements (FTAs), Vietnam is positioning itself as a promising hub for advanced materials manufacturing.
Strategic location and abundant geological resources
Vietnam’s strategic geographical location serves as a gateway to key markets in the Asia-Pacific region. Distinguished by a diverse and mineral-rich geology, Vietnam also presents a considerable reserve of minerals. The country boasts some of the world’s largest reserves of valuable resources, including apatite, bauxites, rare earths, as well as substantial, economically viable deposits of oil, coal, gold, gemstones, copper, zinc, tin, chromite, manganese, titanium (mineral sands), graphite, and various other minerals. This natural abundance of raw materials not only bolsters the nation’s strategic position in the advanced materials sector but also ensures a stable and secure supply chain for investors.
Capitalizing on this opportunity, Masan High-tech Materials, a joint venture between local conglomerate Masan Group and Japanese Mitsubishi Materials Corporation, has become a global leader in providing cutting-edge tungsten materials. These materials are used in key industries such as electronics, chemical, automotive, aviation and aerospace, energy and pharmaceuticals. Currently the company operates Nui Phao poly-metallic mine in Thai Nguyen Province, Northern Vietnam, the world largest tungsten mine outside of China.
Vietnam’s commitment to education and skill development has resulted a highly competent workforce. For instance, the University of Science, Ho Chi Minh City, has taken the lead in providing education and conducting research in advanced materials science. The undergraduate program attracts approximately 400 students annually, predominantly from the Faculty of Engineering and the Faculty of Natural Sciences. In parallel, the postgraduate program admits over 100 students each year at both master’s and doctoral levels, extending its reach to related fields such as physics, chemistry, and biomedical sciences, which are intricately linked to materials science.
The investment in science and technology education has cultivated a talent pool capable of driving innovation in the advanced materials sector, making it an optimal destination for research, development, and production.
Government support and investment incentives
The advanced materials industry has been positioned as one of the four development priorities that are entitled to increasingly attractive incentives. Some of these incentives include government support for individuals and organizations in R&D activities as well as their applications on manufacturing and encouraging companies to use energy-saving and eco-friendly materials, among many other preferential policies.
Further, upon certain conditions, foreign investors in the high-tech sector, particularly advanced materials, are entitled with the highest level of corporate income tax (CIT) incentive. This includes a preferential CIT rate of 10% for 15 years, CIT exemption for 4 years, and 50% CIT reduction for 9 years.
Extensive network of free trade agreements (FTAs)
Vietnam possess an extensive network of 15 active FTAs, including new generation FTAs that connects Vietnam with major markets such as the EU-Vietnam FTA; UK-Vietnam FTA; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) including major American partners such as Canada, Mexico, Peru; and the Regional Comprehensive Economic Partnership (RCEP) with major ASEAN and Asia-Pacific partners.
These comprehensive FTAs that cover major economies provide investors in the advanced materials sector with a strategic advantage for expanding market reach.
For foreign investors seeking to capitalize on Vietnam’s promising advanced materials industry, the present moment is opportune. By establishing a presence in Vietnam, companies can leverage the country’s strategic advantages – its location, abundant geological resources, skilled workforce, government support, innovation ecosystem, and a network of FTAs – to contribute to and benefit from the industry’s growth.