Exploring Hai Phong: Vietnam’s Maritime Economic Powerhouse

Hai Phong, the bustling port city of Northern Vietnam, is not just the third-largest city in the country after Ho Chi Minh and Hanoi; it stands as a vital economic hub, brimming with potential and opportunity. An impressive geographical location, alongside an advanced infrastructure system, makes Hai Phong a magnet for foreign investment and a leader in Vietnam’s rapid economic growth.

Overview of Hai Phong

Located about 120 kilometers east of Hanoi, Hai Phong boasts an area of 1,527 square kilometers, housing a vibrant population of approximately 2.07 million (as of 2021). The city is one of Vietnam’s five municipalities and plays a crucial role in the economic landscape, supported by its status as the largest coastal city in the northern region. Over the past five years, Hai Phong’s economic profile has soared, making it one of the fastest-growing cities in terms of Gross Regional Domestic Product (GRDP).

Strategic Location and Transport Hubs

Strategically nestled at the edge of the Red River Delta and close to the Chinese border, Hai Phong serves as a major trading center. Uniquely, it features five modes of transportation: railways, roadways, airways, inland waterways, and maritime routes. This multi-modal transport capability positions Hai Phong as a critical hub for large-scale manufacturing and industrial activities throughout Southeast Asia.

Economic Growth: Key Statistics

In recent years, Hai Phong has emerged as a leading player in Vietnam’s economic growth story, maintaining its position among the top two regions for GRDP growth. Between 2017 and 2021, the city achieved an impressive annual growth rate of 15.26%, outpacing national averages.

In 2021, Hai Phong recorded a GRDP of approximately USD 13.58 billion, marking a year-on-year increase of 12.38%. This growth, while slightly tempered by challenges such as the pandemic, highlighted Hai Phong’s resilience, retaining its status as one of the only two localities in Vietnam with double-digit GRDP growth that year.

Industrial and Sectoral Development

The industrial and construction sectors are leading the charge, growing at a remarkable rate of 19.04% in 2021. The construction sector alone grew by 7.43%, while manufacturing saw a staggering growth of 20.75%, underscoring its crucial role in the economy. The service sector also showed promise with a growth rate of 5.13%, though agriculture made only modest gains, reflecting a broader shift towards industrialization.

By 2021, Hai Phong’s economy was predominantly industrial, with the sector accounting for 52.86% of the city’s GDP, compared to services at 37.35% and agriculture at a mere 3.97%.

Trade Dynamics

Trade is a cornerstone of Hai Phong’s economy, with total export turnover in 2021 reaching USD 26.51 billion and imports totaling USD 25.77 billion. This robust trade landscape reflects not only Hai Phong’s industrial output but also its role as a gateway for international commerce.

Infrastructure Development Initiatives

Local authorities are actively enhancing Hai Phong’s infrastructure. Plans are underway to construct additional bridges with a total investment of USD 3.6 billion. The expansion of Lach Huyen port, Northern Vietnam’s largest deep-sea port, includes the construction of two new terminals capable of accommodating larger vessels and facilitating global shipments.

Key expressways, such as the Hanoi – Hai Phong and the Hai Phong – Ha Long expressways, are part of vital infrastructure projects that will integrate regional economies, reduce transportation costs, and strengthen trade relations with neighboring countries.

Foreign Direct Investment (FDI) Landscape

According to the Ministry of Planning and Investment, Hai Phong ranks as the sixth-largest FDI recipient in Vietnam, with registered capital of USD 24.15 billion as of 2022. With 12 industrial parks in operation and over 420 FDI projects from 36 countries, including major players from Japan, South Korea, and China, foreign investment flows are integral to the local economy.

Notable projects include the LG Display project (USD 5.84 billion), the Bridgestone tire plant (USD 1.2 billion), and Pegatron’s electronics manufacturing facility (USD 481 million). These developments underscore the strategic importance of Hai Phong in global supply chains.

Future FDI Prospects

Looking ahead, Hai Phong aims to attract an estimated USD 2.5-3 billion in FDI for 2022. The focus is particularly on the manufacturing and processing sector as well as high-tech industries, seaports-logistics, and tourism-commerce as foundational elements for ongoing economic growth.

The Dinh Vu – Cat Hai Economic Zone stands out as a premier investment hub, offering tax incentives and streamlined regulations to attract foreign businesses. This economic zone represents a commitment to sustainable and favorable investment conditions, further solidifying Hai Phong’s allure for foreign investors.

Hai Phong as a Strategic Investment Location

Through its rapid development into a manufacturing nucleus, Hai Phong has positioned itself within the “China+1” investment strategy, emerging as an alternative for businesses seeking to diversify their production operations. With favorable business climates and competitive industrial capabilities, the city serves as an attractive option for investors.

In fact, Hai Phong ranked second out of 63 Vietnamese provinces for having the most favorable business environment, according to the 2021 Provincial Competitiveness Index assessment.

With its advantageous location, improving infrastructure, and extensive government incentives, Hai Phong is not only enhancing its connectivity with global supply chains but also establishing itself as a premier destination for investors and businesses seeking to capitalize on the burgeoning economic landscape of Vietnam.