Vietnam’s factory boom outpaces skilled labour supply

Manufacturers are spreading production across regions as higher-value investment exposes uneven labour and infrastructure capacity.

Vietnam’s manufacturing expansion is moving beyond low-cost production, but manufacturers must spread capacity across regions as skilled labour and infrastructure constraints emerge unevenly.

Registered foreign investment rose 61% year on year to US$34.65b in the first half of 2026. Van Nguyen, Head of Transaction for Northern Vietnam at JLL, said the country is attracting technology-intensive projects after years of serving labour-intensive and cost-focused manufacturers.

“What we have seen in the market in the last decade... is that new FDI is coming in the high-tech sector in electrical semiconductors,” Nguyen said. “Vietnam is becoming a production hub for strategic manufacturing setup.”

The shift suggests Vietnam is building deeper manufacturing capability rather than merely absorbing production displaced from elsewhere in Asia. However, the next phase will depend on whether companies can secure the resources required for higher-value operations.

Nguyen identified skilled labour as the most immediate constraint. Electronics and semiconductor projects require more technical workers, whilst training systems need time to catch up with investment demand.

Power, land, and supplier capacity also vary by region. Electricity supply can be a greater concern in northern Vietnam, whilst conditions are less restrictive in the south. These differences make site selection a central risk-management decision rather than a cost comparison.

Manufacturers are responding by placing different production lines in separate economic regions. Nguyen cited an automotive case in which battery production was located in central Vietnam, whilst assembly and core manufacturing remained in the north.

“Manufacturers can look at this country to see how they put the new manufacturing,” he said. “They can select the location based on the advantages of different regions in Vietnam.”

Nguyen added that Vietnam’s three economic regions allow companies to distribute production according to labour availability, infrastructure readiness, and regional strengths, reducing risks created by concentrating capacity in one location.