Hanoi, the capital of Vietnam, is a rapidly growing city, playing a vital role in the country’s economy and infrastructure. This article explores Hanoi’s economic development, infrastructure improvements, labor market trends, investment opportunities, and future growth strategies, highlighting key factors driving the city’s transformation.

Location

Hanoi, is strategically located in the northern region of the country, at the heart of the Red River Delta—one of Vietnam’s most fertile and densely populated areas. Hanoi is also the largest centrally governed city in Vietnam, covering an area of 344,470 hectares. It is the second most populous city, with over 8.5 million people, and has the second-highest population density among the 63 provinces and cities across the country.

Hanoi is located in the center of northern Vietnam and plays a vital role in the country’s transportation network. The city serves as a major hub for road traffic, with national highways and expressways connecting it to neighboring provinces and key economic regions. Its railway system, centered around Hanoi Station on the North–South line, and Noi Bai International Airport significantly enhance domestic and international connectivity. Although no major river runs through the city center, the Red River supports regional waterway transport for goods and passengers. Thanks to its strategic location and diverse transport infrastructure, Hanoi has favorable conditions for economic and tourism development.

Image of Hanoi city’s location on Vietnam map

Source: Wikipedia

Infrastructure

Hanoi is undergoing a major transformation through extensive infrastructure upgrades aimed at supporting its rapid urbanization and economic development. In 2022, Hanoi ranks 5th among the provinces and cities with the best infrastructure in Vietnam[1]. The city serves as a critical transportation hub in northern Vietnam, with a growing network of expressways, including the Noi Bai–Lao Cai and Hanoi–Hai Phong routes, and the ongoing development of Ring Road No. 4 to ease congestion. Public transit is being expanded through metro projects, with the Cát Linh–Hà Đông and Nhon–Hà Nội lines already operational, signaling progress toward a more sustainable and efficient urban mobility system. Additionally, Noi Bai International Airport enhances both domestic and global connectivity, reinforcing Hanoi’s role as a regional gateway.

Image of Cat Linh – Ha Dong railway – the first urban railway line in Hanoi

Source: Kinh te & Do thi

As of November 2024, Hanoi has 9 industrial zones in operation, covering a total area of 1,670.6 hectares[2]. Additionally, 3 industrial zones have been established and are in the process of infrastructure development, including Quang Minh II Industrial Zone (160 hectares); Hanoi Bio-High-Tech Park (200.6 hectares); and Soc Son Clean Industrial Zone (302.8 hectares)[3]. These industrial zones have attracted 706 active projects, including 301 FDI projects with over 6.4 billion USD in registered capital, and 405 domestic projects with nearly 19,000 billion VND[4]. The development direction for industrial zones in the coming years will focus on key and leading industries such as information technology, new materials, manufacturing, supporting industries, electronics, precision mechanics, medical instruments, and pharmaceuticals[5].

In 2025, Ha Noi approved a comprehensive land use plan featuring thousands of projects to reshape the city[6]. The strategy focuses on expanding transportation infrastructure, housing, and urban areas to meet the needs of a growing population[7]. Environmental improvement initiatives are integral to the plan, focusing on renovating tourist sites, constructing reservoirs, and enhancing water treatment facilities to support agriculture and improve living conditions[8]. It also includes investments in environmental improvements, public services, and social welfare facilities like schools and hospitals[9]. These initiatives collectively aim to transform Hanoi’s urban landscape, bolster economic development, and enhance the quality of life for its citizens.

Labor market

As of 2023, Hanoi has a workforce of approximately 4.1 million people out of a total population of 8.5 million, making it the second largest workforce in the country[10]. Of this, 30.3% are highly educated with university degrees or higher, while around 20.3% have secondary, intermediate, or college-level education[11].

Labor force by educational qualifications (2023) (%)

Source: B&Company synthesis from GSO

A significant portion of Hanoi’s labor force engages in service and sales-related roles, alongside technical and skilled professions. Besides, simple occupations[12] also account for a notable share of the workforce.

Labor structure by occupation (2023) (%)

Source: B&Company synthesis from GSO

As of October 2023, the average monthly income of workers in Hanoi reached 10.7 million VND[13]. Wages have increased across most types of businesses[14]. In 2024, wages in foreign direct investment (FDI) enterprises are expected to rise by 6.76%, while other types of businesses will see increases ranging from 7.14% to 7.35%[15]. State-owned enterprises and state-controlled joint-stock companies have an average salary of 7.5 million VND per month, while private enterprises pay 7.3 million VND, and FDI enterprises offer the highest average at 7.9 million VND per month[16].

Economic landscape

Hanoi’s Gross Regional Domestic Product (GRDP) grew by 6.52% in 2024, reaching nearly 59 billion USD, the second-largest in the country. GRDP per capita was projected to be 163.5 million VND, an 8.8% increase from 2023[17]. The service sector made up 65.6% of the GRDP, while industry and construction accounted for 22.79%[18]. Development investment rose by 10.5%, with state-managed investment increasing by 38.7%[19].

Tourism is becoming a key economic sector, placing Hanoi among the top 10 cities with the fastest-growing tourism in the world, and 15th in the list of the most popular travel destinations globally[20]. In 2023, Hanoi welcomed 24 million visitors, including 20 million domestic tourists and 4 million international visitors[21].

Digital economy is one of the key sectors that Ha Noi is planning to reinforce during this period. According to Hanoi’s Digital Transformation Program, by 2030, the city aims to become the national hub for innovative startups, ranking among the top three in digital transformation, IT technology, competitiveness, innovation, and cybersecurity[22]. Hanoi aims to surpass 20 billion USD in digital economy revenue in 2025, focusing on developing over 200 science and technology businesses and promoting digital and creative economies[23]. At the same time, the city targets over 50% of businesses engaging in innovation, equivalent to around 150,000 out of 210,000 active businesses[24].

To achieve this, Hanoi will support businesses in technology application, digital transformation, and adopting advanced standards to enhance production capacity[25]. The city plans to expand high-tech industrial and agricultural zones and implement new growth models, including green, circular, urban, and shared economies[26].

Besides, Hanoi is promoting private investment in key industries, focusing on high-tech, eco-friendly sectors like semiconductors, AI, energy transition, electronics, and biotechnology[27]. It aims to restart at least 50% of slow-moving projects, increase domestic investment by over 18%, and attract around 3 billion USD in FDI[28].

Investment opportunities

After 15 years of administrative expansion, Hanoi remains one of the top cities in Vietnam for attracting foreign direct investment (FDI). In 2024, Hanoi attracted 2.162 billion USD in FDI, a 30% increase compared to 2023, ranking 5th nationwide[29]. The sectors drawing the most investment are real estate, followed by manufacturing, trade, services, construction, and science and technology[30]. Notably, the Lumi Hanoi apartment project on Thang Long Avenue, invested by Capital Land Group (Singapore) with 662 million USD, is one of the largest foreign investment projects registered in Vietnam in 2024[31].

The table below compiles some prominent FDI projects of Hanoi in recent years.

In recent years, Hanoi has prioritized attracting investment, particularly FDI, by providing favorable conditions including 10 years of land and water lease exemptions for strategic sectors, with a 50% reduction for the remaining period[32]. Businesses also enjoy a 5% corporate income tax rate, a 4-year tax exemption, and a 50% reduction for the following 9 years[33].

In 2025, Hanoi will review and resolve slow-moving projects, aiming to restart 50% of them and increase domestic investment outside the state budget by 18%[34]. The city will focus on attracting investment in high-tech sectors such as semiconductors, artificial intelligence, and the automobile industry, with a goal of reaching 3 billion USD in FDI[35].

Conclusion

To sum up, Hanoi’s strategic location, expanding infrastructure, and focus on high-tech industries present strong opportunities for foreign investment. With growth in sectors like technology, real estate, and tourism, foreign investors can benefit from Hanoi’s incentives and evolving market, particularly in innovation and sustainability-driven industries.

[1] Aviation Logistics. Change in ranking of provinces with the best infrastructure quality in Vietnam<Access>

[2] Communist Magazine. Industrial development in Hanoi: Current situation and future orientation <Access>

[3] Communist Magazine. Industrial development in Hanoi: Current situation and future orientation <Access>

[4] Communist Magazine. Industrial development in Hanoi: Current situation and future orientation <Access>

[5] Communist Magazine. Industrial development in Hanoi: Current situation and future orientation <Access>

[6] Lao Dong News. Thousands of housing and infrastructure projects to change Hanoi’s face by 2025 <Access>

[7] Lao Dong News. Thousands of housing and infrastructure projects to change Hanoi’s face by 2025 <Access>

[8] Lao Dong News. Thousands of housing and infrastructure projects to change Hanoi’s face by 2025 <Access>

[9] Lao Dong News. Thousands of housing and infrastructure projects to change Hanoi’s face by 2025 <Access>

[10] GSO. Labor force survey report 2023 <Access>

[11] GSO. Labor force survey report 2023 <Access>

[12] This group includes occupations that require knowledge and experience for performing simple and repetitive tasks, often involving the use of hand tools and physical effort. Main tasks include street sales, guarding entrances and properties, cleaning, laundry, and general work in industries such as mining, agriculture, forestry, fishing, construction, and manufacturing.

[13] VnEconomy. Average income of workers in Hanoi reaches nearly 11 million VND  <Access>

[14] VnEconomy. Workers’ wages in Hanoi increase in most types of enterprises <Access>

[15] VnEconomy. Workers’ wages in Hanoi increase in most types of enterprises <Access>

[16]VnEconomy. Workers’ wages in Hanoi increase in most types of enterprises <Access>

[17] Con so & Su kien magazine. Press conference to announce socio-economic statistics of Hanoi city in 2024 <Access>

[18] Mekong Asian. Localities with the largest economic scale in Vietnam in 2024 <Access>

[19] Mekong Asian. Localities with the largest economic scale in Vietnam in 2024 <Access>

[20] Vietnam Government Portal. Hanoi’s economy is increasingly changing towards modernity and sustainability <Access>

[21] Vietnam Government Portal. Hanoi’s economy is increasingly changing towards modernity and sustainability <Access>

[22] Con so & Su kien magazine. Capital Economy – Strong Change after 70 Years of Liberation <Access>

[23] Dien dan doanh nghiep. Hanoi aims for digital economy to exceed 20 billion USD by 2025 <Access>

[24] Dien dan doanh nghiep. Hanoi aims for digital economy to exceed 20 billion USD by 2025 <Access>

[25] Dien dan doanh nghiep. Hanoi aims for digital economy to exceed 20 billion USD by 2025 <Access>

[26] Dien dan doanh nghiep. Hanoi aims for digital economy to exceed 20 billion USD by 2025 <Access>

[27] Hanoi.gov.vn. Hanoi to achieve growth target of 80% or more in the first half of 2025 <Access>

[28] Hanoi.gov.vn. Hanoi to achieve growth target of 80% or more in the first half of 2025 <Access>

[29] Kinh te do thi. FDI in Hanoi is on the rise, heading towards higher results. <Access>

[30] Kinh te do thi. FDI in Hanoi is on the rise, heading towards higher results. <Access>

[31] Nhan dan News. Hanoi takes advantage of advantages to attract FDI investment <Access>

[32] Kinh te do thi. FDI in Hanoi is on the rise, heading towards higher results. <Access>

[33] Kinh te do thi. FDI in Hanoi is on the rise, heading towards higher results. <Access>

[34] Hanoimoi. Hanoi strives to achieve growth target of 8% or more by 2025. <Access>

[35] Hanoimoi. Hanoi strives to achieve growth target of 8% or more by 2025. <Access>