FDI News

Competitive factors make Viet Nam a destination for foreign investors

VGP – Viet Nam has been emerging as a new destination for foreign investors thanks to its political stability, promising economic growth and participation in a series of new-generation free trade agreements, most recently the EU-Viet Nam Free Trade Agreement (EVFTA).

According to experts, Viet Nam is a new market to businesses from Japan, Germany and the United States. Compared to other countries in ASEAN, Viet Nam is considered a relatively potential business environment, evidenced through its political stability and promising economic growth.

Specifically, in the face of the COVID-19 pandemic, Viet Nam’s gross domestic product (GDP) still grew by 1.81% in the first half of 2020.

The main drivers of such growth were the manufacturing industry (growing by 4.96%) and the market service sectors (wholesale and retail up 4.3%, finance-banking-insurance activities up 6.78%). As a result, investors are considering Viet Nam a more transparent destination to do business.

For example, a recent survey conducted by the German Chamber of Industry and Commerce in Viet Nam found that up to 72% of German enterprises in Viet Nam would still continue their investment plans in the country, and 27% of them said they would hire more workers.

Most recently, the Bavarian Chamber of Commerce and Industry (Germany) issued a release on its website lauding Viet Nam as an extremely favorable investment and development environment for its businesses in the near future.

Accordingly, the EVFTA will wing the economic relationship between Viet Nam and the Bavarian State. The Southeast Asian country will become an ideal investment destination of choice and can replace China as Bavarian companies wish to further expand their operations in the fertile Asian market.

For Japan, the East Asian country is currently the second largest investor in Viet Nam with a registered capital of more than US$60 billion (out of the total US$380 billion FDI inflows).

Terence Alford, Director of Capital Markets & Investment Services at Colliers International in Viet Nam, highlighted that amid the constant evolution of the COVID-19 pandemic and the U.S.- China trade tensions, Japan’s financial institutions and businesses see Viet Nam as a new attractive and more stable destination to establish new companies as well as relocating their existing businesses from China.

However, in order to take advantage of the plus points as assessed by foreign enterprises above, Viet Nam still has a lot to do such as improving infrastructure and logistics, solving issues related to intellectual property rights, enhancing administrative reforms, and reducing sublicenses./.

By Vien Nhu