Jan 02, 2020 / 08:11

Vietnam remains promising destination for foreign investors

Foreign investors are heading to Vietnam to take advantage of both domestic and export markets thanks to the country’s signed free trade agreements.

After hitting a record high in 2019, foreign capital inflow into Vietnam is forecast to keep thriving next years as foreign investors are continuously choosing the country as a promising destination for their investment plans.

Foreign firms in Vietnam earned US$181.35 billion from exports in 2019.

According to recent survey of Japan Bank for International Cooperation (JBIC), 36.4% of Japanese businesses operating overseas viewed Vietnam as a promising investment destination in the middle and long terms, up 2.5% from last year.

Vietnam has risen to the third place in the JBIC rankings with 36.4% of the vote, and also made the most impressive progress among the top 10 markets for Japanese businesses.

Under the survey, in the 10-year outlook, Vietnam also ranked third with 34.8% after India and China.
Together with Japanese investment, the wave of Korean investment in Vietnam is also forecast to continue as Korean investors are considering Vietnam a favorable destination for their investment.

A recent survey from Korea Trade and Investment Promotion Agency (KOTRA) also showed that more than 90% of Korean firms are satisfied with their investments in Vietnam. The investors are stepping up opening offices, building factories, establishing joint ventures, purchasing shares at Vietnamese enterprises in order to realize investment opportunities through both direct and indirect investment.

Korean investment in Vietnam has expanded over the years with a rise of 37% each year, making Korea the largest foreign investor among the 132 countries and territories investing in Vietnam, at US$67 billion by the end of November 2019.

JBIC and KOTRA said that foreign investors have high confidence in Vietnam’s future growth as well as a low-cost and high quality labor force. General Statistics Office of Vietnam reported that 2019 was the second consecutive year that Vietnam's economic growth has reached over 7%. The country’s GDP expanded 7.02% in 2019 and 7.08% in 2018.

Do Nhat Hoang, Director of Ministry of Planning and Investment’s Foreign Investment Agency, said that many multi-billion dollar projects will arrive in Vietnam in the near future as they view Vietnam as a strategic and crucial investment destination.

Besides existing large corporations such as Samsung, LG and SK who have set up operations in the country, many South Korean and Taiwanese firms are looking to land in Vietnam, Hoang said.

Favorable markets

According to experts, foreign investors are heading to Vietnam as they are benefiting significantly from both domestic and export markets thanks to the country’s signed free trade agreements.

GSO reports showed that in 2019, foreign firms in Vietnam earned US$181.35 billion from exports, a year-on-year rise of 4.2%. If excluding crude oil, the firms’ export revenue stood at US$179.33 billion, a yearly hike of 4.4% and accounting for 68% of Vietnam’s total export earnings. With nearly US$145.5 billion of import revenue in 2019, foreign firms in Vietnam enjoyed a trade surplus of more than US$35.8 billion.

Besides exports, foreign firms have also earned significantly from the Vietnamese market, supported by growing local consumer demands.

Analysts from financial information services provider Fitch Group have highlighted Vietnam as one of the most promising consumer markets in Asia, along with Indonesia, the Philippines, India and China.

Fitch analysts estimated Vietnam’s private consumption growth to be robust, expanding by 7.5% year-on-year in real terms in 2019, accelerating from 7.0% year-on-year in 2018.

Looking ahead, Vietnam’s private consumption growth will cool slightly to 6.8% year-on-year in 2020, but remain strong, the analysts forecast, explaining that improvements in the labor market outlook will be the key force driving private consumption growth, while lower levels of inflation will also boost spending.