Vietnam- second most attractive SEA destination for foreign investors

Illustrative image.

Vietnam is the second most attractive investment destination in Southeast Asia, following Myanmar, according to a Grant Thornton Vietnam survey. Released on April 28, the survey on private investment revealed that 72 per cent of respondents said that the level of investment attractiveness in Vietnam was “Attractive” or “Very Attractive”, similar to results in 2016. It was rated as “Very Attractive” by only 2 per cent of respondents, however, down 7 per cent from the previous survey.
Myanmar occupies the highest position, with potential from rapid economic growth, infrastructure, new investment laws, and many incentives for foreign investors. Vietnam attracts foreign investors on account of its human resources, low labor costs, and the strong growth in its middle class.
Vietnam still has barriers to investment, however, of which corruption is a serious impediment. The country is not expected to make a breakthrough in fighting corruption in its public sector and investors are concerned about the state of political interference, “lubrication”, and weak enforcement and inconsistent interpretation of laws.
Infrastructure is also an obstacle identified by foreign investors, as there are a large number of transport projects with high levels of investment capital but having little positive effect.
Foreign investors said that State-owned enterprise equitization is a source of investment for them. Only 55 enterprises out of 430 have been successfully equitized, however, which is less than in 2015, when 220 were equitized.
Foreign investors say that equitization creates various opportunities to approach Vietnam in major sectors such as telecommunications, petroleum, infrastructure, and retail. Food and beverages and retail remain the most attractive sectors, according to the Grant Thornton Vietnam survey.