FDI is a significant driving force of Vietnam's growth (Photo: VNA) Hanoi (VNA) – Vietnamhas become one of the leading countries in Southeast Asia in attracting foreigndirect investment (FDI), according to an article published on September 21 on the website gfmag.com of GlobalFinance Magazine.
The writing attributes it to arange of advantages of the country, including its favourable demographics as40% of Vietnam’s population of 100million are under 25. In addition, it has tariff-free access to the Southeast Asiaregion with 800 million people thanks to being a member of the Association ofSoutheast Asian Nations (ASEAN).
According to ThierryMermet, CEO of Source Of Asia (SOA), a consultant to companies looking forbusiness opportunities in Vietnam and ASEAN, the 2023 outlook for the business environmentin Vietnam shows promising signs of improvement. He citedforeign direct investment capital reaching about 10 billion USD in the firstquarter of 2023, an increase of 0.5% over the same period last year. Mermetpredicted that this trend will continue in the near future.
Theexpert said that in the long term, Vietnam is really strengthening its positionas one of the top three locations where European business leaders want toinvest. According to the Business Confidence Index report conducted by theEuropean Chamber of Commerce in Vietnam (EuroCham), 3% more leaders have pickedVietnam as one of the top three investment choices.
Thearticle said that 90 countries and territories invested in Vietnam in the first halfof this year; the top five are Asian countries. with the Republic of Korea infirst place, accounting for 81 billion USD. It was followed by Singapore andJapan with 72 billion USD and nearly 70 billion USD committed, respectively. Notably,while the US stood in the 7th position in terms of investment capital, it is Vietnam’sfirst key export partner.
Another indicator ofVietnam’s attraction is homegrown electric vehicle (EV) manufacturer VinFast,which recently became the world’s third-largest automaker by market capitalisation,behind Tesla and Toyota.
Accordingto Barry Elliott, Vice President of Tomkins Ventures and a supply chain gurulong active in Vietnam, this not only signals a promising future for the EVindustry in Southeast Asia in general, but also exemplifies Vietnam’s emergingprowess in manufacturing.
Meanwhile, S&P Global said that Vietnam’srobust economic growth is also a factor that helps attract foreign investors tothe country. Although its economic growth slowed to 3.7% in the first half from8% in 2022, the World Bank predicts a rebound in the second half of this year.
The S&P Global forecast an increase inmergers and acquisitions in Vietnam’s banking sector over the next two yearsas lenders seek to bolster their capital.
Thailand'sKasikornbank PCL is reportedly in talks to acquire consumer finance providerHome Credit Vietnam in a deal valued at about 1 billion USD. If successful, thiswould be the second-largest deal in Vietnam in 2023, following Sumitomo MitsuiBanking Corp.'s acquisition of a 15% stake in Vietnam Prosperity Joint StockCommercial Bank in March.
A corner of Ho Chi Minh City from above (Photo: baodautu.vn) According to Mukuru Kato, managing director and head of frontier markets research at EFGHermes Research said deals will likely surge between 2023 and 2024, includingamong state-owned commercial banks (SOCBs), as the State Bank ofVietnam is keen to have a Vietnamese bank rank among the top 100 in Asia.
IvanTan, an analyst at S&P Global Ratings, said that acquiring a strategicstake in Vietnamese banks provides an opportunity for foreign investors toparticipate in the growth and tap the country’s favourable demographics viaretail lending, particularly via digital channels./.
