HSBC: Vietnam's resilient economy and Vietnam's competitive wages (both 28%) are the two leading factors in attracting foreign businesses.

HSBC's survey report on foreign investors' views on the situation in Southeast Asia shows that international businesses from nine major economies in the world are increasingly optimistic about the prospects in this region, with business activity expected to grow by 23.2% over the next 12 months - compared to 20.1% in last year's survey.

The HSBC Global Connections survey also shows that business groups from countries closer to Southeast Asia, such as Asia and the Middle East, have a stronger presence in Southeast Asia and a greater level of ambition in terms of expanding operations in this area compared to groups of businesses from Europe and the US.

Amanda Murphy, head of Commercial Banking, South & Southeast Asia, HSBC Asia Pacific said "These findings once again confirm the fact we observed from our own customers that businesses across around the world are becoming more confident in expanding the scale of operations in Southeast Asia.

We and our business customers are excited about Southeast Asia, and we are always focused on connecting international businesses in HSBC's global network with opportunities in this dynamic region."

Growth ambition

The survey revealed a clear difference in the mergers & acquisitions (M&A) ambitions of Asia-Pacific companies in Southeast Asia compared to companies from other regions.

The number of companies from China (65%) likely to increase organic growth in Southeast Asia by 2024 is twice as many as the number of companies from Germany (45%).

Survey companies from all markets expect this activity to increase over the next four years, and the gap between Asian companies and companies from other places in the survey to narrow gradually over time.

Companies participating in the survey that are already present in the region plan to focus on developing in places they already know well. 36% of companies operating in Singapore expect to prioritize growth there over the next two years, followed by 27% of companies with operations in Malaysia and 24% with operations in Thailand.

Businesses from markets other than Germany are likely to prioritize Singapore among their current markets, reflects the country's enduring appeal as a regional connectivity hub and financial hub.

Vietnam is considered an attractive market for foreign businesses. Photo: baodautu.vn

In terms of new opportunities, Indonesia and Malaysia are the two most popular options for companies aiming to expand into a completely new ASEAN market within the next two years.

A quarter of companies without a presence in Indonesia and a quarter of companies with a presence in Malaysia plan to expand operations to these two countries during that time period.

"Southeast Asia is clearly an attractive manufacturing base, with increasingly advanced supply chains and highly skilled labor attracting global companies to the region," said Amanda Murphy, head of Commercial Banking, South & Southeast Asia, HSBC Asia Pacific.

Attraction of Vietnam

HSBC research shows that Vietnam's resilient economy and competitive wages (both 28%) are the top two factors in attracting foreign businesses.

The skilled workforce (27%) is also identified by international companies as one of the attractive features of Vietnam as a manufacturing base.

An equal proportion of businesses are attracted to Vietnam's growing consumer market, highlighting rising consumer prosperity as an attractive feature.

Vietnam's growing digital economy (23%) is also a strong point that attracts businesses to expand operations. Many companies participating in the survey said they were attracted by Vietnam's high smartphone usage rate and vibrant startup sector.

"With a total population of more than 600 million people with an average age of 32 and an average GDP growth rate of 5%, ASEAN represents an attractive market, as it is poised to become the world's fourth largest economy by 2035.

This growth is driven by dynamism, digitalization trends and demographic characteristics," said Tim Evans, chief executive officer of HSBC Vietnam.

Evans emphasized that, known as a country with rapid economic growth, Vietnam also emerged in the group of countries with the best growth in the ASEAN region because of the resilience of the economy during and after the pandemic.

Coupled with a hard-working skilled workforce and competitive cost structure, this resilience continues to attract strong FDI flows into Vietnam.

Despite current difficulties, Vietnam is still an attractive destination for foreign businesses.

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