Vietnam becomes bright spot for foreign investors

Vietnam is among the leading countries in Southeast Asia chosen by Japanese investors, said Nakajima Takeo, chief representative of the Japan External Trade Organization (JETRO) in Hanoi.
June 09, 2021 | 12:35
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Vietnam becomes bright spot for foreign investors
A container ship docks at Cat Lai Port in Ho Chi Minh City. Photo: Shutterstock/Xuanhuongho.

Posting strong economic growth despite Covid-19

“Vietnam is among the top countries in Southeast Asia chosen by Japanese investors,” said Nakajima Takeo, chief representative of the Japan External Trade Organization (JETRO) in Hanoi.

That Vietnam’s population is anticipated to reach 106 million by 2050 and the middle class has increased will turn the country into a promising place for retail businesses, according to the JETRO. Besides, Vietnam is among the country with the most impressive annual economic growth in the region, making its GDP scale increasingly larger. Numerous Japanese retailers have been presented in the Vietnamese market such as AEON, Muji, FujiMart and Matsumoto Kiyoshi.

Torben Minko, vice chairman of the European Chamber of Commerce in Vietnam (EuroCham), said: “It is clear that Vietnam’s successes in the fight against Covid-19 have great confidence for European businesses as the industrial parks have remained operation, the number of laid-off workers has been kept in minimum and the supply chain has been ensured.

Vietnam becomes bright spot for foreign investors
A man works at an assembly line of Vinfast Auto factory in Hai Phong City, northern Vietnam. Reuters/Kham.

Vietnam’s Business Climate Index (BCI) hit 73.9 points during the first quarter of the year, the highest level since the third quarter of 2019, before the outbreak of the Covid-19 pandemic.

When being asked about the prospects of the Vietnamese business environment for the next quarter, 67% of European businesses predicted it would be either “excellent” or “good”, representing a 12% increase compared to the previous quarter.

EuroCham Chairman Alain Cany said the BCI results in the first quarter of 2021 once again showed that Vietnam was continuing to open up its economy. While many countries in the world have grappled with the pandemic, Vietnam can ensure that companies can operate normally without any disruption. This has helped to boost the economy and enhance confidence for European businesses.

Michele Wee, chief executive officer at Standard Chartered Bank Vietnam said that the foreign direct investment (FDI) inflow to Vietnam would be strongly maintained in the medium term.

In 2020, the country recorded a GDP growth rate of 2.91%, making it among the economies with the highest level of economic expansion.

Dual goals of preventing Covid-19 and developing the economy

Do Nhat Hoang, director of the Foreign Investment Agency under the Ministry of Planning and Investment said: “Ministries, departments and localities have made efforts to both adopt pandemic prevention measures and support firms to maintain operation, avoid the interruption of the supply chain.”

In the gloomy picture of the global economy due to the Covid-19 pandemic, Vietnam is the only nation in the world with the economy raised to “positive” by three credit rating agencies including Moody's, S&P and Fitch.

Vietnam becomes bright spot for foreign investors

Shipping containers at a port in Ho Chi Minh City. Photo: Shutterstock/Igor Grochev.

S&P forecasted that Vietnam’s economy would remain a good momentum in the next one to two years thanks to the government’s effective measures in curbing the pandemic.

Vietnam has also been among the leading countries in Southeast Asia in terms of FDI attraction, stable export growth, strong domestic demand and solid external position.

According to the Ministry of Finance, the basis for S&P to enhance Vietnam’s credit rating outlook to positive is the recognition of the country's impressive economic development and continuous reforms in policymaking in the context that the Covid-19 pandemic has adversely affected the socio-economic situation.

During the first five months of the year, FDI flow into Vietnam reached US$ 14 billion.

Newly-registered capital stood at nearly US$ 8.83 billion, up 18.6 percent year-on-year, while additional investment totaled US$ 3.86 billion, an increase of 11.7 percent compared to the same period last year. Investment through capital contributions and share purchases was US$ 1.31 billion, down 56.3 percent year-on-year.

Meanwhile, the disbursement of foreign investment was up 6.7 percent to US$ 7.15 billion.

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