A STRONG POSITIVE OUTLOOK FOR FOREIGN DIRECT INVESTMENT

BBGV

Wednesday, 03 Aug 2016

In the first 7 months of 2016 Vietnam has seen a significant increase in the level of Foreign Direct Investment ("FDI"). with actual remitted capital increasing 17+% Yoy to 8.55 billion whilst committed investment has surged over 45% to US$ 12.9 billion according to information from the Ministry of Planning and Investment. Based on these statistics we can expect to see an increase over last years US$ 14.5 million of remitted FDI, which was a record year since the mid 90's.

The numbers have been buoyed by the strong economic growth seen last year and the forecast growth in the foreseeable future and although last years growth in GDP of 6.7% maybe hard to maintain 2016 looks set to return a GDP growth of at least 6-6.2%. The confidence is in part also due the expectations of the coming into force of several free trade agreements including the Trans Pacific Partnership and the EU Vietnam Free Trade Agreement. The former is expected to boost GDP growth to over 10% by 2025 if it is ratified by US Congress and other TPP countries who would be expected to follow the lead of the USA.

The continuing improvement in the business climate being championed by the new Government is also having a favorable impact on investor confidence as evidenced by the growing M and A activity with foreign players.

However much of the FDI is still coming from regional neighbors with South Korea leading the way with major additional investments in the offering from LG group, and new investment from Seoul Semi-conductor.

Japanese firms also continue their investment spree with likely investments from Mitsubishi in Real Estate and Daikin in production of air conditioners.

Recent surveys by both Eurocham (the European Chamber of Commerce in Vietnam) reported that almost half of their 800+ members were considering to increase their investment levels in the coming months.

Whilst we have seen surges in the amount of FDI in the past they did not have the substance we are seeing this time with serious investors " willing to put their money where their mouth is", which augers well for the future.

Kenneth Atkinson
Chairman of British Business Group in Vietnam