According to the United Overseas Bank (UOB) Asian Enterprise
Survey 2016*,
Vietnam is likely to see increasing investments from its neighbours Malaysia, Thailand and
Singapore in the next three to five years.
Enterprises from Malaysia (38%), Thailand (35%) and Singapore (29%)
have
ranked
Vietnam as their top three expansion destinations.
They are among the 28% of all respondents
who chose the country as their favoured expansion destination in the next three to five years.
These Asian enterprises
are drawn to
Vietnam’s stable political and economic climate (41%), large
and growing customer demand (40%) and its
favourable
tax and regulatory environment (35%).
With economic growth of 6.7% in 2015 and a young workforce where 60% of its
90 million-strong population is under 35 years old, Vietnam is proving to be an attractive investment
destination.
In the first half of 2016, the country
received
a record US$11.3 billion in
foreign direct
investment (FDI),
up 105% from the same period last year**.
Eric Tham, Head of Group
Commercial Banking
at UOB,
said that the findings from the
UOB Asian
Enterprise Survey 2016
reaffirmed
the
entrepreneurial spirit of
Asian enterprises as they continue
to seek
new markets for growth.
“According to the
survey, the top industry sources of foreign investment into Vietnam are from the
manufacturing, healthcare and pharmaceuticals, construction and real estate, as well as energy and
natural resources sectors. These sectors are key as the country
aims to build a strong foundation to
support its long-term economic growth.
“Investments into Vietnam will also create more jobs and boost income. This in turn will open the doors for
new economic opportunities as Vietnam’s growing urban population and expanding middle class start
spending more on consumer goods, and on healthcare services to ensure their personal health and
wellbeing. In addition, Vietnamese enterprises will benefit from collaborating with foreign companies in the
areas of knowledge sharing and skills transfer,” said Tham.
One company
that has
ventured
into Vietnam
to
expand their business
is CKL Holdings, a
food and beverage conglomerate
with manufacturing facilities
in Ho Chi Minh City for the
production of beverages.
Chia Chor Meng,
Group Chairman of CKL Holdings, said,
“We first set up
a production plant
in
1996
in
light
of
Vietnam’s
huge consumer market,
lower
operating cost,
availability of work force
and
abundant
natural
raw materials.
By having research and development facilities
there, we
are also
able to
manufacture
and sell
products that suit
the
tastes
of the local population. We also tapped
Vietnam’s
conducive export environment to
distribute
our products to 60 countries worldwide.
Last year,
we
established our second factory, which is five times
the size of
the first, to meet increasing customer
demand.”
Vietnam’s government is
increasing its efforts
to attract foreign investment.
One example is the memorandum of understanding (MoU) signed between the Vietnam Foreign Investment Agency (FIA) and UOB in
2015 aimed at increasing investment and trade between Vietnam and Southeast Asia. The MoU is FIA’s first such collaboration with a bank.
Tham added that while
Vietnam’s economy may be affected by global market uncertainties stemming
from a precipitous drop in oil prices and tepid consumer demand in the West, Vietnam’s rapid
development presents many opportunities for Asian enterprises.
“The global economy may be slowing down but the Vietnamese economy is still seeing growth. Asian
companies that are able to seize the arising opportunities, and produce the products and services needed
to meet the rising demands of Vietnam’s middle class, will have a unique opportunity to build strong and
sustainable regional businesses,” said Tham.
Interested?
Read the UOB Asian Enterprise Reports 2016
*The survey was conducted by UOB in May and June 2016 among 2,500 Asian enterprises across mainland China, Hong Kong,
Indonesia, Malaysia, Singapore and Thailand. The objective was to explore how Asian enterprises are capitalising on business
opportunities
amid global and regional economic trends and trade flows.
**Source: Doing Business in Vietnam, International Enterprise Singapore
