Global investors applaud Vietnam

Vietnam is a top destination for investment as companies seek new sources of growth beyond the BRICs (Brazil, Russia, India and China), according to a newly published report by UK Trade & Investment and Economist Intelligence Unit.

The report is based on a wide-ranging global survey of 523 companies, representing all major industries, conducted by the Economist Intelligence Unit during July and August 2010.

“It is the third consecutive year that Vietnam has been selected by executives as their number one investment target outside of the BRIC countries,” said the report.

Nineteen per cent of respondents select Vietnam as the most popular destination for investment, just one per cent lower than China, the first selection of global investors. The third position belongs to India.

“Vietnam has been on the radar of manufacturers looking to move beyond China for some time. With its large, well-educated workforce, the country has good prospects for moving up the value chain,” the report said.

The survey’s result show the existing macroeconomic challenges in Vietnam like high inflation and widening trade deficit have not deterred foreign investors to jump into the country.

Foreign investors registered to invest $21 billion and disbursed $10 billion in Vietnam last year. According to the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency, foreign investors registered to invest in 658 new projects with total capital of around $10.7 billion, increasing 41 per cent year-on-year.

Vietnam expects foreign direct investment registered capital will reach $25 billion and disbursed capital at $10-$11 billion.

Two weeks ago, the World Economic Forum revealed that Vietnam’s global competitive index actively shifted 16 levels, from 75th in 2009 to 59th this year.

John Rand, economist at University of Copenhagen in Denmark, said Vietnam’s business climate was improving year-by-year, especially when the economy was recovering. Rand is now studying business climate in Vietnam with economists at MPI’s Central Institute for Economic Management.

Like UK Trade & Investment and Economist Intelligence Unit, Standard Charter Bank has released a report saying that foreign investors are very confident in Vietnam economy.

“The conditions that originally put Vietnam on investors’ radar screens will return,” said the report.

According to the report, foreign investors will increase investments in Vietnam as they see many of the structural fundamentals that caught investors’ attention remains intact, that include positive economic growth and potential for risk diversification.