Foreign investors maintain interest in Vietnam

Japan’s Sumitomo Mitsui Finance Group (SMFG) outlaid 1.37 billion USD for 49 percent of FE Credit. Illustrative image

Hanoi - Despite a year-on-year slip in foreign direct investment (FDI) to Vietnam in the first four months of the year, foreign investors still signed major deals in the country and confirmed its ongoing investment appeal.

In early April, the SK Group of the Republic of Korea announced the signing of an agreement with the Masan Group Corporation to acquire a 16.26 percent stake in VinCommerce, a Masan subsidiary, for a cash consideration of 410 million USD.

Japan’s Sumitomo Mitsui Finance Group (SMFG) then outlaid 1.37 billion USD for 49 percent of FE Credit.

The two deals warmed up Vietnam’s merger and acquisition (M&A) market, confirming that it is still attractive and that investors are still seeking valuable deals.

In the first four months of the year, FDI in Vietnam was not far below the figure in the same period last year thanks to major projects being signed, including a 3.1 billion USD gas-fuelled power plant in Long An province, the 1.31 billion USD O Mon II thermal power project in Can Tho city, and the adding of 750 million USD to the LG Display project in Hai Phong city.

Vietnam attracted a total of 12.25 billion USD worth of FDI in the period, equal to 99.3 percent of the figure in the same period last year, including 8.5 billion USD going to new projects.

According to Nakajima Takeo, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi, its survey on business trends showed that the majority of enterprises believe it will be difficult to expand production and business in the next one or two years but still consider Vietnam to be a leading investment destination among ASEAN member countries.

Meanwhile, a recent survey by EuroCham revealed that European firms in Vietnam are confident about recovery in the country, with its Business Climate Index (BCI) hitting 73.9 points.

When asked about the prospects of Vietnam’s business environment in the next quarter, 67 percent predicted either “excellent” or “good” - a 12 percent increase compared to the previous quarter.

Meanwhile, business leaders are also more optimistic about their own companies. More than two-thirds (68 percent) predict that orders and revenue will remain steady or increase over the next three months, which is a 25 percent increase compared to the fourth quarter of 2020.

EuroCham President Alain Cany attributed the results to European firms’ confidence in the Vietnamese market, where business has not been greatly interrupted by the COVID-19 pandemic.

However, amid fierce competition from other countries in FDI attraction, experts said that Vietnam should work harder to win favour.

Amcham Vice Chairman John Rockhold said that the country should consider non-carbon facilitation, while Nguyen Hai Minh, Vice President of EuroCham, held that it needs more high-tech human resources to meet investor needs.