US supersizes investment

A number of US top trump firms are primed for major investments in Vietnam in the year ahead

Nguyen Viet Ha, managing director of the US’ investment consultant BowerGroupAsia Inc, told VIR that some US firms were seeking investment opportunities in Vietnam in the IT and consumer goods sectors, with projects’ total investment capital expected to be over $1 billion.

These firms are selecting locations and waiting for the new leadership of Vietnam to be determined at the on-going 12th National Party Congress before making final decisions regarding their investment projects in the country.

Notably, Coca-Cola is reported to be planning another $300 million investment in Vietnam over the next few years. The company has invested $700 million in the country since 1994, $300 million of which was invested in the last two years alone.

Jabil, the world’s third largest electronic equipment maker, is also expected to begin a $500 million expansion of its existing $200 million factory in Saigon Hi-Tech Park in Ho Chi Minh City this year. A contract for the expansion was signed last July in Silicon Valley.

IBM Vietnam is expecting a double digit growth rate in Vietnam this year, after seeing a very high growth rate last year. In 2016, IBM Vietnam will likely begin major projects on cloud computing and analysis with big partners in Vietnam, including ministries, and partners in the finance, banking, telecommunications, health, and retail sectors.

According to the 2016 ASEAN Business Outlook Survey conducted by AmCham Singapore and the US Chamber of Commerce, over 500 senior business executives representing US firms in all 10 ASEAN markets, 84 per cent of respondents said they would likely see a profit in Vietnam in 2016.

Selected by 37 per cent of the respondents for future investment, Vietnam is also ASEAN’s second most attractive market (after Indonesia, with 41 per cent) in the survey. 76 and 50 per cent said investment in Vietnam was more favourable than investment in other Asian and Western nations, respectively. 84 per cent of respondents in Vietnam also said ASEAN integration was important to their companies. 65 per cent in Vietnam stated that they had a regional strategy based on the ASEAN Economic Community’s goals.

Praising Vietnam’s business climate improvements, the US Department of State said in its 2015 Investment Climate Statement that Vietnam was serious about attracting foreign investment, especially in sectors that would bring advanced technology and improve Vietnam’s labour productivity.

“Vietnam’s attractiveness as a foreign direct investment (FDI) destination has grown as the country has made key legal reforms related to the business climate,” the statement said. “Other draws are Vietnam’s stable political system, strategic location near global supply chains, and an abundant labour force that is significantly less expensive than that of China.”

According to the statement, the conclusion and signing of any or all of Vietnam’s many active trade agreement negotiations “will open the door for a considerable increase in FDI.”

As of December 2015, the US was Vietnam’s 8th largest FDI source with the total registered capital of $780 million, up from 11th place in December 2014 and 15th place in December 2013.