January rebound signals new growth momentum for Vietnam

Enduring a slight fall in 2018, foreign direct investment inflows into Vietnam rebounded in the first month of 2019 with an impressive growth rate of 52 per cent, promising further rise in the months ahead.


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According to statistics from the Ministry of Planning and Investment (MPI), Vietnam attracted $1.9 billion worth of total newly-registered and added foreign direct investment (FDI), as well as stake acquisitions in January 2019, up 51.9 per cent on-year.

FDI disbursement is estimated at $1.55 billion, up 9.2 per cent on-year, and making up 81.57 per cent of the total, reflecting improvements in the quality of FDI.

A senior MPI official attributed the rise to the hefty hike of 114 per cent in mergers and acquisitions (M&A) value, reaching $761.8 million and 489 transactions involving foreign investors.

South Korea, Singapore, the British Virgin Islands, and China were among the foreign investors who are the most interested in M&A deals to expand to and in Vietnam during the period. These economies were also Vietnam’s four biggest foreign investors during the first month.

Experts forecast that the upward trend is likely to continue in the months to come, driven by more positive developments from foreign investors and recent developments in the equitisation and divestment of state-owned enterprises (SOEs).

“The number and value of completed M&A transactions in Vietnam have grown steadily in recent years, and are expected to grow further during 2018 and 2019, especially if the EU-Vietnam Free Trade Agreement (EVFTA) is ratified and comes into force as anticipated,” said Antoine Logeay, chairman of the EuroCham Legal Sector Committee.

What is more, significant expansion in FDI inflows into science-technology also contributed to brightening the country’s FDI picture during the month, after months of decline in 2018.

As shown in the MPI statistics, science-technology surpassed other sectors to rank second in terms of FDI value with $185.8 million, making up 9.7 per cent of the country’s total FDI.

Industry insiders forecast that FDI in sci-tech will continue to grow in the months to come, aligning with the draft of the country’s next-generation FDI attraction strategy by 2030 and giant investors’ new policies to head to Southeast Asia.

Foreign investors need not wait longer as the Politburo is expected to enact the master plan on FDI attraction in March 2019, paving the way for them to take next steps on their digital transformation journey.

Looking forward, the EVFTA is expected to be signed and take effect this year, while the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially came into effect in Vietnam on January 14, 2019, bringing in huge opportunities for Vietnam.

“The EVFTA has put Vietnam on the radar of more and more European investors. Even before the EVFTA has been ratified and implemented, new European companies were opening representative offices and branches or were looking for sourcing partners in Vietnam in anticipation of the benefits that this historic agreement will bring,” Nicolas Audier, co-chairman of EuroCham in Vietnam, told VIR.

According to the latest APEC CEO Survey released by PwC, the world’s leading provider of assurance, advisory, tax, and legal services, Vietnam is a top target for cross-border investment among the 21 APEC economies, with net 46 per cent planning to increase investments in the country over the next 12 months.

Vietnam ranks even higher than attractive regional destinations like China (45 per cent), and Thailand (39 per cent), thus marking it the second consecutive year it ranks first, following 2017.

VIR

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