Vietnam's international integration pays FDI dividends

Vietnam’s growing national wealth and inclusion in the world’s fastest growing region, south-east Asia, has put it in the sights of international investors. The country received approximately $20.3bn in greenfield FDI in 2017, making it the fifth top FDI destination out of 35 countries in Asia-Pacific, according to fDi Markets. Moreover, Vietnam’s stock market rose by 48%, exports increased by 21%, and GDP expanded by 6.8%, according to the General Statistic Office of Vietnam.

These impressive figures are driven by economic fundamentals and a pro-business government, according to Bradley LaLonde, co-founder of advisory firm Vietnam Partners (VP).  

Investors are attracted to the country’s strong demographics, he adds. The large and young population will continue to provide youthful, highly literate, and inexpensive labour, even as Vietnam’s middle class expands.

Beyond its globally admired natural beauty, Vietnam has rich natural wealth. With deposits of iron ore, copper and gold, as well as offshore oil and gas, the country offers a diverse investment and trade landscape, and is becoming a platform for global manufacturing along with its large domestic market. Furthermore, Vietnam is recent signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11), which will remove trade tariffs and streamline inter-governmental regulation.

Mr LaLonde’s tenure with VP has allowed him to witness Vietnam’s gradual integration into the international markets. Since 2015, Vietnam’s biggest investors have been South Korea, Japan, Thailand and Taiwan. China, as the dominant regional power, ranks as the eighth largest investor base, just behind the US, Singapore and Malaysia, according to fDi Markets. Mr LaLonde suggests that Korea, Japan, and Taiwan’s investment is beginning to reallocate from China to Vietnam.