By: Andrew Salzman, Dezan Shira & Associates
Vietnam’s Ministry of Planning and Investment’s Foreign Investment Agency has announced a 7% year-on-year growth in FDI disbursement for the first quarter of 2015, continuing the trend we noted back in January that FDI levels were increasing .
The total Q1 FDI is more than US$1.83B. Almost 67% of that figure came from new projects. The manufacturing sector led the way, with US$1.4B in investment. This follows a pattern that we have been seeing recently, where more companies are looking at Vietnam as a low-cost alternative destination for manufacturing in Asia. Exports reached US$25.08B, a 12.9% increase from the same period last year. These numbers are showing that Vietnam is a viable place to manufacture for export.
Continuing from the numbers published in January, Ho Chi Minh City received the most foreign investment, at US$540.2M.
Forecasts for the rest of the year are optimistic as Vietnam has made several regulatory changes to become more attractive to foreign investment. Vietnam has made a concentrated effort to attract green investment, with initiatives such as a carbon credit market and incentives for green construction.
Later this year, several initiatives intended to make it easier for foreign businesses to operate in Vietnam are being rolled out, including making it easier for foreigners to acquire property, and reducing tax payment time.
South Korea has the largest proportion of foreign investment in Vietnam. Total registered FDI reached 26.7%, with the British Virgin Islands and Japan rounding out the top three countries. South Korea’s pole position will come as no surprise to anyone who has been following Samsung’s increased presence in the country. The high level investment is also fueled by the recent signing of a bilateral free trade agreement between Vietnam and South Korea.
This article was first published on Vietnam Briefing.
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.