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Vietnam, a top destination for large investors
On March 8, 2023, the Vietnam Dairy Products Joint Stock Company (Vinamilk) and Sojitz Corporation (Japan) commenced construction of the Vinabeef Tam Dao livestock breeding and beef processing complex in Tam Dao District of Vinh Phuc Province, with Deputy Prime Minister Tran Luu Quang in attendance. The primary objective of this project is to offer high-quality and safe beef to the domestic consumers.
Sojitz is among several prominent Asian and Japanese corporations that have chosen Vietnam as their investment destination, including Toyota, Honda, Canon, and AEON that have a long-standing presence in Vietnam. These firms remain committed to investing in Vietnam for the long run.
Apart from Japan, multinational corporations from the Republic of Korea (RoK), including LG and Samsung, have also selected Vietnam as the location for their factories. Samsung, in particular, has invested more than US$20 billion in Vietnam in recent decades and continues to expand its investment in various Vietnamese provinces and cities including Bac Ninh, Thai Nguyen, Hanoi and Ho Chi Minh City.
Vietnam is also increasingly popular for Thai, Chinese and Taiwanese investors. Central Retail Group (CRC) from Thailand, for instance, recently announced plans to invest THB50 billion (equivalent to US$1.45 billion) in Vietnam between 2023 and 2027. Despite the global economic uncertainty, Vietnam’s economy continues growing, as explained by Olivier Langlet, the CEO of Central Retail Vietnam.
According to Joonsuk Park, Head of International Subsidiary Banking and Wholesale Banking at HSBC Vietnam, many foreign investors and multinational companies operating successfully in Vietnam contribute to over 80 percent of Vietnam's total exports and more than 25 percent of domestic investment. Most of these multinationals are intra-Asian firms.
Significant investment opportunities
Park explains that cultural similarities and familiarity with Vietnamese customs and business practices attract Asian investors. The Asian investment, in turn, adds value to export products and expands domestic consumption, consolidating foreign direct investment (FDI) in Vietnam and accelerating the country's journey towards emerging market status.
With an export-oriented economy, Vietnam has become a leading frontier market in Asia. The country has established an extensive international economic integration process through 17 free trade agreements, 15 of which have already come into effect. The deep integration enables multinational companies and exporting enterprises in Vietnam to access 15 of the G20 markets.
Vietnam's domestic market of almost 100 million citizens is equally attractive to multinational companies, with HSBC's research predicting that by 2030, the domestic consumer market will surpass that of Thailand, the UK, and Germany.
Despite these advantages, Vietnam's investment environment has some limitations and deficiencies, such as cumbersome administrative procedures, poor infrastructure and public service quality. To attract global corporations, Vietnam needs to enhance its policies and utilize FDI effectively, with a focus on green growth, digital transformation, and supply chain connections between Vietnamese and FDI enterprises, particularly transnational corporations.
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