Investment from the EU to Vietnam is expected to surge inthe time to come as many European firms are showing their interest in themarket while the Vietnamese government is also boosting plans to attract morecapital from the important partner.
Many European firms have recently come to Vietnam to exploreinvestment opportunities ahead of the signing of the EU-Vietnam Trade Agreement(EVFTA), which is expected to be ratified in the next few months.
A Finnish business delegation, including firms BMHTechnology Oy, Fortum Power and Heat, Simosol Oy and led by Finnish Minister ofEconomic Affairs Mika Lintila, was the latest European investors who came toVietnam last week to explore investment opportunities.
The latest survey released last week by the European Chamberof Commerce in Vietnam (EuroCham), also showed that most of Europeancorrespondents forecast Vietnam will become a hub for European business in theASEAN region and EVFTA will have significant impact on European businesses inVietnam.
“Our members paint a positive, optimistic picture of theagreement, with 85 percent anticipating a significant or moderate impact ontheir business and investment plans in the long term,” Nicolas Audier,Co-Chairman of EuroCham.
Some 80 percent of EuroCham members also believe the EVFTAwill improve Vietnam’s competitiveness compared to other countries such asChina, Japan and South Korea, he added.
According to Audier, Vietnam is open for business as anattractive trade and investment destination as shown in the latest BusinessClimate Index (BCI) released in early this month.
Under the BCI, Vietnam gained 84 points for the secondquarter of 2018, up six points from the previous quarter. The sentiment ofEuropean businesses is at its strongest in 18 months, and just two points belowthe all-time high of the third quarter of 2016.
The latest BCI also showed that EuroCham members reported anoptimistic outlook on various issues, from their own investment and profitprojections to workforce levels and Vietnam’s macroeconomic outlook. More than70 percent reported a positive situation for their enterprises in the lastquarter, with 65 percent describing it as “good” and 12 percent as “excellent”.Looking ahead to the next quarter, 64 percent believe their business situationwill be “good” with a further 15 percent answering “excellent.”
Government in actions
According to the Ministry of Planning and Investment (MPI),economic and trade ties between Vietnam and the EU are developing relativelyfavorable, but FDI is still too modest, especially in high technology andmodern services sectors.
Despite the EU’s strong will of pushing up investments inVietnam, the inflow from the bloc is still far below expectations. Vietnamattracted only US$24 billion from the investors, who poured US$334 billionabroad last year. Among the European countries, the Netherlands is currentlythe top investor in Vietnam with total registered capital of US$9.33 billion.France, Luxembourg and Germany followed with US$3.62 billion, US$2.33 billionand US$1.8 billion, respectively.
According to Audier, though Vietnam is an attractivedestination to foreign investors, the government must continue improvingbusiness and investment environment to lure more investors, especially in thecontext of the US-China trade war and the return of trade protectionist trend,which will affect the Vietnamese economy.
Minister of Planning and Investment Nguyen Chi Dung alsoadmitted that the prospect of attracting more FDI from the EU depends onVietnam’s efforts to meet the investors' requirements for an open, transparentand predictable legal system besides effective regulations on intellectualproperty, anti-corruption and law enforcement.
Prime Minister Nguyen Xuan Phuc in a recent conference on 30years of FDI attraction in Vietnam also required relevant ministries andagencies to ‘meet what investors need’ in a move to lure foreign investors,including those from the EU.
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