Vietnam has emerged as an attractive foreign direct investment (FDI) destination in Asia, by beating China and India, a report by The Economist Intelligence Unit (EIU) has indicated.
Vietnam emerges as attractive Asian destination for investors (Photo: VNA)
The Southeast Asian nation has become a new hub for low-cost manufacturing in Asian supply chains, the website eurasiantimes.com on January 14 quoted the report.
The report suggests that factors that make Vietnam better than its peers are the incentives for international firms for setting up units to manufacture hi-tech products, the pool of low-cost workers, and the proliferation of free trade agreements.
It also cited Ruchir Sharma, an emerging markets strategist at Morgan Stanley, as saying that Vietnam’s FDI has averaged more than 6 percent of GDP, which is the highest ratio in any emerging country.
In addition, the ever-changing policies as per the market demand, the vigorous changes in the business and investment climate, socio-political stability and population structure are also factors that made the country attractive for FDI, the report said.
It added that the recent free trade agreement between Vietnam and the European Union has benefitted the country as the EU lifted 85 percent of its tariffs on Vietnamese goods in 2020 and the FTA’s biggest gains were witnessed by footwear manufacturers in Hanoi.
Around 40 percent of exports to the EU in footwear manufacturing faced 30 percent tariffs, which were completely withdrawn from August 2020.
Even amid the COVID-19 pandemic, in the period from January to September 2020, the country attracted 21.20 billion USD in FDI or 81.1 percent compared to the same period last year, it said, quoting data of the Vietnam Briefing./.VNA
Foreign investors had poured more than $28.5 billion into the Vietnamese market as of December 20, equivalent to 75 percent of the amount in the same period last year.
Foreign direct investment in supporting industries is expected to spike in the coming months as more and more foreign companies establish production facilities in Vietnam and seek to develop supply chains here, experts said.