VietNamNet Bridge - Diverse sources of foreign direct investment (FDI) are expected to help Vietnam create equilibrium in attracting FDI and ease reliance on certain sources.

 

Vietnam predicts three investment waves from South Korea, Japan, US

South Korea is now the biggest foreign investor in Vietnam, according to Hoang Thi Chinh from the HCM City Economics University,  As Korean businesses have been prospering in Vietnam, and Vietnam and Republic of Korea relations are now very good, they will surely expand investment.  

Japanese investment in Vietnam, which now ranks the second in terms of scale, is also believed to increase sharply in the time to come, empowered by the good relations between the two countries and the Japanese appreciation about Vietnam as an investment site. 

Meanwhile, the US can see long term benefits in Vietnam, especially as Vietnam and the US are both members of the Trans Pacific Partnership Agreement (TPP).

Chinh noted that Vietnam will have great opportunities from South Korean, Japanese and US investments. There will be the investment projects, not in labor intensive industries, but in fields which require high technologies and intelligence. 

South Korean and Japanese investors may also pour money into agriculture, the sector which promises great potential but cannot be exploited well by Vietnamese businesses. Meanwhile, the US is likely to inject money into high-technology fields.

Diverse sources of foreign direct investment (FDI) are expected to help Vietnam create equilibrium in attracting FDI and ease reliance on certain sources.

Agreeing with Chinh, chair of the HCM City Economics and Management Science Association Phuong Ngoc Thach, believes that the presence of the world’s leading high-technology conglomerates from South Korea, Japan and the US like Microsoft, Intel and Samsung would help improve the quality of FDI flow to Vietnam.

However, Thach warned that while Vietnam expects benefits from FDI from the three big investors, it would face the high risk of being more heavily reliant on the investors. 

Therefore, he believes that Vietnam should pay attention to diversifying FDI sources to minimize the reliance.

An analyst, when asked to comment how the Vietnam’s FDI panorama would change with the stronger presence of the three big investors in Vietnam, said many investors would create competition among them, which would help improve investment quality.

The analyst went on to say that this would also help ease Vietnam’s reliance on China, which has territorial disputes with Vietnam.

“This will benefit Vietnam because this helps create an equilibrium situation in FDI attraction and helps Vietnam avoid reliance,” he said.

The analyst said that Vietnam should be cautious when receiving FDI from China as many Chinese invested projects had not brought the desired effects, while they caused social and environmental problems.

He also warned that Vietnamese businesses may be crushed by Korean, Japanese and American because of their low competitiveness.

Dat Viet