Vietnam's OFDI is expected to increase in 2018

Vietnam’s OFDI has been increasing in recent years with 930 projects licensed, mostly in the fields of industry, agriculture, telecommunication and finance & banking. Forty percent are developed in Laos, Cambodia and Myanmar.

Laos is in No 1 among the countries and territories where Vietnam has OFDI. According to FIA (Foreign Investment Agency), by the end of September 2016, Vietnam had 266 licensed projects in the country with total registered capital of $5.1 billion.

The OFDI in Cambodia has been increasing with 182 projects capitalized at $3.6 billion licensed. Vietnam is the fifth biggest foreign direct investor in Cambodia, after China, Thailand, Japan and South Korea.

Myanmar ranks eighth among the FDI recipients from Vietnam, but Vietnam ranks 10th only among the biggest foreign investors in the country. By the end of 2016, Vietnam had 54 projects with the total registered capital of $695 million. The figure only accounted for 1 percent of total FDI in Myanmar.

According to Nguyen Hong Son from Hanoi National University, the biggest foreign investors in Myanmar are from China, Singapore, Thailand, South Korea, the UK and Netherlands. 

Vietnam’s OFDI in Myanmar remains modest with the number of projects and volume of capital much lower than investments in Laos and Cambodia, though the investment growth rate is high.

Son believes that the OFDI in the three countries will increase in the time to come because of four reasons. First, the good political relations between Vietnam and the three countries.Second, the countries have rich natural resources, low labor cost and there are many Vietnamese speaking people. Third, the legal framework on trade & investment cooperation has been improved gradually. Fourth, the FDI receivers offer attractive incentives to foreign investors.

However, Son said that Vietnam’s OFDI is encountering big challenges as the member countries of the Greater Mekong sub-region are becoming more attractive to foreign investors from ASEAN+3, especially China. 

Meanwhile, the infrastructure conditions in Laos, Cambodia, Myanmar and the transport routes linking Vietnam and the countries remain underdeveloped.

In Cambodia, FDI from China alone accounts for 32 percent and FDI from ASEAN 25 percent of total FDI in the country.

China is also the biggest investor in Laos, accounting for 62 percent of total FDI, followed by ASEAN with 21 percent.

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