VietNamNet Bridge - Compared with other countries in the region, Vietnam has outstanding consumer potential and new opportunities, which will help stimulate capital to flow from the US to Vietnam.

US President Obama at the talks with young businessmen of Vietnam in HCM City yesterday.

A recent report of the Foreign Investment Department on "Trends of US investment in Vietnam" shows hints regarding potential investment for US investors.

One of the most important things is low labor costs. Soaring labor costs in China have urged many multinational corporations of the US to turn their attention to Vietnam, where labor costs are 50% cheaper.

Some large corporations are planning to move large-scale projects to Vietnam. For example, Microsoft has moved its smartphone factory from China to Vietnam in late 2014.

Other groups are also considering moving their plants to Vietnam as Intel, Jabil, Microchip ...

According to the Foreign Investment Agency, the signs shows that American corporations consider Vietnam as a strategic market, for long-term benefits, not only because of immediate benefits.

Secondly, the biggest attraction for most foreign investors in general and American in particular is the Trans-Pacific Partnership (TPP) of which Vietnam is one of 12 member countries.

In the past few years, the interest of US companies is growing with strong moves to seek investment opportunities in the country.

If in 2013 only 22 US businesses learnt about the business environment in Vietnam, in the first half of 2014, three business groups with large members of investors (including many big corporations such as Boeing, Apple, AIG, Exxon Mobil ...) visited Vietnam to look for investment opportunities.

Recently, the group of more than 30 enterprises of the US-ASEAN Business Council came to Vietnam to seek opportunities for cooperation in the field of construction.

Interest in Vietnam will increase once Vietnam joins the TPP, and the TPP has helped push many US companies to Vietnam to seek investment opportunities in recent times.

Thirdly, the young population and the improving income of Vietnamese people have helped increase purchasing power in Vietnam.

At the same time, stable political situation, controlled inflation and the government’s measures to promote growth and support investors are factors luring foreign investors to Vietnam.

Fourthly, the key sectors of the Vietnamese economy at present, petroleum (Exxon Mobil, Chevron ...), aerospace (Boeing, ADC - HAS Airport), information technology (Microsoft, Intel, Apple, HP) and electricity (General Electric, General Atlantis, AES ...) are also the strengths of the US.

Obama visit will attract more US investors

The US President Obama's three-day visit to Vietnam will boost trade and investment co-operation between the two countries. US investors have been paying increasing attention to the local stock market recently.  But President Obama's visit that began on Monday raises hope of greater investment in the market.

Trade co-operation between Vietnam and the United States is undergoing positive evolution and will develop more with the Trans-Pacific Partnership Agreement (TPP), the Minister of Planning and Investment Nguyen Chi Dung told local media yesterday.

Local statistics reveal the United Sates is currently the largest export market for Vietnam. In 2015, the value of Vietnamese exports to the United States reached US$33.48 billion, accounting for 20.6 per cent of total export value, an increase of 16.9 per cent compared with 2014. As a result, Vietnam has become the biggest exporter to the United States within ASEAN.

According to experts, with TPP, the door to the US market will open even wider for local goods after taxes are reduced from 20 per cent to zero per cent, giving the country a huge advantage in competing with non-TPP rivals, such as China, India, Thailand and Bangladesh.

Textiles, footwear and seafood, shares of which have been increasingly listed on local exchanges, are among the key Vietnamese export products to the United States.

According to Saigon Securities Inc (SSI), US investors in the Vietnamese market often invest through their subsidiaries and affiliates based in other markets, such as the British Virgin Islands, Singapore, Hong Kong and other foreign countries. So current investment statistics do not fully reflect the real flow of US investment.

Since US investors have high standards for their projects, not only will the Vietnamese economy and society benefit, but also the environment, SSI said.

US investors have been present since the beginning of the local stock market in 2000, according to lists of foreign investors in the Vietnam Securities Depository.

SSI has witnessed a growth in US investment in the local market. In 2009, the US-based Van Eck Fund established the VanEck Vectors Vietnam ETF to invest in Viet Nam. Currently, the fund is valued at over $340 million.

But the presence of US investors is still limited, due to geographical distance and the small-scale of Viet Nam's stock market, SSI said. The firm said large US management funds also have branches in Singapore and Hong Kong to invest in regional markets, allowing for indirect invest in the Vietnamese market.

The Managing Director of Mekong Capital, Chris Freund, told local media the fourth fund of Mekong Investment (MEF III) - which has $112 million in capital, including US capital - was just set up in Viet Nam this month, attracting the attention of US investors to the local market.

The country's stock market is changing, according to Chris Freund. To improve it, Vietnam should further focus on transparency of information for US investors, so investors can better understand Vietnamese economic information, the investment environment, and the effectiveness of investment projects in a timely manner.

The managing director said the US president's visit sent a clear message to help US investors better identify opportunities in Vietnam.

The general director of Maritime Securities Inc (MSI) Mac Quang Huy said Obama's visit would have a positive psychological impact on Vietnam's stock market. The Vietnamese market had already recognised the positive signals, according to Huy. He also said the local stock market rallied after the previous US presidents' visits in 2000 and 2006.

"The TPP, which is part of the visit's agenda, will have a positive impact on textile stocks. In addition, some industries with potential co-operation agreements with the US, such as oil and gas, finance, and banking, will see their stock value rise in the market," Huy said.

According to securities experts, Vietnam needs to improve transparency, expand the scale and quality of the market and listed companies, and promote the IPOs of large State-owned enterprises to make the local market more attractive to foreign investors, including US investors.

Vietnam should also diversify investment instruments, create more flexible administrative procedures for foreign investors, and give them more access to locally-listed firms. This will raise international investor confidence in the Vietnamese stock market-VNS.

Nam Son