Foreign investors have a key role to play in Vietnam’s economy, Prime Minister Pham Minh Chinh said at a meeting in Hanoi on April 22, 2023.

At the Prime Minister’s meeting with foreign investors in Hanoi late last month, three foreign groups unveiled their plans to invest 3.7 billion USD into Vietnam.

A group from the Republic of Korea will invest 1.6 billion USD in heavy industry and logistics production, a German investor is eyeing green production using renewable energy with an estimated capital of 1.5 billion USD, and a Japanese investor plans to spend 600 million USD on medical equipment production.

Many foreign enterprises have pledged to expand investment in Vietnam which is evaluated by international media and financial institutions as one of the leading countries in foreign attracting foreign investment in 2023, as “a safe, attractive investment destination”, “a potential destination for investors”, or “a magnet for investors”.

Vietnam is attractive to foreign investors

According to the Korea Chamber of Business in Vietnam (Kocham), there are about 9,000 RoK businesses investing in Vietnam, with bilateral trade reaching a record high of 87.7 billion USD last year.

Hong Sun, Kocham Chairman, said that there will be more large Korean enterprises to invest in Vietnam. Currently, LG Electronics, LG Display, and LG Innotek are expanding their factories in Vietnam and turn them into global production hubs in electrical, electronic equipment and machinery, and household appliances.

Takeo Nakajima, Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi, said Japanese enterprises are ready to invest in Vietnam. Its survey showed that 47% of respondents will expand their operations in Vietnam in the coming years. 

According to the European Chamber of Commerce in Vietnam (EuroCham), despite several barriers, Vietnam remains a rising star in business and investment as 400 of 1,300 European businesses rank Vietnam in their top 5 destinations to invest and do business.

Nguyen Hai Minh, EuroCham Vice Chairman (Photo: baodautu.vn)

Vice President of EuroCham Nguyen Hai Minh said that recent EuroCham surveys on the business environment index find that Vietnam has always been selected as a top destination in the region for European investors.

“It’s attributed to Vietnam’s geographical location, openness of free trade agreements, full participation in supply chain, and human resources, and especially its sustainable development and green growth strategy,” said Minh.

In March, 52 leading US enterprises, including Boeing, SpaceX, Netflix, and Meta came to Vietnam to discuss cooperation opportunities.

According to the assessment of US firms, Vietnam has great potential in semiconductor, fast-moving consumer goods (FMCG), toys, furniture, and food processing and manufacturing, as well as in digital economy, creative economy, banking and financial services, and health care. 

Rafael Frankel, Meta Group’s Director for the Asia-Pacific region, said there are several factors that make US businesses interested in investing in Vietnam.

“The first thing we talked about is the extraordinary talent, dedication, hard work, resilience, and entrepreneurship of the Vietnamese people. Those are qualities that Vietnamese people possess, far against anyone in the world. Second is that this is a country where we believe in investment,” said Frankel.

“We believe that there is an incredibly bright future and we've seen what has come of that investment over the course of more than three decades now. And then I think the third point is that the government of Vietnam, for a generation now, has pursued policies that have kept the economy open,” Frankel added.

Bright prospects for Vietnam’s economy

Foreign investors speak highly of Vietnam’s economy because of its resilience against the heavy impacts of the COVID-19 pandemic and the risk of a world economic recession.

Despite several difficulties and challenges, Vietnam has maintained macroeconomic stability, controlled inflation, and quickly adapted to the new digital transformation era.

Vietnam is one of a few countries with a national credit rating upgraded by prestigious international credit rating agencies amid global difficulties.

Moody's and S&P Global Ratings upgraded Vietnam sovereign credit rating to “Stable”. Fitch Ratings maintained its outlook on Vietnam's long-term credit rating at positive. Vietnam has also been praised for developing a national brand which recorded the fastest value growth worldwide over the past three years.

Economists say Vietnam's economy in the medium and long term remains positive. International institutions forecast that Vietnam's economic growth will remain high compared to other countries in the region and the world this year.

The International Monetary Fund, the World Bank, the Asian Development Bank, the Organization for Economic Cooperation and Development, the ASEAN+3 Macroeconomic Research Office (AMRO), and the Standard Chartered Bank said Vietnam's economic growth is to fluctuate between 5.8% and 6.6%.

Nguyen Minh Cuong, ADB Principal Country Economist for Vietnam, said, “ADB's view on Vietnam's long-term growth is very positive. We think Vietnam's average growth of 6.5% from now to 2030 is achievable thanks to its advantages.”

Cuong attributed to the fact that Vietnam is a dynamic economy with 100 million people while the middle class in Vietnam has the fastest growth rate in Asia, and added, “Vietnam also has an advantage over market access through FTAs plus neighboring China, the world's second largest economy.”

With positive signs for economic growth and positive assessment of international economists and foreign investors, Vietnam’s foreign investment is forecast to expand this year.