Together with Cambodia, Laos and Myanmar, Vietnam has surged as a foreign direct investment (FDI
) magnet in Southeast Asia when FDI flows into the four countries soared 38% last year, according to the ASEAN
Investment Report 2016.
Despite an 8% decline in FDI into the 10-nation bloc, the so-called CLMV countries stood out by attracting $17.4 billion worth of FDI in 2015, compared to $12.6 billion in 2014.
Vietnam led the CLMV bloc, taking in $11.8 billion worth of investment, a 28% increase. Myanmar followed with $2.8 billion, representing a whopping 211% increase. FDI into Laos grew 71% to $1.2 billion. FDI in Cambodia remained flat at $1.7 billion.
The report noted a rapid rise in investment in Vietnam by South Korean companies over the past several years, led by electronics groups Samsung and LG.
“To further reduce the costs of parts or inputs used in its mobile phones, Samsung encouraged its Korean subsidiaries and subcontractors to invest in Vietnam, operating close to its assembly plants,” the report noted.
Samsung has been the biggest single investor in Vietnam, with its investments totaling some $14 billion to date.
LG has set up two manufacturing plants with $1.5 billion each in the northern port city of Hai Phong. Its electronic components arm, LG Innotek, has unveiled an intention of spend $230 billion by 2018 to build a camera module factory also in Hai Phong.
A separate study conducted by Standard Chartered
also showed about 40% of foreign investors in China would choose Vietnam if they had to relocate. Cambodia came second with 25%. Only 3% of investors said they would move their business to the Philippines.
“Vietnam is definitely in the sweet spot right now,” David Mann, Standard Chartered chief economist for Asia, was quoted by CNN Philippines as saying.
Mann said Vietnam has taken a proactive stance in opening up its economy to foreign investors.
“They made it much easier to do business, cut red tape, loosened restrictions - basically, brought down non-tariff barriers,” he explained.