Vietnam has returned to be the most favored nation in ASEAN for American businesses operating in the region, after conceding the title to Indonesia over the past two years, according to the 2017 ASEAN Business Outlook Survey (ABOS).
Conducted annually by Amcham Singapore in collaboration with the U.S. Chamber of Commerce and other Amchams in the region, the ASEAN Business Outlook Survey polls the business sentiment of some 500 senior executives representing U.S. firms in all ten ASEAN member countries.
Positive Business Sentiment
Up to 40% of American firms in ASEAN nominated Vietnam as their preferred location to expand into, compared to 38% who favored Indonesia, 34% who nominated Myanmar and 30% who chose Thailand.
Source: Amcham Singapore/AEC News
The survey highlighted strong optimism among heads of American firms in ASEAN about Vietnam with 80% of respondents saying they plan further expansion and 61% expecting their workforce to grow this year.
Regarding the local investment environment, 72% of American companies in Vietnam described it as improving. When it comes to additional profits, 87% of respondents from Vietnam were upbeat about increased profits in 2015, marginally behind the 91% in Myanmar.
Source: Amcham Singapore/AEC News
The survey also polled American companies with operations in China about their plans to diversify businesses over the next two years into ASEAN. Vietnam came second with 17% of U.S. firms nominating it as the planned location for 2017, after Malaysia with 19%.
Although two candidates for the U.S. presidency have voiced against the Trans-Pacific Partnership (TPP
) agreement, American firms in ASEAN remain upbeat about the accord.
According to the survey, 56% of respondents in ASEAN TPP member countries – Brunei, Malaysia, Singapore and Vietnam – believe the trade deal will benefit regional trade and investment, while 75% of American business leaders in Vietnam think the TPP will help their companies’ trade and investment.
Downsides: Corruption, Red Tape
The survey also pointed out shortfalls, especially corruption, persist in Vietnam. Only 6% of respondents said they are satisfied with the lack of corruption in the local business environment.
Bureaucratic red tape remains problematic as well, in addition to anemic regulations and the rule of law. 46% said they were unhappy with the Vietnam Customs and 42% with the Vietnamese taxman.
Just a mere 8% of American firms in Vietnam expressed satisfaction regarding the prevalence of local protectionism, while 9% are satisfied with laws and regulations. A massive 89% of American firms in Vietnam believe laws are not enforced fairly.
U.S. Heads for No. 1 Investor Status
Surging as one of ASEAN’s strongest investment magnets, Vietnam is no doubt a favorite investment destination for U.S. businesses thanks to its impressive economic growth, rising purchasing power and quick economic integration.
An increasing number of American companies are paying attention to Vietnam as the Vietnam-U.S. relations are gathering steam after two decades of normalization.
Following aggressive expansion by tech giants such as Microsoft and Intel in Vietnam, Apple is expected to follow suit. The iPhone manufacturer is rumored to be working on a plan to establish a $1-billion data center the Southeast Asian country, probably in Da Nang.
American enterprises had pledged to invest $11.3 billion in Vietnam as of December 2015, enabling the U.S. to be the eighth largest investor in the country. U.S. firms invested an additional $159 million in their projects in Vietnam in the first eight months of this year.
U.S. Ambassador to Vietnam Ted Osius
has repeatedly stated that his nation will soon become the biggest investor in Vietnam.
“I don’t think it’s gonna take very long. U.S. companies are not waiting for the entry into force [of TPP]. They are betting on Vietnam and making investment decisions now,” he told BizLIVE
in an interview earlier this year.