Singapore Firms Bolster Investment in Vietnam

Tuan Minh

11:08 05/09/2016

BizLIVE - Singaporean businesses are looking to expand their investment portfolios in Vietnam where the economy and middle class are growing rapidly.

Singapore Firms Bolster Investment in Vietnam

VSIP is planning to develop the eighth industrial park in Vietnam. Photo: Getty Images

Singaporean investors have been making bold investments in Vietnam to capitalize on huge opportunities stemmed from the country’s fast-growing economy and swelling middle class.
ASEAN’s FDI Champion in Vietnam
With 1,664 valid projects worth $38.2 billion as of July 20, 2016, Singapore has held onto the third-largest investor title in Vietnam and taken the lead among Southeast Asian investors in Vietnam. It has overcome Japan to be the second-biggest investor in Vietnam since February this year.
Singaporean businesses have poured capital into 18 out of 21 industries in Vietnam, including infrastructure, oil and gas, real estate, health care, hospitality, education, food and beverages, logistics, technology, telecommunications and media.
The processing and manufacturing has been the most heavily invested sector. As much as $16 billion has been funneled into this sector, accounting for more than 44% of the island country’s investment. Real estate comes second with 81 projects, having attracted nearly $11 billion in capital.
Singaporean investors are now present in 46 of 63 Vietnamese provinces and cities. The southern metropolis of Ho Chi Minh City has driven the largest amount of foreign direct investment (FDI) from Singapore with nearly $10 billion.
In the first eight months of this year, FDI from Singapore in Vietnam reached $1.67 billion, accounting for 60.5% of total investment flows from Southeast Asia, statistics from the Foreign Investment Agency under the Ministry of Planning and Investment showed.
Established in 1996, Vietnam-Singapore Industrial Park Company (VSIP), a joint venture between Becamex IDC Corp. and a consortium of three companies from Singapore led by Sembcorp Development, has become one of the most successful Singaporean-invested companies in Vietnam. It has built seven parks nationwide and attracted more than $8 billion in investment and created some 170,000 jobs.
Big names in the real estate industry from Singapore such as Keppel Land, CapitaLand, Ascott and Mapletree are increasing their portfolios in Vietnam, especially through major acquisitions in Ho Chi Minh City, which accounts for one fifth of the country’s GDP.
Singaporean investors are keen on doing business in Vietnam thanks to the country’s young population, skilled workers and sizable market in the Southeast Asia region, Singapore’s Consulate-General in Ho Chi Minh City Leow Siu Lin said at the Vietnam – Singapore Business Forum 2016 held last month.
More Singaporean Investments in the Pipeline
VSIP is planning to develop the third industrial park in the southern province of Binh Duong and the eighth of its kind in the country, the Dau Tu (Investment) newspaper reported, adding its construction is set to start this month.
Mapletree, which has scaled up its investment in Vietnam to over $1 billion to date following the acquisition of Kumho Asiana Plaza in downtown HCM City in June, is seeking to invest in finished projects in major cities in Vietnam for immediate earnings, said CEO Hiew Yoon Khong.
Singaporean companies will continue to invest in industries with high added value here, said Yuen Siu Hong, deputy chief of mission at Singapore Embassy in Vietnam, citing Ascendas’One Hub Saigon project which operates in the hi-tech and information technology sector.
Coupled with the rise of Vietnam’s middle class and the growing demand for modern services, Singaporean firms are interested in investing in fresh sectors such banking, healthcare and telecommunications, in addition to state-owned enterprises which are set to undergo privatization, Hong added.  
Chief Executive Officer of Singapore Business Federation (SBF) Ho Meng Kit expressed hope in the investment prospects of Singaporean enterprises in Vietnam, adding that the SBF was cooperating with localities to implement investment promotion programs to grab opportunities when the Trans-Pacific Partnership takes effect.
He said that Singaporean enterprises are interested in investing in Vietnam in manufacturing, property, hi-technology and infrastructure services such as harbors, transportation and energy, agricultural products, and tourism, he told the Vietnam News Agency.
Vietnam is considered one of the most promising emerging markets in the world, but further changes to the investment environment such as cutting procedure times and the licensing process are needed, Benjamin Yap, senior partner at RHT Law Taylor Wessing told VnExpress International on the sidelines of Vietnam Singapore Business Forum last month.
Benjamin Yap also suggested Vietnam enhance its education and training system to provide a workforce capable of meeting the requirements of international integration.
The recently-concluded visit by Vietnamese President to Singapore is expected to give an impetus to the trade and investment ties between Vietnam and Singapore, which had their bilateral relationship upgraded to strategic partnership in September 2013.