Vietnam remains top regional foreign investment market among APAC leaders

17 December 2018 Consultancy.asia

Vietnam will be the prime beneficiary of increased cross-border investment according to PwC’s annual APEC CEO survey, yet local CEOs are not so optimistic for the year ahead.

Already attracting the highest consistent growth rates of foreign direct investment among ASEAN nations, Vietnam looks set to further capitalise on rising APEC cross-border business investment sentiment in the coming year according to professional services leader PwC and those in the know; the CEOs themselves, taking part in ninth edition of PwC’s annual APEC CEO survey.

The latest survey, released in conjunction with last month's 2018 APEC CEO summit held in the Papua New Guinean capital Port Moresby, included the participation of nearly 1,200 business leaders representing each of the 21 Asia-Pacific Economic Cooperation (APEC) economies, with more than a third of the respondents overseeing organisations pulling in more than $1 billion in annual revenues.ASEAN and Vietnam FDI inflowsAmong the findings, more than half of the business leaders are planning to raise their levels of investment over the coming twelve months, rising from a figure of 43 percent just two years ago, with Vietnam again named as the number one target for increasing investments in APAC. Among ASEAN nations, Vietnam already captures the second highest share of direct foreign investment (DFI) inflows, with consistent positive growth over recent years.

Following last year’s top APEC destination ranking for cross-border investment intentions, with the nation jumping China and Indonesia from the previous year, Vietnam has again been named by the region’s leading business executives as the busiest territory for foreign investment in the coming year – ahead of China, the United States, new entrant Australia, and Thailand, with Indonesia slipping out of the top five.Top five countries for APEC cross-border investment 2019Altogether, a net 46 percent of the 1,189 CEOs surveyed stated that their organisations would increase their investments in or into Vietnam, including those intending to invest in the country for the first time – corresponding to recent reports suggesting Vietnam could be one of the major beneficiaries of the escalating US-China trade spat, courtesy of a supply-chain rethink which will likely impact regardless of the outcome.

While the level of net intended investment into Vietnam is slightly down on last year (47 percent), the net figure is six percentage points higher than in 2015, when Vietnam was seventh on the list of intended APEC foreign investment nations, behind the Philippines (net 41 percent) Singapore (47 percent), Hong Kong (49 percent) and Indonesia (53 percent), territories which have all since dropped out of the top-five.

“With major trade deals like the CPTPP, EU-Vietnam FTA and ASEAN Hong Kong FTA on the horizon, Vietnam has the potential to attract even more investment and generate new cross border business opportunities,” PwC Vietnam General Director Dinh Thi Quynh Van said of the report. “However, additional regulatory reforms, continued domestic investment and improvements in manufacturing and labour standards are needed to fully capture the benefits from these and other trade agreements.”Decline in Vietnamese business confidenceYet, despite the solid foundations for continued economic growth in Vietnam – or perhaps due to threat of rising competition – CEOs in the country were however among the least optimistic for business growth over the next year compared to their APAC peers, with just 33 percent – down from 38 percent last year – signaling they were very confident compared to a regional average of 35 percent, the APEC figure dropping only the two points from 2017.

Further, those who stated they were somewhat confident dropped from 54 percent to 48 percent, while those who felt not very confident jumped from 7 percent to 12 percent (compared to year on year APAC of 12 percent down to 10 percent) – although the survey report notes fluctuating sentiment due to uncertainty over US trade maneuvers, with two of its largest trading partners in China and Mexico showing below average confidence at 25 percent and 21 percent.


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