Nick Le, Research Fellow
Saigon's motorbike craze is one of the heralds of Vietnam's cultural and economic rejuvenation. Traffic congestion is a new phenomenon for Saigon, which has been dubbed "Scooter City."
It should not catch anyone by surprise that Vietnam is becoming a tiger in the Southeast region of Asia. With its growing openness to global markets and willingness to comply with international standards, Vietnam continues to be a strong, key player in the economy of the region. In fact, “the inflow of foreign direct investment (FDI) into Vietnam has increased rapidly so far this year and is shifting in a positive trend. As of July 20, the country had attracted US$12.9 billion in new FDI pledges, alongside another US$5.9 billion in additional pledges, without taking into account the US$3.1 billion, which was both contributed and used by foreign investors to buy stakes in Vietnamese businesses”. The positive trend has continued to grow since “FDI flows to Vietnam rose by 28 per cent to $11.8 billion in 2015, dominated by Asian investors (in particular the Republic of Korea and ASEAN). Some 67 per cent of FDI flows last year (2015) were in manufacturing and were led by Korean investors.”
In the last few years, there have been significant interests in Vietnam from big companies such as Intel. According to a report published by ASEAN, “Eighty per cent of the world’s central processing units for personal computers are produced at Intel’s Viet Nam facilities.” In addition, “In May 2015, Black & Veatch was selected by a subsidiary of Vietnam Electricity to be the project technical lead on the expansion of the Duyen Hai 3 power plant, a 688 megawatt plant to be completed by 2018. Black & Veatch will provide plant engineering liaison and commissioning, as well as some procurement for the $1 billion project.” (Page 123)
According to the Ministry of Planning and Investment in Vietnam, the year 2016 “marked a great stride for the private sector with the establishment of 110,000 business in Vietnam”. Furthermore, “in the first seven months of 2017, the country had 72,593 new firms with a total registered capital of 690.7 trillion VND (30.39 billion USD), a respective year-on-year rise of 13.8% and 39%”.
On July 26th, with the support of the World Bank Group, Vietnam launched the Vietnam Trade Information Portal. The main objective of the Portal is “to make it easier for traders and investors to comply with regulatory requirements associated with the import and export of goods. The portal is a major reform, which helps Vietnam comply with the World Trade Organization (WTO) Trade Facilitation Agreement (TFA). Access to information and understanding of the required regulatory procedures to import and export is a major barrier to the private sector, especially for smaller firms and new market entrants.” Basically, the trade portal is a “web-based database system, which makes all cross-border trade regulatory information available at a stroke of a key. The information includes all laws, prohibitions, restrictions, technical standards, the entire commodity classification and tariffs, all procedures for license and permit application and clearance, copies of all forms, and plain language instructions. This includes a total of 760 laws/decrees/circulars, 301 measures, 365 procedures, and 337 forms.” This portal will increase transparency, aid, and support the private sectors, small businesses, and international firms wanting to operate in Vietnam. The use of the portal will also expand to policy makers and legislators to predict and analyze trends within industries in Vietnam. To add the cherry on top, on July 1st, 2015, Vietnam made it legal for foreign entities and individual to own real estate for a maximum of 50 years with recent talks of extending it to 99 years. With the new regulation and law in regard to foreigners owning real estate, Vietnam hopes to continue to attract FDI from all over the world as it learns to become the tiger of Southeast Asia.
Notable shifts in FDI inflow structure, Talk Vietnam, 7 August 2017, accessed on 9 August 2017
ASEAN Launches Investment Report 2016, ASEAN, 6 September 2016, accessed on 9 August 2017
PM: Private enterprises strive to contribute 50-60 pct of GDP, VNA, 31 July 2017, accessed on 9 August 2017
New Trade Information Portal Improves Transparency in Vietnam, World Bank Group, 26 July 2017, accessed on 9 August 2017
Foreign home ownership may rise to 99 years, Vietnam Net, 4 August 2017, accessed on 9 August 2017