Singaporean firms have invested $33 billion into Vietnam, mostly centred around Hanoi ($4.17 billion) and Ho Chi Minh City ($9 billion), by the end of February 2015, say the statistics provided by Vietnam’s Foreign Investment Agency,
This makes Singapore, the third largest investor in Vietnam, after South Korea and Japan.
Vietnam’s strategic location, low-cost labor, burgeoning consumer class and plentiful financial incentives for foreign investors render it an attractive investment destination for foreign direct investment (FDI).
Collectively, the Japanese and the South Korean investors have invested $75.54 billion on Vietnam, till date, with 4240 projects worth $37.84 billion and 2556 projects worth $37.37 billion, respectively
Meanwhile, the Singapore-based firms have already implemented 12 new projects and increased investment levels in eight existing projects in the first two months of 2015. To date, Singapore has invested in 1379 projects in Vietnam, increasing both the number of projects and level of investment from earlier years.
Average capital scale for Singaporean projects in Vietnam is $24 million, much higher than the average capital scale ($14 million) for other investment projects.
According to The Establishment Post, Singaporean investors have injected capital into 18 of 21 economic sectors in Vietnam, with the major investment areas being in processing and manufacturing, where Singaporean firms are involved across 426 projects, with a total registered capital of $13.37 billion, accounting for 40.5 percent of total investment.
Other sectors where Singaporean capital is present include, real estate ($10 billion), accommodation & catering ($1.88 billion), construction ($1.86 billion) and entertainment ($1.78 billion).
About 63 percent of total Singaporean registered capital is in the form of wholly foreign owned projects, of which they number 995 projects worth a total of $20.75 billion. 27 per cent of Singaporean investment in Vietnam exists in the form of joint ventures like joint stock companies and business cooperation contracts.
With prospects looking up for Vietnam and robust economic links between Singapore and Vietnam, the bilateral trade has increased from S$15.8 billion in 2012 to S$17.2 billion in 2013, an 8.86 per cent increase.
Investors and entrepreneurs still have to bear in mind the challenges of the Vietnamese market as it gradually recovers from the 2011-2012 period of macroeconomic instability, according to an September 2014 report from IE Singapore.
Lending will remain sluggish as the banking sector attempts to de-leverage and restructure its balance sheet and non-performing loans (NPLs). Tighter credit conditions will also be in force, while public spending cuts keep economic activity depressed, as Vietnam works through economic excesses.
However, the long term fundamentals of strong private savings, positive demographics and rich endowments of agricultural and seafood resources remain intact.
These natural resources will position Vietnam well, for future growth, especially as the market matures and it becomes more open and receptive to investment.
Food, manufacturing and hospitality & tourism sectors present many opportunities to be capitalised upon, and companies that stay engaged for the long term in Vietnam are positioned to reap benefits from the economic recovery.