Countries wooing Foreign Investment: Vietnam is the one in the Top List in 2023
Vietnam is growing, thanks to Foreign Investments! There are other countries too getting positively affected by Foreign Investments.
Countries wooing Foreign Investments: Vietnam is the one in the Top List in 2023
In the Global race for Foreign Investment, countries like Vietnam are getting listed as major players in the list. With the growth in the country’s economy and favourable business climate, the country is attracting commendable larger international investments in order to capitalise on the growing opportunities.
Comparably in the last few years, Vietnam has made significant improvements in its infrastructure and created a business-friendly environment for foreign investors.
Adding to it, the government of Vietnam has implemented a lot of reforms to aid the operation of Foreign organisations in the country with impressive results seen in recent years.
Concludingly due to which country’s GDP (Gross Domestic Product) has been boosted, making Vietnam an attraction for Foreign Investments, especially in its Manufacturing sector.
Most investments are from companies looking for expansion in Asia.
How Vietnam became a dream destination for Foreign Investments.
In recent years, many renowned corporations set down their operations in the country such as Intel, LG, Samsung etc. This trend seems to continue in the long run.
Even after the hit of Covid 19, Vietnam’s economy remained resilient and even the country positioned itself well to take advantage of economic recovery.
Here are the factors in detail which made the country an attraction for Foreign Investment –
1. GDP Growth –
Vietnam’s GDP has grown significantly over the years. In 2020, Vietnam’s GDP grew by 7.1%, following in 2021 & 2022 the growth was 2.6% and 8%.
Making it one of the fastest-growing economies in the region and one of the best performers throughout the years.
2. FDI –
As mentioned by the Vietnamese ministry of planning & Investment, Vietnam received $22.4 billion that is 13.5% year on year. This is the highest hit in the last five years of Vietnam’s history.
In 2020, Vietnam was the largest recipient of Foreign Investment in Southeast Asia.
3. Exports –
Vietnam’s exports hiked to $700 billion in December 2022 which is $31.5 billion more than in 2021. Again in 2020, it was the largest exporter with a total value of $ 292 billion
4. Manufacturing –
In Vietnam, manufacturing has played an important role. As per the world bank, the manufacturing sectors in the country will mark out approximately 25% of its GDP in 2021.
In the field of electronics, textiles, and footwear Vietnam has been a boom.
The government there is also focusing on upgrading the capabilities for manufacturing and is encouraging corporates to move up in the value chain so that end products can have better quality.
5. Workforce –
Another commendable factor in Vietnam adding to its capabilities is low-cost Labour. The country has a large pool of educated and skilled youngsters which has attracted MNCs to look forward to reduced labour costs.
The country has grown its purchasing power and raised the demand for consumer goods. A combination of cheap Labour along with a favourable business climate has made this country outperform.
It is witnessed that the government of Vietnam has taken up interesting measures to boost FDI.
Yet, there are Challenges, Vietnam has faced all along its journey –
1. Infrastructure –
Despite recent improvements, Vietnam’s infrastructure still is quite a challenge for many foreign investors, especially in terms of distribution channels including transportation and logistics.
The country, even after working a lot on its infrastructure, is facing a lot of traffic congestion in its major cities, and the transportation infrastructure is still insufficient to meet the needs of a growing economy.
2. Bureaucracy –
The bureaucratic process of commencing a business in Vietnam is time-consuming and quite complicated for foreign investors.
There are often many steps involved in acquiring the necessary licences and permits.
3. Corruption –
Corruption is another challenge in Vietnam like many other democratic economies.
It can be difficult for foreign investors to navigate the complex and often opaque business environment.
This can lead to delays along with higher commencement costs for companies trying to do business in the country.
4. Human rights concerns:
Vietnam is an authoritarian state, and the government has a history of suppressing political dissent and violating human rights.
That has been a concern for foreign investors for a long time who were looking to establish operations in a country that is politically stable and respects the rule of law.
5. Competition –
Vietnam is not the only country in the region that is seeking foreign investment, and it is challenged with quite higher competition from other countries in Southeast Asia, such as Thailand and Indonesia.
Despite these challenges, Vietnam continues to showcase literally higher growth in addressing them, and the country remains an attractive destination for foreign investment.
With its growing economy, favourable business environment, and skilled workforce, the country is well-positioned to continue attracting investment and supporting its economic growth in the years to come.
Other countries like Vietnam wooing Foreign Investments
Not only Vietnam but there are many other countries which are growing and trying their best to woo Foreign Investments. Some of the top performers are –
1. Mexico –
Mexico has been working great to increase its FDI which was witnessed in 2023 as an increase of 12% to $35.29 billion. Mexico has a favourable trade route providing access to both the US and Latin American markets.
Moreover, Mexico has a rich cultural heritage which is reflected all over in the country’s art, architecture, cuisine, and traditions, attracting millions of tourists each year.
Adding to it, this country is less comparable than others when it comes to economic shocks. To boost its growth Mexico has been a member of many trade agreements such as the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP).
The government there has been investing huge resources in building infrastructure including transportation, energy, and telecommunications, to support economic growth.
2. India –
As we all know, India has a large pool of young and skilled workforce and the country is working to improve its business climate aggressively, particularly in the area of technology and manufacturing.
As per statistics, “India has registered its highest-ever total FDI inflows of $84.84 billion in 2021-22″.
As India is also a largely populated country, the market base here is also wider than in other countries. India has significantly shown excellence in technology, engineering, and financial areas providing a strong foundation for the country’s growing services sector
3. Indonesia –
Indonesia is a mix of a favourable environment, cheap Labour and great trade routes providing access to the regional Market.
Also, the country has abundant natural resources, including fertile land, minerals, oil and natural gas, and forests providing significant opportunities for businesses in various sectors, such as consumer goods, retail, and tourism.
Politically there is relatively low corruption and a higher commitment to economic reform.
4. Bangladesh –
Bangladesh is not behind the competition, especially for its low-cost textile manufacturing is taking over the world. In the area of clothing and footwear, it is an unbeatable economy with incredible skills.
Providing foreign investors with low-cost labour, favourable government policies and access to large south and Southeast Asia market.
A major contributor is an agricultural sector which employs a significant portion of the population all over and helps in boosting the GDP of the country.
5. Ethiopia –
Ethiopia is a pool of amazing natural resources like fertile land, minerals, water and biodiversity which opens up opportunities for agriculture, mining, and tourism.
Also, it is one of the fastest growing economies of Africa with a young population at large. Moreover, in the last two decades, it has experienced political stability which is a great advantage to go on with Foreign Investments.
Foreign investments are growing in many countries and most of the countries are planning themselves well in the era of globalization. Almost every country has accepted a combined growth with all other countries. Of course, it has been quite a great opportunity for economies to grow together but that can be equally a threat to many countries as well where they were operating on monopolies or restricted entries of FDIs.
In times like these almost all countries are now required to work more on their technical knowledge and networking. Finding opportunities and ways to lure Foreign Investments can be a struggle in the coming years.