Investment Sentiment in Vietnam Strengthens

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Dec. 11 – Investment sentiment in Vietnam remains high among international enterprises, according to a survey released this month by Grant Thornton.

In its survey, the 10th bi-annual Investment Sentiment and Outlook for the 4th quarter of 2013, Grant Thornton reported a 16 percent increase among international fund managers, legal firms and corporate investors who hold a positive outlook for Vietnam’s economy in the coming year. In total, 43 percent of respondents held a positive view, while 45 percent maintained a neutral view and only 13 percent anticipated a negative economic outlook in the coming year.

The positive trend among international investors is “the result of the improved macro-economic environment, the control of inflation at a single-digit rate, improvements to the quality of transport and energy infrastructures, and the efficiency of the local commodity markets,” said the report.

Among the 13 most active sectors in Vietnam, the food and beverage industry ranked as the most attractive, followed by education, real estate and financial services.

A majority of investors also reported plans to maintain a medium-term view of their operations in Vietnam, lasting from 3 to 5 years. Eighteen percent reported plans to stay invested in Vietnam for more than 5 years. Only 3 percent plan to maintain a holding period of less than one year.

Management support and strong product branding were seen as the two most important factors for success in Vietnam. Maintaining a local presence was also cited frequently as a critical component of successful deal negotiations.

Vietnam’s strengthening outlook has already led to large gains in foreign direct investment inflows, which grew by over 50 percent on a year-on-year basis during the first 11 months of 2013 to US$20.8 billion. This represents a 38 percent increase over the governments pre-year projections for FDI in 2013, a sign the market will remain strong in 2014, according to Nguyen Mai, Chairman of the Association of Foreign Invested Enterprises .

“The investment environment has got better thanks to the stabilized inflation and monetary policies. However, the barriers relating to the policies and infrastructure still exist,” he said.

The Investment Outlook survey found that corruption was cited as the largest barrier to investment in the region, along with governmental red tape and complex real estate ownership laws.

Despite these concerns, 46 percent of respondents said they are considering increased activity and investment in Vietnam over the next twelve months.

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