South Korea, Singapore, Hong Kong and Japan have become the top sources of inbound foreign direct investment for Vietnam, replacing mainland China and Taiwan, the Hong Kong Economic Journal reported.
As China held back investments in Vietnam following the anti-Chinese riots in the country earlier this year, other nations and regions have taken the top spot in investments, the report said, citing data from Vietnam’s statistics bureau.
In the first 11 months of this year, Vietnam attracted US$13.7 billion of foreign direct investment (FDI), according to the statistics bureau.
Hong Kong firms are said to have poured in US$1.5 billion in direct investment in Vietnam in the 11 months, 1.5 times the level seen in the same period in 2013.
That put Hong Kong in the third spot after South Korea and Singapore, with Japan taking the fourth place, the report said.
Inflows from mainland China dropped almost 90 percent, according to the report.
The Hong Kong Chamber of Commerce in Vietnam said the rise in investment by Hong Kong firms stems partly due to the fact that relatively fewer Hong Kong manufacturers were affected by the riots this summer.
Vietnam-based Hong Kong companies mainly invest in garment and property businesses, said Pham Van Cong, Vietnam’s Deputy Consul General to Hong Kong and Macau. Hong Kong firms’ investment confidence was generally not affected by the May anti-Chinese riots, the official said.
Vietnam’s efficiency in handmade production, which is just second to China in the region, is another factor, said Dickson Ho, principal economist for Asian and emerging markets at the Hong Kong Trade Development Council.
As for South Korea, direct investment projects from that country increased 40 percent to 415 during the first 11 months, according to official data.
A free-trade agreement (FTA) between South Korea and Vietnam is expected to drive up investment in Vietnam further. The two nations last week concluded negotiations for an FTA that seeks to triple bilateral trade turnover to US$70 billion by 2020.
In the May 13 riots, a total of 50 Korean companies were affected as they suffered some minor damage to their buildings, according to Sang-hyup Park, a Korean trade representative in Vietnam. However, there were no serious cases of loss of property or assets, Park said.
South Korea will continue to treat Vietnam as its top investment priority in Southeast Asia, Park said.
Yasuzumi Hirotaka, managing director of JETRO Office in Ho Chi Minh City, said a total of 22 Japanese companies were affected by the May riots, but the financial damage was very minor. Japanese firms will continue to boost investments in Vietnam, although some companies may hold back due to the depreciating yen, he said.
–Contact us at [email protected]