VietNamNet Bridge - Analysts have said the strong investment wave of investors from South Korea, Japan and the US would act as a counterpoise to rising Chinese investment.

 

South Korea is now the biggest foreign investor in Vietnam

Recent studies carried out by the Ministry of Planning and Investment’s Foreign Investment Agency (FIA) on outward investment tendencies showed that capital from South Korea, Japan and the US would continue flowing to Vietnam in the time to come. 

The reports of the agency mentioned the ‘tripodal position’ in foreign direct investment (FDI) in Vietnam. Diverse sources of foreign FDI are expected to help Vietnam create equilibrium in attracting FDI and ease reliance on certain sources.

South Korea is now the biggest foreign investor in Vietnam. As Korean businesses have been prospering in Vietnam, and Vietnam and Republic of Korea relations are now very good, they will surely expand investment.

Nguyen Van Ngai from the HCM City Forestry and Agriculture University noted that South Korea, Japan and Vietnam have cultural similarities. 

Meanwhile, Americans also have good understanding about Vietnamese from the war in the past. Therefore, they would have great advantages when investing in Vietnam.

Vietnam also has great opportunities. The profits are very attractive in newly opened economies. Meanwhile, the labor cost in Vietnam is low, which allows them to save production costs.

Analysts have said the strong investment wave of investors from South Korea, Japan and the US would act as a counterpoise to rising Chinese investment.

Third, Vietnam is a large market, and foreign manufacturers can sell many types of products to Vietnamese consumers.

China is now among the top 10 foreign direct investors in Vietnam. Meanwhile, experts have predicted a new investment wave in the time to come as Chinese try to set up factories in Vietnam to enjoy preferences from free trade agreements (FTAs).

But analysts said Chinese investment is ‘low-quality and unreliable’.

“Korean, Japanese and American investors will compete with Chinese. And I believe this will help Vietnam ease its reliance on China,” Ngai said. “I would like to see many foreign capable companies compete with Chinese companies,” he said. 

“I think Chinese imports to Vietnam would decrease in the time to come, while the Chinese goods market in Vietnam would shrink thanks to the presence of powerful investors from other countries,” he said.

What does Vietnam need to do to select the best investors? Ngai said Vietnam, when opening its market and integrating into the world, must commit to create favorable conditions for investment and trade liberalization. 

This means that it cannot set up policies with an aim to prevent these or other investors. In exchange, other countries also have to open their markets widely for Vietnamese investors.