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A third of foreign investors choose Vietnam over China

By Khanh An, Dam Tuan   March 31, 2016 | 04:45 am PT
About half of foreign investors in Vietnam considered other countries before choosing Vietnam, and of those 27.9 percent contemplated China, followed by Thailand (21.2 percent) and Indonesia (12.6 percent).

In 2015, Vietnam doubled its attractiveness to foreign investment compared to 2013, according to PCI 2015 report by VCCI and USAID released today.

Notably, the number of foreign investors seeing Cambodia as a potential substitute for Vietnam plummeted from 20 percent in 2014 to 2.5 percent in 2015. This reflects uncertainty over the political and investment environments in the neighboring country.


Vietnam's investment environment has been improving to entice more FDI enterprises. Photo: VnExpress

Vietnam’s biggest competitors in attracting foreign investment continue to be China, Thailand, Indonesia, Malaysia, the Philippines and Laos.

The PCI 2015 report also shows that Vietnam has lower tax rates, lower expropriation risk, better opportunities, policy influence and lower policy uncertainty than its competitors.

Vietnam is considered a relatively less risky destination to invest by 65 percent of current foreign invested enterprises (FIE), a significant improvement from 2013.

The remaining FIEs evaluate Vietnam as being less attractive based on corruption, regulatory burdens, quality of public services (such as education, health care and utilities) and the quality and reliability of infrastructure in which macroeconomic risks (changes in banking and finance systems) and regulatory risks (changes in regulations and taxes) are the major concerns.

Approximately 70 percent of FIEs disclosed that they spend over five percent of their time dealing with bureaucratic procedures. Some FIEs report undue harassment with more than ten inspections per year. Concerns on such issues have kept FIEs doing business in Vietnam on alert.

FIEs report more difficulty acquiring information without dependence on personal relationships and connections, and lower quality information when they obtain it.

As the National Assembly considers the draft Law on Access to Information, FIEs can see benefits from this legislation as transparency may be improved. 

The Vietnam Provincial Competitiveness Index Report 2015 was prepared by the Vietnam Chamber of Commerce and Industry (VCCI) and the United States Agency for International Development (USAID). The report handled surveys from more than 10,000 private enterprises.

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