Vietnam could gain from investors’ likely Myanmar exit

"Once borders open up after the pandemic, and Asian investors return physically to Vietnam, I believe it will be a feeding frenzy and you will see deal activity erupt, pushing Vietnam to the top of the list of emerging markets attracting foreign investment," Field Pickering, head of venture investing at Singapore-based Vulpes Investment Management, which has interests in Myanmar, said.

The coup on February 1 has resulted in the stock market and banks being closed and telephone and internet access suspended in major cities.

Myanmar has been in chaos since the army seized power and detained elected government leader Aung San Suu Kyi and much of her party leadership on February 1, alleging fraud in a November election her party won in a landslide.

Dave Richards, managing partner of impact investor Capria Ventures, told DealStreetAsia: "Investor money that might have gone into Myanmar will not be going there. The countries around the region will benefit."

The U.S. company had planned to invest up to $8 million in several countries in February last year with a focus on Myanmar, but it postponed the plan and is set to make its first investment in Vietnam this year.

In the last five years the Cambodia-Laos-Myanmar-Vietnam subregion has achieved average annual GDP growth of around 6 percent, much higher than the rest of Southeast Asia.

FDI flows into the four countries grew by 6.3 percent in 2019, and 55.9 percent in the case of Myanmar.

But all this could stop because of the coup.

Andrew Durke, chief operating officer of Cambodia-based Obor Capital, said investors could shift from a Myanmar-only to a regional strategy.

"For investors with set investment mandates in Southeast Asia and purely looking for financial returns, Vietnam remains a strong option for the same reasons that made it attractive in the past 5-10 years."

Dutch development bank FMO said Vietnam has already built a business ecosystem that facilitates investments from companies moving part of their supply chain out of China.