Vietnam - Strong Rival for China, Thailand in FDI Attraction

Vietnam is seen as one of the most attractive destinations for foreign investors, putting great pressure on China and Thailand, affirmed a recent report conducted by the US’s Stratfor.

 

With the fast and steady economic growth (8.2 per cent in 2006), cheap and abundant labor, and particularly WTO entry, Vietnam is not inferior to China in promising extremely lucrative opportunities for foreign firms, the report said.

 

However, it emphasized that Vietnam has two outstanding advantages in comparison with the neighboring nation. Bad debts of Vietnamese banking sector are estimated at just 3-15 per cent among total outstanding loans, an impressive number in Asian region. Meanwhile, China’s figure is up to 35-50 per cent out of the total GDP.

 

Besides, changes in global economy do not affect Vietnam as much as China, although Vietnam’s export turnover accounts for around 56 per cent of GDP, higher than the level of China with 37 per cent.

 

This is allegedly attributed to the difference in structure of export items. Vietnam’s main export products are essential and consumer goods while those of China are electronic and mechanic ones, the report showed.

 

More and more foreign investors prefer Vietnam to Thailand for the political stability. The political unrest in Thailand from the coup last year has led to inconsistent policy for finance market management, causing a serious stagnation for the country’s stock market.

 

Vietnam will attract more foreign direct investment (FDI) than Thailand in the next 10 years, noted Japanese Ambassador to Vietnam Hattori.

 

The country attracted total capital of US$10.2 billion in (FDI) in 2006, a record level far beyond the year target of US$6.5 billion. It has also set a target to lure around US$10 billion in FDI this year.