Vietnams FDI outlook for 2016

(http://www.vietnam-briefing.com/news/vietnamese-fdi-2016-outlook.html/)

1. Introduction

Vietnams rapid pace of integration into global commerce is likely to yield great
opportunities for foreign firms, therefore, FDI flow into Vietnam has been on
the rise. Our presentation will deal with the status of FDI flow into Vietnam in
2016, and the new trends that accompany the rising and more quality
investment.

A brief look at the number:

+ Newly registered projects reached a high of 127, up 186 percent from a year
prior.

+ Total FDI from this period was also up over 100 percent exceeding 1.3
billion dollars.

The substantial changes over 2015 help to highlight the increased importance
of Vietnam as a destination for foreign capital.

Now, we will go into more details about different aspects of FDI into VN, the
first being the sources of investment. Please welcome ..........

2. sources of investment
2.1. Increased investment from ASEAN countries.

With regard to sourcing, the most notable feature of 2016s investments lie in
the rising capital flows from ASEAN.

A number of reasons account for this:

+ The birth of ASEAN Economic Community AEC in December 31, 2015.

+ ASEAN nations enjoy lowered trade barriers, lower income tax and the
low cost for human resources.

+ Key investors within the AEC are Malaysia and Singapore accounting
for 18 and 22 percent of Vietnamese FDI respectively.Party to the TPP and
ASEAN simultaneously, companies based in these two countries are able to tap
Vietnams competitive production costs and lowered trade barriers, along with
the predictable government treatment.
As evidenced by this chart,ASEAN countries account for the majority of FDI flow
into Vietnam in 2016.
+ in 2015, Korea is the biggest investor, with 30% of all FDI, and ASEAN
countries only have 18%.
+ However, Koreans FDI in 2016 is reduced to only 13% of the total, and
ASEAN contribute 45%, hearly half of all FDI flow.

2.2. Future Growth: The EU and India

+ while India havent invested much into Vietnam over the years, in
2016, its FDI account for 4% of all FDI into VN, which is a 400% increase.
Reasons being its medicine, textile and electronic companies are finding
Vietnam a favorable place with close geographic distance and same level of
workforce.
+ The EU is predicted to increase FDI to Vietnam, because of the newly
signed FTA pact with Vietnam.

Next, I would like to introduce .......... to talk about the major sectors that enjoy
the most FDI.
3. Investment in Depth
3.1. Favored Industries

Manufacturing , as you can see from the chart, remains a significant attractor
of FDI in 2016, accounting for just under 68 percent of all FDI inflows in January.
This is not surprising, considering:

+ Vietnam has some of the lowest labor costs in the world

+ and lowered barriers to trade expected under recent trade agreements, such
as the newly implemented AEC and TPP.

these figures are a confirmation of Vietnams competitiveness as a

manufacturing hub.

Examples of foreign firms working in manufacturing:

+ Electronic and smartphones manufacturers like Samsung and Panasonic, car

makers like Yamaha, Toyota and Honda have been in Vietnam for years and
play an important role in supporting their mother companies.

+ Recently, Piaggio , a motorbike maker from Italy, has built its branch in Vinh
Phuc to serve as its operation hub for Asia.
More interesting is the showing for arts and entertainment which has
attracted 15 percent of FDI to date in 2016.

+ This is a significant indicator of Vietnams growing middle and upper

classes which are projected to 30 million by 2020.

+ Increasing access to areas such as gambling and shifting opinions on

content restrictions for paid media are likely to make the entertainment and
related industries lucrative sectors for investment in the years ahead.

+ Major firms working in Entertainment include Lotte and CGV, with CGV
having the biggest cinema chain in Vietnam.

Now, I would like to save the last trend for ......... Over to you.

3.2. Trend in R&D investment

Another hopeful trend is The increasing appearance of foreign direct

investment projects in research & development (R&D). Following are some of
the biggest projects that use FDI in R&D:

+ a few years ago, foreign groups began to invest in R&D activities in Vietnam.
Hewlett-Packard (HP), one of the world's leading computer manufacturers,
invested in building a R&D centre at Quang Trung Software City in Ho Chi Minh
City in 2012, HP's first R&D centre in the Southeast Asian region.

+Samsung Electronics Vietnam will build a US$300-million R&D centre in

Hoang Mai district. The centre will become Samsung's largest R&D project in
Southeast Asia. With US$300 million invested in building a new R&D centre,
Samsung Electronics has demonstrated that the group not only considers
Vietnam as a place for mobile phone production and assembly, but also a place
for research and development of software applications, a field requiring more
brainpower and skilled labour.

+ Apple Inc, a rival of Samsung in the mobile phone and tablet market, is
preparing to invest US$1 billion in building a data and R&D centre in Hanoi. The
centre will serve Apple operations in Asia, but it is unclear where and when the
project will start.

That concludes our study into the industries that FDI investors are increasingly
interested in. Now over to ............ to speak about the method in which foreign
firms operate in Vietnam.
4. Investment Vehicles
When investing in Vietnam, investors have mostly chosen to invest via 100%
Foreign Owned Enterprises currently accounting for 80 percent of all
Vietnamese FDI projects and just under 75 percent of all capital.

Other notable possibilities for investment include Joint ventures and Business
cooperation contracts. However, the nature of these investments has proven to
be less popular among investors as it requires increased cooperation with
Vietnamese counterparts.

It is worth noting that Representative Offices, while a good way to gather

information on the Vietnamese market, are not included within these figures in
a substantive way. Prohibited from generating profits, ROs are unlikely to
register large amounts of capital in Vietnam, and thus little insight on the
prospective investors can be gained from assessments of FDI.

5. Conclusion
This concludes our presentation on the trends of FDI inflows into Vietnam. We
have covered the major contributors of FDI, changing from Korea and Japan to
the closer ASEAN community. We have covered the most favored industries
that enjoy the greatest amount of FDI, which are manufacturing and
entertainment, as well as a trend in increased investment in R&D, which can
help Vietnam in developing a high-quality workforce.

We hope our presentation has been beneficial to your knowledge about FDI.
Thank you for listening.