HANOI – Vietnam has emerged as an attractive foreign direct investment (FDI) destination in Asia, by beating China and India, a report by The Economist Intelligence Unit (EIU) has indicated.
The Southeast Asian nation has become a new hub for low-cost manufacturing in Asian supply chains, Vietnam News Agency (VNA) reported citing The Economist report.
It said the report suggests that factors that make Vietnam better than its peers are the incentives for international firms for setting up units to manufacture hi-tech products, the pool of low-cost workers, and the proliferation of free trade agreements.
It also cited Ruchir Sharma, an emerging markets strategist at Morgan Stanley, as saying that Vietnam’s foreign direct investment has averaged more than 6% of its gross domestic product, which is the highest ratio in any emerging country.
In addition, the ever-changing policies as per the market demand, the vigorous changes in the business and investment climate, socio-political stability and population structure are also factors that made the country attractive for FDI, the report said.
It added that the recent free trade agreement between Vietnam and the European Union has benefited the country as the EU lifted 85% of its tariffs on Vietnamese goods in 2020 and the FTA’s biggest gains were witnessed by footwear manufacturers in Hanoi.
According to VNA, around 40% of exports to the EU in footwear manufacturing faced 30% tariffs, which were completely withdrawn from August 2020.
Even amid the Covid-19 pandemic, in the period from January to September 2020, the country attracted 21.20 billion US dollars in FDI or 81.1% compared to the same period last year, it said, quoting data of the Vietnam Briefing. – Bernama. January 18. 2021
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