Vietnam has long become an emerging economy in Southeast Asia, since a lot of improvements and achievements in diplomatic relations in integration policies. Moreover, Vietnam’s economic performance is strong and stable over the years, and it has been an attractive magnet for Singaporean investors. Furthermore, Singapore’s business community has listed Vietnam as its top market of interest, and Singapore is investing there for various sectors, from manufacturing, real estate, energy, retail and construction, arts, tourism, and entertainment. But, you may be curious about the most popular Vietnam FDI sectors in Vietnam that Singapore would want to venture into. This article provides you the information about the most popular FDI trends in Vietnam. Let’s keep reading!
Overview of Vietnam FDI Sectors
Since the beginning of this year, the total FDI capital poured into Vietnam accounted for 84.5% of that in the same period last year. However, foreseeable investment inflows to Vietnam will be affected due to COVID-19, but high economic growth will provide a buffer for the country.
According to Nguyen Bich Lam, general director of the General Statistics Office (GSO), Vietnam is in a favourable position to attract more foreign investments, including the relocation plans of foreign investments in China to evade the US-China trade war and many free trade agreements (FTA) that Vietnam has signed.
In January this year, there is $5.3 billion of FDI landed in Vietnam, a surge of 179.5% year-on-year. It is an opportunity to attract foreign investors to invest in Vietnam even during this pandemic, also to continue improving the investment and business environment, amending policies and strategies to attract the quality of foreign investments.
Moreover, investors have poured money into 18 fields and sectors, such as manufacturing and processing with a capital of nearly US$6 billion, accounting for 48.4% of the registered tally. The electricity production and supply came second with US$3.9 billion, or 31.9% of the total, followed by wholesale and retail with US$776 million, real estate with US$665 million. The data shows that out of 93 countries and territories investing in Vietnam in the first months of 2020, Singapore took the lead with US$5.07 billion.
This year, the praises have showered on Vietnam as it is successful in fighting against the pandemic. As a result, it has created a positive influence on foreign investors’ decisions.
A report of VNDirect Securities released recently cited that foreign sources show that Google and Microsoft are relocating some production lines from China to Vietnam. For instance, the two giant technology firms are considering selling Pixel4A, Pixel5, and Surface computers in Vietnam.
No surprise to us, Vietnam’s technology sector has been gaining power recently as the country is now moving from low-tech manufacturing to a service-oriented economy. But, what are the technology sectors that Singaporean investors have an eye to invest in? Let’s take a look closer!
The Popular Technology Sectors in Vietnam That Singaporean Investors Venture Into
When it comes to investing in Vietnam, foreign investors will have drastic growth due to Vietnam’s recent adoption of Industry 4.0 across every industry. Furthermore, the Vietnamese government also prioritizes advanced technology projects of the trend 4.0 revolution, projects with modern management, and the connection between production chains and global supply.
This year The Politburo of Vietnam issued Resolution No. 50-NQ / TW on the orientation to attract FDI in the future and also paying special attention to attract FDI projects that consisted of advanced and high technology.
Additionally, the technology sectors in Vietnam are mostly funded by foreign investors, with projects focused on building electronic components. Data has shown, more than 86% of total Information Technology (IT) revenues came from hardware in 2017.
Recently, Samsung from South Korea has decided to set up an R&D center and eight factories in Vietnam and Intel Corporation has also built a testing facility and assembly companies in Ho Chi Minh City.
There are the top three technology sectors that have great potential for Singaporean investors to venture into Vietnam. Let’s take a look!
Based on the Vietnam E-Commerce Association (VECOM), the e-commerce sector is forecasted to reach a value of $23 billion in 2025. VECOM also reported that Vietnam’s e-commerce market grew at an average annual rate of 30% from 2015 to 2019.
Most of Vietnam’s e-commerce activities are in Hanoi and Ho Chi Minh City. The sales contribute to 70% of the country’s total e-commerce sales. The internet economy in Vietnam has brought more than US$1 billion in funding in the past four years.
The other reason that Singaporean investors should invest in this sector is that 30% of Vietnamese will shop online, and with a current population of 96 million people, the rapid increasing number of smartphones and internet users will make the country become a successful e-commerce business.
Vietnam’s fintech industry gained pace in 2019. Also, in 2019, Vietnam ranked second in ASEAN in terms of fintech funding with 36%, second only to Singapore with 56%. The sharp increase in funding was attributed to two large deals going to payment companies VNPay with US$300 million and MoMo with US$500 million.
Furthermore, there are at least 120 fintech-related companies in Vietnam, starting from digital payment until wealth management, blockchain, and cryptocurrency.
Over 66% of Vietnamese fintech companies are involved in digital payment services via online payment apps, and they have taken over 87% of the fintech market share.
The State Bank of Vietnam (SBV) issued licenses to 27 intermediary payment service providers, and most of them are e-wallet service providers. These signs that digital payment fintech companies are on the rise.
3. Education Technology
In 2018, Vietnam gained investments worth US$55 million for Vietnam’s Education Technology (Edtech). It’s because the Edtech Centers are able to build a gap between traditional education environments and learning needs which is inspired by the private sector.
Most recently, a Hong Kong-based equity firm has poured US$4 million to a Vietnamese startup called Everest Education. Organizations like Everest Education offer tech-enabled personal learning through a network of centers and partner schools.
There are other successful Edtech firms in Vietnam, such as Violet.vn, Hocmai.vn, and Topical. It is surely an enticement to attract foreign investors from Singapore for venturing into Edtech in Vietnam.
The popular FDI sectors in Vietnam have long been attractive for Singaporean investors, and yet they are promising to be successful in the future. In conclusion, Vietnam’s technology sectors are expected to remain intact growing approximately 30% a year. That means, there are a lot of opportunities for Singaporean investors to expand their businesses in the country!