Vietnam still hot for American investors
The survey, which polled more than 350 leaders of U.S. companies operating in the region, not only found that more American employees are asking to relocate to Southeast Asia – a surprise to analysts who have long assumed China and India were the hot spots – but also found that 57% of the companies polled intended to expand their operations in Vietnam, compared to a mere 6% in Indonesia and 11% in Thailand.That’s another of the more surprising conclusions from a recent survey conducted by the American Chamber of Commerce in Singapore (AmCham Singapore) and the U.S. Chamber of Commerce, which was reported earlier by The Wall Street Journal.
For American companies already operating in Vietnam, 82% expect an increase of profits next near and more than half are planning an expansion of their workforce. Such results are a sign that sentiment around the country among some companies remains positive, despite a significant slowdown in gross domestic product growth in Vietnam over the past few years, as well as other signs of macroeconomic instability, including a series of currency devaluations and a sharp rise in non-performing loans in the Vietnamese banking system.
Analysts have widely argued that Vietnam needs to pursue more aggressive economic overhauls, including steps to privatize state companies, if it wants to start attracting new rounds of big foreign investment.
The survey did indicate that many American businesses in Vietnam remain skeptical about efforts to stamp out corruption there, with 77% of those polled perceiving bribes and kickbacks as a concern. This figure was only higher in Cambodia, where 81% of companies expressed such concerns, and Indonesia, where 87% are still worried about corruption in the country.
The survey didn’t explain the apparent disconnect between Americans’ desire to expand their operations in Vietnam even as they worry about corruption and other issues. But the country continues to offer some appeal for Western investors, despite the recent economic problems there.
Its sizable consumer market of 91 million and relatively low-cost labor pool are still attractive for many companies, and some may be betting that the country will grow out of its economic problems eventually. Some economists have argued that steps to tighten credit and rein in inflation have positioned Vietnam to rebound once the global economy recovers from its recent slump, though that remains to be seen in the coming years.
