According to the 2022 World Investment Report by UNCTAD, FDI in Southeast Asia increased 44% in the post-Covid-19 period. Savills Southeast Asia Chief Executive Officer, Chris Marriott, assessed investments in the region have shifted into high-value industries. Viet Nam is a leading destination, with facilities and production capabilities that meet international expectations.
Tech Firms Keen on Viet Nam
Over the past year, leading tech companies have contributed significantly to FDI in the Asia Pacific, which has pushed demand for industrial and commercial real estate.
The 2022 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD) shows that Asia received 40% of global FDI in 2021. It achieved an all-time high of US$619 billion after three years of continuous increases. FDI inflows in China increased by 21% and by 44% in Southeast Asia.
Chris Marriott, CEO, Savills Southeast Asia, noted investments in the Asia Pacific region have tended to shift into manufacturing, supply chain and data centres in recent years.
"With the growth of e-commerce and expansion and diversification of supply chains, we see growth in the manufacturing and business sectors in Southeast Asia. Investment funds are focusing on the market, with the development of production and logistics. In addition, the development of technology and e-commerce has driven the demand for data centres," Chris added.
At Savills Cross-Border Tenant Advisory APAC 2022 event in Ho Chi Minh City in August, Dominic Harding, Senior Vice President, Head of Cross Border – Americas, noted that when American technology firms expand into foreign markets, they see a growing middle class across Southeast Asia. He said they want to invest, expand, and develop their businesses in these regions.
"Compared to China, India, and other Southeast Asian countries, Viet Nam is an attractive market for investment with relatively low risk. This creates an impetus for the capital flow of many technology companies and other businesses in the US to invest in Viet Nam," Dominic added.
Many American businesses that are active in Viet Nam see it as an attractive place to do business, with a quality workforce, good distribution channels, and high demand. For these businesses, Viet Nam presents current and long-term potential, which creates a positive outlook for investment.
.jpg?1791484338.17519 "Dominic Harding, Senior Vice President, Head of Cross Border – Americas")
Dominic Harding, Senior Vice President, Head of Cross Border – Americas
Attractive Market
According to Chris Marriott, one of the great advantages Viet Nam has at the moment is the production capacity of its high-tech industries. While sectors focussing on raw products flourish in Indonesia and automotive and agricultural sectors thrive in Thailand, Viet Nam is seeing growth in its electronics industry. The tech industry is being driven by a highly skilled workforce, attractive policies, and investment. The country also delivers competitive production and logistics costs for trade. The import of agricultural products and export of goods are improving with infrastructure and logistics channels, which is favourable for domestic and foreign investors.
.jpg?1791484338.17571 "Chris Marriott, one of the great advantages Viet Nam has at the moment is the production capacity of its high-tech industries")
"When compared to other markets in the region, investment costs in Viet Nam are very competitive. Costs in markets such as Singapore and China are now high, which mean large operational costs, making trade more difficult. Businesses are looking to alternative markets, and Viet Nam is doing a great job in catching these demands, especially after the pandemic," Chris added.
The diversification of supply chains and production is being driven by the China+ 1 policy, with Chinese companies wishing to expand into foreign markets and multinationals looking to expand their supply chains outside of China. Viet Nam is benefiting from this movement because it offers attractive investment policies, a highly qualified workforce and lower prices than more established markets like Singapore. Ho Chi Minh City and Ha Noi are leading high-tech and electronic production markets in Viet Nam.
"A solid legal system and attractive financial policies will be the driving force for investment and real estate. Viet Nam needs a strong legal system with solid land ownership and financial structures. This will create a healthy real estate market. In short, the government's policies need to revolve around real estate ownership and the ability to access capital," Chris commented
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See Further:
- Vietnamese real estate attracts foreign investment in H1/2022
- South Korean FDI into Vietnamese Real Estate Increases
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