This is a right timing for foreign companies, particularly small and medium enterprises (SME) to consider an investment in Vietnam either to develop production capacity, build partnership or take part of the 90 million people domestic market. Effectively, with the lifting of most restrictions on foreign ownership of public/listed companies starting from September 2015 except in banking, securities and insurance industries, Vietnam is now a particularly attractive destination for foreign SMEs to invest in:
- Foreign companies may buy shares or take equity control of public or private companies without any restrictions except in some specific sectors. The sectors that are open to foreign investment without limi include real estate and providing services in tourism, entertainment, computing, research and development, information, leasing, transportation, construction, healthcare and trading (Update in December 2015 based on the government website dautunuocngoai.gov ).
- The country’s growth continue at high rate, about 6.5% in 2015, in a context of low inflation and further integration of Vietnam economy in the world trade through the set-up of Asean Economic Community end 2015, the coming signature of major free trade agreements with Europe (Vietnam-EU FTA) and with the 12 Pacific Rim countries (TPP).
- Vietnam's stronghold as a world manufacturing hub exploiting its key advantages (young, educated and technophile workforce, strategic location at the center of Asia manufacturing eco-system and particularly close to China, low total labor costs, welfare included (about 47% of China and 50% of Thailand) (1)
- The current relatively low average PER (about 12.4 times for HCM-Vietnam vs 19.8 times for Thailand and 21.9 for Philippines (see graph above and note 2), noting the good performance of Vietnam’s VN Index which tops in 2015 the MSCI South East Asia Index (+15% vs -12%) (3). Vietnam eyes by the way for a possible upgrade by Morgan Stanley from Frontier to Emerging market now most of the caps on stocks’ foreign ownership is being lifted.
- Vietnam’s government commits to improving the business climate and the ease of doing business in the country (ranked 78th by World Bank in June 2014 ) with the target to reach the average level of Asean-4 in 2016 : Singapore - 1st in June 2014 ranking, Malaysia - 18th, Thailand - 26th, Philippines - 95th.
ATTP Capital is ready to accompany your company in this development strategy.
(1) China Briefing - June 3, 2014
(2) Barry Weisblatt -VP Bank Securities- April 24, 2015
(3) Bloomberg - August 9, 2015