The increase of foreign direct investment (FDI) in the first two months of the year has contributed to a better performance of listed industrial park developers.
According to the General Statistics Department, FDI flowing into projects in Vietnam picked up 9.8 percent year on year to a three-year high of US$2.58 billion in January and February.
In the same period, foreign investors poured $8.47 billion into Viet Nam in various channels, including FDI projects.
Foreign investment reached $35.46 billion in 2018, 2 percent lower than the 2017 figure. That included $19.1 billion worth of FDI projects.
Impressive numbers from the government statistics agency indicated how attractive Viet Nam is to foreign investors.
According to Vietinbank Securities JSC, as the US central bank Federal Reserve’s signal slower interest rate increases this year, and better trade talks between the US and China have made foreign investors look to emerging markets, including Viet Nam.
In 2019, FDI companies will be the major driving force of the Vietnamese economy as the Government has good relations with other countries with Viet Nam seen as an attractive option for overseas firms.
A survey conducted in January by Kyodo News showed 36 percent of targeted Japanese firms said Viet Nam was the top destination. The second was India (18 percent).
As a result, higher foreign investment means better opportunities for local industrial zone developers.
Since the beginning of the year, shares at industrial zone developers such as Viglacera (HNX: VGC), Kinh Bac City Development Holding Corp (HoSE: KBC) and Nam Tan Uyen Joint Stock Corporation (UPCoM: NTC) have beaten the forecasts of analysts and investors.
Viglacera shares gained nearly 23 percent since the beginning of the year. Shares of the other two companies rose about 15.7 percent and 60 percent, respectively.
According to Rong Viet Securities Corp (VDSC), Viet Nam is an attractive destination for foreign investors as the country covers a highly strategic position in the Asia-Pacific region.
“No industrial zone is located too far from the coast and all of them are connected with seaports by highways and expressways, which the Government is calling for more intense development,” VDSC said in a note.
In addition, the improved business climate in Viet Nam was another factor that had lured more foreign capital into the country, the brokerage firm said.
A low-cost workforce remained a comparative advantage over other economies, VDSC added. Average labor costs in Viet Nam is 43 percent and 10 percent lower than in Thailand and Indonesia.
“The northern provinces and cities are favored by foreign companies such as Samsung and LG who entered the country more than 10 years ago,” VDSC said.
Kinh Bac City Development Holding Corp and Viglacera were forecast to benefit from north-based FDI companies and would gain more as trade tensions between the US and China showed few signals of cooling and technology groups were expanding their business and supplier network, VDSC added.
Trade tensions also saw foreign small-and medium-sized enterprises (SMEs) move from Taiwan and China to the southern region, and that could help Nam Tan Uyen JSC earn higher profits.
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