Vietnam: Hot Money or Good Investments?

People often think about how a country attracts investment. Is the money more speculative in nature or does it represents true belief in the growth pattern of the economy. Well, economists call this the hot money issue. That is when investors put money in a country only to withdraw it after a short time because of jitters. Vietnam is not having a hot money issue, but its strategic position to China and Southeast Asia (and generally foreign friendly government and people) have made Vietnam the next big thing. Check out some statistics on trade.

The United States’ $11 billion makes it the seventh largest investor into Vietnam; U.S. businesses have significant roles in 17 of 21 of Vietnamese industries. Most US firms (599) are wholly foreign, but others (111) are joint ventures. Vietnam’s Ministry of Planning and Investment has said U.S. firms accounted for 735 projects with seventeen projects being in the hospitality sector which has makes up 42.3% of projects and accounts for $4.68 billion. Manufacturing and processing industries has 423 projects which make up 20.3 percent worth US$2.24 billion. Top Investment Destinations include Ba Ria-Vung Tau, Hai Phon, and Binh Duong.

The Vietnamese love American and are considered pro-American by most accounts. The result, a strong relationship with the United States which is tied into the The Trans-Pacific Partnership (TPP). The TPP will elimate tariffs on  $2 trillion in goods and services which means Vietnam will get access to new markets. This is beneficial for Vietnam as many companies pivot away from China. Other countries which large investments  are Singapore (3rd), South Korea (1) and Japan (2) remain Vietnam’s largest foreign investors. Over 100 countries and territories have investments in Vietnam.