According to the United Overseas Bank (UOB) Asian Enterprise Survey 2016, close to two in five (or 38 per cent) Malaysian companies chose Vietnam as their preferred Southeast Asia expansion destination in the next three to five years.
Malaysian businesses said they are drawn to Vietnam’s political stability (44 per cent), large and growing customer demand (42 per cent), and favourable tax and regulatory environment (32 per cent).
The country’s economic growth rate of 6 per cent in 2016 and its young workforce, where 60 per cent of its 90 million-strong population are under 35 years old, make the country an attractive investment destination.
In 2016, Vietnam received a record US$15.8 billion of investment inflows and in the first two months of 2017, the country attracted US$3.4 billion of foreign direct investment, up 21.5 per cent from the same period in 2016.
Wong Kim Choong (right), CEO of UOB Malaysia said the findings of the survey reaffirmed the entrepreneurial spirit of Malaysian businesses as they continue to expand beyond their home market in search of growth and trade opportunities.
“Malaysian investments into Vietnam stem largely from export-based industries such as manufacturing, healthcare, pharmaceuticals, construction and real estate. These industries are keen to extend their customer base beyond domestic shores and are drawn to Vietnam’s favourable business conditions and growing middle class with increasing spending power.
“Malaysian businesses are also attracted to the opportunities that will open up further afield through Vietnam’s free trade agreements with the European Union and the Eurasian Economic Union,” he added.
The UOB Asian Enterprise Survey 2016 also found that 27 per cent of Malaysian businesses do not expand abroad because they lack local business contacts, while others are uncertain about operating in the local regulatory and tax environment (25 per cent).
The UOB Asian Enterprise Reports 2016 interviewed 2,500 key financial decision makers of Asian enterprises from Malaysia to explore how they are capitalising on business opportunities amid global and regional economic trends and trade flows.
Malaysian businesses included in the survey had to be in operation for at least three years with an annual sales turnover of at least RM15 mil (US$ 3.5 mil).