ASEAN Economic Community: New impulse for regional investment

Hanoi (VNA) - When the ASEAN Economic Community - one of the three major pillars of the ASEAN Community - is established at the end of this year, the flows of investments from ASEAN countries into Vietnam and vice versa are expected to further flourish.

Boasting a strategic geographical location, young abundant labour forces and low labour costs, Vietnam has been one of the most attractive destinations for foreign investors, including those from ASEAN.

Vietnam-Singapore Industrial Park I (Source:Internet)

According to the Foreign Investment Agency under the Ministry of Planning and Investment, by the end of September 2015, eight out of the 10 ASEAN countries, namely Brunei, Cambodia, Laos, Malaysia, Indonesia, Singapore, Thailand and the Philippines, had invested in Vietnam. Of the total, Singapore topped the list with 1,456 projects worth 33.45 billion USD out of 2,687 projects valued at 56.32 billion USD.

A report released by the World Bank Office in Vietnam shows that Vietnam is one of the countries with the highest economic growth over the past two decades. Economic activities in 2015 have continued to prosper thanks to an increase in industrial output and the recovery of the construction sector.

World Bank’s Senior Economist Sebastian Eckardt told Vietnam News Agency’s reporter that: “ Deeper integration among ASEAN countries will encourage investment, trade integration. In addition, I think there are also opportunities for Vietnam to benefit from investment from outside ASEAN by investors who want to take advantage of Vietnam as an entry to the ASEAN market as a whole. There are also going to be opportunities for Vietnamese firms to invest in other ASEAN economies to basically increase trade linkages and realize new market opportunities in those markets.”

However, Eckardt suggested that the Government of Vietnam should continue to improve the business environment, simplify administrative procedures and ensure fair competition among domestic and foreign enterprises if the country wants to draw more investments, especially the flow of capital from the ASEAN nations.

PM Nguyen Tan Dung delivers a speech at the forum (Source:VNA)

At the Global Investment Forum held in Vietnam at the end of September, Prime Minister Nguyen Tan Dung stressed that “Vietnam is actively and positively integrated into ASEAN, a dynamic market with a combined population of 652 million and Gross Domestic Product (GDP) of about 2.5 trillion USD. With a relatively high economic growth rate, it is expected that by 2030, the bloc’s GDP will reach 10 trillion USD.”

The government leader added that to lure more foreign direct investment, Vietnam is making efforts to improve its market economy regulations, focusing on improving legal frameworks and administrative procedures, especially in improving human resource quality and developing infrastructure.

The Law on Investment and the Law on Enterprise (revised), which took effect on July 1, 2015, provided information on prohibited and conditional business sectors. They, therefore, act as a guideline for foreign investors who wish to invest in Vietnam.

According to economic experts, Vietnam will attract selectively high value-added and quality, modern technology and environmentally-friendly projects, as well as large scale projects with competitive products that participate in global value chains of trans-national companies. The country will also encourage, create good conditions for and strengthen connections among foreign-invested enterprises, as well as between them and domestic ones.

In the coming time, especially as Vietnam joins AEC at the end of this year, the liberalisation of trade, services and investment will not only help build and enhance foreign investors’ trust in ASEAN, but also contribute to strengthening regional investment.

A Metfone Viettel office in Cambodia (Source:Internet)

A representative of the army-run telecom group Viettel said ASEAN is an attractive market, as ASEAN states have close economic ties with Vietnam. The group is investing in Cambodia and Laos. Of these, Cambodia is its largest market.

27th ASEAN Summit was held in Malaysia (Source:news.chinhphu.vn)

At the 27th ASEAN Summit in Kuala Lumpur, Malaysia, leaders of the regional countries signed the “2015 Kuala Lumpur Declaration on the Establishment of the ASEAN Economic Community” on December 31, 2015, in the witness of leaders from dialogue partners and the United Nations. The establishment of AEC will become a turning point, marking the comprehensive integration of the Southeast Asian economies. Regional economic competitiveness will improve, making ASEAN a large potential market for foreign investors.

By:Le Hien-Phuong Chi