Many optimistic investors stand ready to inject additional resources into the market and expect to have a better return in the long run, according to audit and business advisory firm Grant Thornton Vietnam.
“Vietnam's economy still faces many challenges, however, there has been an improvement in macroeconomic stability and some positive signals that the economy has begun to recover. Foreign capital is expected to continue to flow into the country through M&A activities in the coming years,” said Ken Atkinson, Executive Chairman of Grant Thornton Vietnam.
Vietnam was selected as an attractive destination by 54 percent of the respondents, according to a Grant Thornton Vietnam survey conducted during the second quarter of this year among foreign and domestic firms.
Meanwhile, 51 percent of respondents reported plans to increase their allocation of investment funds into the country in the next 12 months.
Some sectors have really stood out, particularly retail, food and beverage, real estate and hospitality. Vietnam's retail industry proved Vietnam's most attractive with 52 percent of respondents expressing interest.
Nearly 48 percent of respondents reported having a positive outlook on Vietnam’s economy in the next twelve months. This continues the trend of rising investor confidence in Vietnam’s economy over the previous few quarters.
Vietnam’s economy grew by 5.18 percent year-on-year in the first half of this year, and is expected to increase 5.8 percent for the whole year. Due to low inflation, currently estimated at less than 6 percent, and lower interest rates, 2014 could prove a promising year for private equity investment.
In May, China stationed an oil rig in Vietnamese waters, creating significant political tension between the two countries. Investors raised concerns that the investment environment could worsen if the territorial dispute was not settled in a peaceful manner.
However, after an initial dip, markets returned to normal.
Nevertheless, the economy faces many challenges, including slow reforms in the state-owned sector, non-performing loans and sluggish bank lending. As a result of those issues, 43 percent of respondents said they maintain a neutral outlook for Vietnam’s economic future.