In just the first few weeks of 2024, European businesses have made announcements about their continuing expansion in Vietnam. Lego Group unveiled that the group will roll off production lines at its $1.3 billion factory in the southern province of Binh Duong this year.

Vietnam deemed cost-effective for Euro expansion

The factory is expected to produce high-quality products in the second half of 2024. This marks an important milestone for the Lego project as it shifts from planning to production.

Nestlé also a big splash last week by injecting another $100 million into its Nestlé Tri An factory in the nearby province of Dong Nai. The move follows the additional investment of $132 million in the factory in 2021. As of present, Nestlé has invested $500 million into the Nestlé Tri An factory, making it one of its largest production plants in the country.

Commenting on the positive development of Euro-backed projects, European Chamber of Commerce in Vietnam’s (EuroCham) chairman Gabor Fluit, said, “Vietnam has seen a clear rise in European companies investing money to start or grow businesses in the country. This indicates that investors see Vietnam’s economy as increasingly stable and Vietnam as a cost-effective manufacturing location. These major investments have a very positive impact - as more European companies move in, others see the potential and follow suit.”

According to the latest Business Confidence Index (BCI) from EuroCham, the BCI remained below the midpoint at 50 in Q4/2023; nevertheless, there has been continuous quarter-over-quarter improvement in BCI since Q2 2023. This may suggest a cautiously optimistic trend in market recovery.

Decision Lab CEO Thue Quist Thomasen, said, “Vietnam’s long-term economic trajectory suggests a promising path of continued growth. In the short and medium term, Vietnam is showing its trademark ability to deliver a stable business climate even in turbulent times. Continued stability and potential improvement in 2024 will underpin the case for further foreign direct investment in the country.”

In the same vein, Yoan Gyuon, CCO of GreenYellow Vietnam, said, “Vietnam’s economy has shown resilience despite the challenges faced in 2023 due to the global economic downturn. The recovery has been slower than anticipated, but Vietnam has managed the situation relatively well, especially in the industrial sector. In 2024, the local economy is expected to reach pre-pandemic levels,”

According to the BCI report, Vietnam is still seen as an attractive investment destination, with more than 60 per cent of European businesses considering it within their top 10 destinations. Additionally, a larger number of businesses anticipated a more substantial increase in their company’s foreign investment in Vietnam compared to the third quarter of 2024.

“Vietnam’s appeal to European investors comes from its stability. It offers a predictable policy environment, maintains steady exchange rates, and provides a consistent economic and political climate. Fiscal responsibility and exchange rate stability add to investor confidence,” Fluit noted, adding that Vietnam’s diversification into renewable energy and high-tech sectors, alongside increasing domestic consumption, presents attractive opportunities for international investors, including European investors.

“With projections that Vietnam will continue to be one of Asia’s fastest growing economies, European companies are likely to invest more in the country in the coming years,” Fluit added. “By using its unique advantages, while gradually improving regulations, legal frameworks and infrastructure, Vietnam is well-positioned to remain one of the most popular destinations for European capital for years to come.”