Reflecting on my five-year stay in Vietnam, which concluded in 2017, I recall significant multi-billion-dollar investments from Thai conglomerates during that time. Notable examples include ThaiBev’s acquisition of local beer company SABECO for $4.8 billion, Siam Cement’s expansion of their cement and building materials plant, Central Group’s acquisition of Big C’s operations, and CP Group’s plant expansions.

Aseem Goyal, managing director Factum Global Asia

Post-global financial crisis, Thai businesses recognised that their domestic market had matured, prompting them to seek growth opportunities abroad. While Indonesia, the Philippines, and China also benefited from this outward expansion, Vietnam received the bulk of Thai investment.

Vietnam emerged as a favoured investment destination for several reasons. It has experienced consistent high economic growth rates, averaging around 6-7 per cent annually over the past decade. Vietnam’s strategic location and extensive network of free trade agreements, surpassing those of Thailand, have also attracted Thai companies.

Meanwhile, labour costs in Vietnam are relatively low compared to Thailand. Combined with high education levels and significant female workforce participation, it appeals particularly to manufacturing and industrial companies.

With a population nearing 100 million, a young demographic, and a rising middle class, Vietnam presents a lucrative consumer market. At the same time, the Vietnamese government has implemented various initiatives, including tax incentives, simplified administrative procedures, and the establishment of industrial parks and special economic zones, to attract foreign investment.

While Thai investors initially focused on retail and manufacturing, they are now venturing into other industries. Major Thai banks such as Bangkok Bank, Kasikorn Bank, and Siam Commercial Bank have operated in Vietnam for many years and are now expanding their operations in the country.

Similarly, the energy sector, particularly renewable energy, has seen growing interest from Thai investors. B. Grimm Power has invested in solar and wind energy projects, and PTT has explored opportunities in the petrochemical sector.

Other ASEAN countries, particularly Singapore, have also been major investors in Vietnam. In just the first four months of 2024, Singapore contributed $2.92 billion, accounting for nearly half of the total foreign direct investment during the period.

Singaporean investment is primarily focused on real estate and financial services. Major Singaporean banks like UOB, OCBC, and DBS operate there.

Similarly, real estate companies such as CapitaLand, Keppel Land, Mapletree Investments, Frasers Property, and Ascendas-Singbridge have some of the most high-profile projects in residential, commercial, and industrial real estate.

Malaysia is another ASEAN country whose investment has seen significant growth. Malaysian investment in Vietnam includes real estate, renewable energy, healthcare, and pharmaceuticals. Noteworthy projects include Berjaya’s $2.5 billion Vietnam International University project, which started construction in 2024, as well as Top Glove’s new glove factory in the southern province of Binh Duong.

Additionally, CIMB has expanded operations in Vietnam, partnering with South Korean fintech Toss, the country’s first unicorn.

ASEAN is a critical source of investment in Vietnam, with companies rapidly expanding their operations there.

Their focus and success can be attributed to three main factors: ASEAN investors appreciate that returns will take time and that they are in the country for the long term; having navigated their local market’s regulatory complexities, ASEAN investors are better prepared to handle Vietnam’s business environment; and with a focus on ASEAN economic integration and limited opportunities in their own markets, investing in Vietnam makes strategic sense.

The increasing Thai and ASEAN investment in Vietnam signifies a robust economic partnership. Driven by Vietnam’s economic growth, strategic location, cost-effective production environment, and supportive government policies, ASEAN companies are strategically positioning themselves in key sectors.

As Vietnam continues to grow and integrate into the global economy, this trend is likely to accelerate, bringing mutual benefits and strengthening economic ties. This relationship enhances economic cooperation and fosters closer regional integration within ASEAN, contributing to the region’s stability and prosperity.