Viet Nam has emerged as an attractive foreign direct investment (FDI) destination in Asia according to a report by the Economist Intelligence Unit (EIU).  

A corner of Ho Chi Minh City - the country's biggest economy hub

The report suggests that factors that make Viet Nam better than its peers are the incentives for international firms for setting up units to manufacture hi-tech products, the pool of low-cost workers, and the proliferation of free trade agreements.

The EIU report says that Viet Nam has scored more than both India and China in the FDI policy. India remains behind both China and Viet Nam in foreign trade and exchange controls.

Viet Nam will continue to offer generous arrangements for international firms with incentives for investment, underlining that “Viet Nam’s proliferating membership of free trade agreements represents a strong point of its trade relations, reducing export costs”.

Regarding factors making Viet Nam investor-friendly, Viet Nam’s FDI has averaged more than 6% of GDP, which is the highest ratio in any emerging country.

Meanwhile, something that has worked in the favor of Viet Nam is the ever-changing policies as per the market demand, the report stresses.

The recent free trade agreement between Viet Nam and the European Union has benefitted the country as the EU lifted 85% of its tariffs on Vietnamese goods in 2020. The report states the FTA’s biggest gains were witnessed by footwear manufacturers in Ha Noi.