UK investment focuses on local processing and manufacturing industry

Deputy Minister of Industry and Trade Tran Quoc Khanh noted that in addition to two-way trade growing by 17% in the first year of the UKVFTA being enacted, foreign direct investment (FDI) flows from the UK into the nation have significantly increased.

Specifically, there were 48 newly-granted British investment projects in Vietnam last year, featuring a total registered capital of more than US$53 million, an annual rise of 157%.

The total registered capital of UK enterprises in the country currently stands at approximately US$4 billion, thereby accounting for nearly 1% of the total registered FDI in the nation. The UK ranks 15th out of 141 countries and territories with investment projects in the Vietnamese market.

British investment projects in the country primarily focus on the processing and manufacturing industry, constituting 38.7% of total registered investment capital, whilst real estate businesses make up 26.2%, and mining represents 17.6% of the total.

Graham Stuart MP, trade envoy of the British Prime Minister in charge of Laos, Vietnam, and Cambodia, stated that the enforcement of the UKVFTA in early 2021 can be viewed as an important pillar to carry out commitments relating to trade and bilateral investment promotion. If last year saw the trade of goods become a great achievement that the UKVFTA opened up for both nations, then it can be anticipated that investment activities will be in full swing moving forward.

This can largely be attributed to 26 investment co-operation agreements signed between firms from the two countries on the occasion of Prime Minister Pham Minh Chinh's visit to the UK and his attendance at the 26th Conference of the Parties to the UN Framework Convention on Climate Change (COP26) at the end of last year.

Prospects for clean energy and high technology

Stuart emphasised that Vietnamese commitments to zero net emissions at COP26 are extremely important, with this attracting further British investment into Vietnamese renewable energy, typically offshore wind power projects, with the UK currently being a leader in offshore wind power.

Kenneth Atkinson, a board member of the British Chamber of Commerce Vietnam (BritCham Vietnam), stated that his organisation is learning the interest of British financiers in investment plans in the Vietnamese market and offering specific advice.

Although the pandemic remains complicated, the air route between the two sides has now been opened, coupled with continued investment co-operation programmes between businesses of the two sides.

Furthermore, Standard Chartered Bank has committed to invest a large amount of capital for sustainable development in the nation in the near future to provide technology support for Vietnamese partners. This indicates that investment activities will increase and become more substantial moving forward.

According to Kenneth Atkinson, the areas of concern for British businesses relate to investment in education, clean energy, high technology, healthcare, and fintech.

The UK is looking forward to working alongside Vietnam and international partners to support the country in realising its commitments on climate, development, and private finance attraction.

Foreign financial institutions have duly made reasonably optimistic forecasts about the prospects for the Vietnamese economy in the year ahead, with the nation’s GDP growth rate this year forecast at between 6.5% and 6.7%, thanks to the wide coverage rate of the COVID-19 vaccine and economic recovery policies.

Leaving the EU back in January, 2020 has driven the UK into a new phase. Moving forward, investment inflows from the UK into the nation are predicted to see a continued increase, with UKVFTA commitments effectively supporting this investment process in the nation.