Vietnam tops emerging markets for greenfield FDI performance index
Vietnam has topped a performance index for green-field foreign direct investment, leading all other emerging markets by a wide margin, according to the Financial Times.
Vietnam ranked number one in a study by FDI Intelligence, an FT data division, scoring 8.14 in the index, far ahead of the second and third countries, Romania and Hungary, as well as its regional competitors Malaysia and Thailand.
Financial Times said that Vietnam’s economy has been growing quickly. Between 2003 and 2014, the country attracted more than 2,000 greenfield FDI projects. Almost half Vietnam’s inward FDI is in manufacturing, attracted by abundant and relatively low-cost labor.
Vietnam has also taken steps to improve its business environment, reducing its corporate tax rate from 25% to 22% as well as establishing a new credit bureau to improve its credit information system, this newspaper commented.
In the FDI index, a score of 1 indicates that a country’s share of global inward greenfield FDI matches its relative share of global gross domestic product; a score greater than 1 indicates a larger share than indicated by its GDP and a score of less than 1, a smaller share.
Vietnam, with a score of 8.14, is attracting more than eight times the amount of greenfield FDI that might be expected given the size of its economy. Vietnam scored the highest rank of all developed and emerging economies that attracted more than 100 greenfield FDI projects in 2014.
The index uses a methodology devised by UNCTAD, the UN trade and development body, for overall FDI and applies it to only greenfield FDI — leaving aside mergers and acquisitions, intra-company loans and other forms of cross-border investment.