Local companies look to gain footholds in global markets

VOV.VN - To further internationalize operations, many Vietnam local companies are planning to expand their outward foreign direct investment (FDI) in the years ahead, says the Foreign Investment Agency (FIA).

local companies look to gain footholds in global markets  hinh 0

In 2015 they registered total FDI of US$625 million in 102 new business ventures and increased their supplementary investment significantly in another 53 that were already in existence as of the beginning of last year, said the FIA in a recently released report.

The FIA report says the companies in 2015 not only increased the scale of funds committed but “fanned out to new non-traditional markets in the US, Russia, Singapore and Germany.”

“However, the bulk of outward FDI for 2015 was in Laos and Cambodia, two markets where investment has historically been strong.”

They focussed investment on the mining, farming, forestry and aquaculture industries, areas they consider their strong points, says the FIA, while spreading out to other industries such as real estate, banking and insurance.

Phan Huu Thang, former head of FIA and current director of the Foreign Investment Research Centre, said the higher levels of investment, though modest is a step in the right direction.

Local companies have become more willing to invest overseas largely as a result of an amendment to the Law on Investment passed by the NA in 2014 that came into effect on July 1 of last year, said Mr Thang.

Mr Thang underscored the point that the amended law has created a clearer picture of the investment landscape saying it “substantially reduced the risks of investing overseas that previously existed.”

“The revised law along with a raft of free trade agreements have stimulated an eagerness on the part of many local companies to internationalize and bump up their overseas investment in business gambles heretofore considered too precarious.”

As it relates to investment strategy, Mr Thang said the lion’s share of outward FDI is flowing into Laos and Cambodia, more traditional markets local companies feel they have a good understanding of.

But we are seeing more activity in markets in Africa and in North America, Central America and South America along with the Caribbean, particularly with the Vietnam National Oil and Gas Group (PetroVietnam).

“Most recently PetroVietnam received a license to explore for oil and gas in Myanmar,” said Mr Thang, “which is a monumental development.”

Meanwhile, Viettel started to operate in Tanzania and Burundi in 2015, bringing the total number of foreign markets it is operating in to 10, said Mr Thang.  Viettel is actively pursuing expansion plans boasting it plans to be operating in 20 foreign countries by 2020.

Thang said only the oil, gas and telecom business endeavours have been substantive large scale FDI initiatives with most undertakings of local firms having been on a relatively small scale.

However, Tran Huu Huynh, chairman of the Vietnam International Arbitration Centre (VIAC), has a different take.  He said the important thing is that local companies have taken a step in the right direction.

Local companies are laying the foundation for future growth and getting toeholds in foreign markets, said Mr Huynh, which with some innovation and creativity along with experience operating in global markets will most likely quickly turn into footholds.

VOV

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