Vietnam leaped 12 places in the Economist Intelligence Unit's (EIU) newest business environment rankings while Asia is "reorienting away from China".
The latest business environment rankings (BER) of EIU measure the attractiveness of doing business in 82 countries and territories on a quarterly basis, using a standard analytical framework with 91 indicators.
The biggest improvements over the past year are in the business environments of Vietnam, Thailand, Belgium, Sweden, India, and Costa Rica.
“Vietnam is our overall biggest mover worldwide, climbing 12 spots in the rankings, while Thailand improves by 10 places and India by six. Vietnam and Thailand, which have favorable policies for foreign investors, are benefiting from firms pursuing a China+1 policy of having supply chains in both China and another Asian market,” EIU wrote in its May report “Assessing the best countries for doing business”.
“Vietnam’s score rises on the back of an improving economic outlook, and Thailand’s as a result of greater economic stability,” the study said.
EIU said India has historically struggled to attract manufacturing investment but is now well-placed to benefit from similar trends. A strong, stable economy and access to a large labor supply form the basis of its appeal to investors.
EIU is the research and analysis division of the Economist Group, providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports.
Vietnam attracted almost $8.9 billion in foreign direct investment (FDI) in the first four months of this year amid prolonged global economic headwinds, down 17.9% year-on-year.
Of the 77 countries and territories investing in Vietnam, Singapore led the pack with $2.2 billion in the period, or over 24.7% of the total, down 29.5% year-on-year. Japan ranked second with nearly $2 billion, accounting for 22.1% of the total, 2.63 times higher than the same period last year, followed by mainland China with $752 million (8.5%), down 30%; Taiwan; Hong Kong, and South Korea.
The number of newly-registered FDI projects reached 750 with total investment capital of $4.1 billion, up 65.2% and 11.1%, respectively.
International ratings agency S&P Global said on May 4 that the Vietnamese manufacturing sector saw a further decline in April as demand remained subdued, with both output and new orders falling for the second month running.
S&P Global’s May 2023 report shows Vietnam’s manufacturing Price Managers' Index (PMI) score dropped to 46.7 in April from 47.7 in March and 51.2 in February. The score of 46.7 was the lowest in four months.