Over 40% of Swedish firms in Vietnam plan expansion

Up to 44% of Swedish companies operating in Vietnam have plans to increase their investments over the next 12 months as they seek further opportunities in one of the fastest growing economies in Asia, a survey has shown.

“The country is today considered one of the most open countries in Asia in terms of FDI receipts, owing to its economic reforms and integration with the global economy,” stated the business climate survey for Swedish companies in Vietnam 2023, jointly carried out by Business Sweden and the Swedish Embassy in Vietnam.

The Vietnamese government has a special focus on investment incentives and encouraging foreign investment, especially in prioritized industries and businesses. Moreover, transportation infrastructure, industrial parks, export processing zones, and economic zones have seen consistent investment in upgrades to meet the demands of upcoming investors, it added.

Swedish companies see Vietnam as one of the most attractive markets in Southeast Asia. “With a population of 100 million and rapidly expanding middle classes in Asia-Pacific, Vietnam is one of the key markets in Southeast Asia,” the survey noted.

In the professional services area in particular, no companies are planning to leave the market, while 56% reported expansion plans in Vietnam.

However, companies in the consumer segment showed the most pessimistic view of the market, as only 25% of them had plans to further invest in Vietnam, while 17% were planning to leave the market.

The survey found that 62% of the Swedish companies made a profit in 2022 while 8% incurred a loss.

In line with the conservative outlook for Vietnam's economy in 2023, Swedish companies expressed their concern about their businesses in Vietnam, with only 47% expecting a higher turnover, compared to last year’s responses of 70%. Moreover, 39% of Swedish businesses forecast a loss in 2023, which was triple last year’s figure.

While some uncertainties remain, businesses are still hoping for a better performance in the second half of the year as China has relaxed its lockdown, which might help Vietnam increase its trade value.

Although most respondents remained positive about Vietnam’s business climate, they agreed that an improvement in the business climate is needed to keep investment sentiment strong. Their biggest concerns were customs procedures, financial access, state aid/subsidies, local regulations, and protection of intellectual property.

An HSBC survey released on September 8 has found that about 53% of 880 corporate respondents are prioritizing growth in Vietnam over the next two years to capitalize on opportunities as the country has shown impressive economic resilience. It says that among respondents who have not yet established operations in Vietnam, 13% plan to enter the country in the next two years.

According to a survey conducted by EuroCham in Q2, 48% of European businesses expect to increase their investments in Vietnam by the end of Q4/2023.