ABOUT two in five Malaysian companies have chosen Vietnam as their preferred South-East Asia expansion destination in the next three to five years.
That is one of the findings from the United Overseas Bank (UOB) Asian Enterprise Survey 2016.
According to the survey, 44% of Malaysian businesses said they were drawn to Vietnam’s political stability, 42% saw opportunity in the large and growing customer demand while 32% pointed to its tax and regulatory environment as the reason.
Other factors making Vietnam an attractive investment destination to Malaysian companies are its economic growth rate of 6% in 2016 and its young workforce in which 60% of its 90 million population are under 35 years old.
UOB Malaysia chief executive officer Wong Kim Choong said the findings of the UOB Asian Enterprise Survey 2016 reaffirmed the entrepreneurial spirit of Malaysian businesses as they continued to expand beyond their home market in search of growth and trade opportunities.
“Malaysian investments in Vietnam stem largely from export-based industries such as manufacturing, healthcare, pharmaceuticals, construction and real estate.
“These industries are keen to extend their customer base beyond domestic shores, and are drawn to Vietnam’s favourable business conditions and growing middle class with increasing spending power.
“Malaysian businesses are also attracted to the opportunities that will open up further afield through Vietnam’s free trade agreements with the European Union and the Eurasian Economic Union,” he said.
UOB has recognised the strategic importance of Vietnam since 1995 when it opened a foreign bank branch in the country serving mainly the corporate sector.
In March, UOB received preliminary approval from the State Bank of Vietnam to establish a foreign-owned subsidiary bank in Vietnam – the first Singapore bank to be able to do so.
The licence will enable UOB to expand its branch network in Vietnam beyond the existing branch in Ho Chi Minh City, connecting clients to cross-border opportunities through UOB’s extensive regional network.
UOB Malaysia collaborated with the Vietnam Singapore Industrial Park to host a half-day seminar entitled “Vietnam in 2017: Opportunities for Foreign Direct Investments.”
The seminar provided insight into the opportunities for businesses expanding into Vietnam and advice on how UOB Malaysia could assist them in their journey.
Delegates were guided through the practical aspects of expanding into Vietnam, including how to register a company and how to comply with local regulatory requirements.
The event was attended by close to 80 delegates from the Malaysian manufacturing, technology and consumer goods industries.
In 2016, Vietnam received a record US$15.8bil (RM69.9bil) of investment inflows and in the first two months of 2017, the country attracted US$3.4bil (RM15bil) of foreign direct investment, up 21.5% from the same period in 2016.
“UOB’s unique combination of a local presence in Malaysia coupled with our regional network and deep understanding of Asian economies put us in a good position to help our customers lay a strong foundation for their intra-regional growth and expansion plans.
“Our FDI advisory teams throughout Asia enable us to provide Malaysian enterprises with services that go beyond banking.
“This includes assisting our customers to establish foothold in a new market by connecting them with reputable administrative, legal and tax advisory services on the ground,” said Wong.
The UOB Asian Enterprise Survey 2016 also found that 27% of Malaysian businesses did not expand abroad because they lacked local business contacts, while 25% of them were uncertain about operating in the local regulatory and tax environment.
Through its on-the-ground expertise and relationships with various government agencies, business associations and professional service providers throughout the region, UOB Malaysia is well positioned to deliver seamless business solutions that enable Malaysian enterprises to thrive overseas.