Hesitant to invest abroad

Outbound investment is slowing, but it is only a matter of time. Many large investors are still doing well in foreign markets and plan to accelerate their search for opportunities in international markets.

Although it is the youngest network operator in Myanmar, Mytel has affirmed its position.

Sweet fruits from bold investment decisions

Viettel Global Investment Joint Stock Corporation (Viettel Global) has just announced its consolidated financial report for the second quarter of 2024. Accordingly, the company has achieved impressive business results, with sales and service revenue reaching nearly VND 8,700 billion, an increase of 27% compared to the second quarter of 2023. This is also the quarter with the highest revenue ever for Viettel Global.

Notably, in this quarter, all 9 companies that Viettel Global invested in abroad achieved high growth rates. For example, Lumitel in Burundi increased by 32%, Unitel in Laos increased by 30%, Movitel in Mozambique increased by 23%, Mytel in Myanmar increased by 21%, Natcom in Haiti increased by 18%, Telemor in East Timor increased by 15%...

As one of the largest telecommunications companies in Vietnam, in recent years, Viettel has continuously expanded its investment scale abroad and reaped many "sweet fruits". Not stopping there, information shows that Viettel is continuing to seek investment and business opportunities in other markets.

Vietnam's leading investors, including Vingroup, TH, FPT , Vinamilk, etc., affirmed that they will continue to expand their investment activities abroad. In mid-May 2024, TH Group started the Dairy Cow Farming and Milk Processing Project with a total investment of VND 5,200 billion in the Far East (Russia), to continue to realize the investment plan of USD 2.7 billion in this large market.

Similarly, Vinamilk has just announced its Q2/2024 business results, with total consolidated revenue reaching a record high of VND16,665 billion. This result is said to be supported by both domestic and foreign business activities. Of which, counting only overseas branches in Cambodia and the US, namely Angkormilk and Dridtwood, net revenue reached VND1,384 billion, up 21.8% over the same period and higher than the 9.6% increase in Q1/2024.

FPT also had equally impressive business results. In the first 6 months of the year, the foreign IT services segment of this technology giant increased by 29.8%, thanks to strong growth from the Japanese market (up 35.2%) and Asia-Pacific (31.9%).

To expand its market, FPT has recently been continuously carrying out mergers and acquisitions (M&A) deals. In March 2024, FPT acquired 100% of the capital of Next Advanced Communications NAC Co., Ltd. (NAC), a Japanese information technology services company, and opened new branches in foreign markets.

A few days ago, FPT's 17th office in Japan officially opened. "Japan not only plays a decisive role in FPT's journey to 'go global', but has also been our core market for more than two decades. Success in Japan has become the foundation for FPT to confidently conquer other challenging markets such as the US, Europe and globally," said Ms. Chu Thi Thanh Ha, Chairwoman of FPT Software.

Many other Vietnamese investors are also achieving positive investment and business results in foreign markets. In mid-July 2024, while accompanying President To Lam to visit Laos and Cambodia, Minister of Planning and Investment Nguyen Chi Dung visited and worked at a number of Vietnamese investment projects in these two countries, such as projects of Greenfeed Vietnam Joint Stock Company; Vinamilk; Vietnam Rubber Industry Group (VRG)...

Of which, VRG and its member units have invested in 23 projects in Laos and Cambodia, with a total investment capital of 1.4 billion USD. In 2023, VRG's revenue in Laos and Cambodia will reach about 5,000 billion VND.

Meeting with businesses, Minister Nguyen Chi Dung highly appreciated the fact that Vietnamese investors have boldly invested and done business in Laos and Cambodia, bringing efficiency and high added value, while contributing to the socio-economic development of the localities.

Hesitant to invest abroad

Overseas investment activities of Vietnamese enterprises are bearing fruit. Moreover, in addition to traditional investors, new investors have appeared, with large-scale projects, such as TH Group (investing in Russia, Australia), VitaDairy Milk Company (investing in Russia), Vingroup Corporation (investing in the US, Singapore, etc.)

However, in recent years, due to the general difficulties of the global economy, as well as Vietnam, foreign investment of Vietnamese enterprises has tended to decrease. If in 2022, Vietnamese enterprises registered to invest 534 million USD abroad, then last year, the figure was only nearly 421 million USD, down 22% compared to the previous year. Meanwhile, in the first 7 months of this year, according to data from the Foreign Investment Agency (Ministry of Planning and Investment), the total registered capital for foreign investment, including newly registered and increased capital, only reached nearly 150.7 million USD, equal to 47% of the same period last year.

Not only did the number of projects and registered investment capital decrease, but capital and profits transferred back to the country also decreased. The figure for 2023 was 345 million USD, down 23%.

There is only one positive point, which is that recently, in addition to traditional investment markets, a number of Vietnamese enterprises have invested in the US, the Netherlands, Europe... and a number of other markets. However, as of July 20, 2024, the localities receiving the most investment out of the total capital of nearly 22.27 billion USD registered for foreign investment of Vietnam are still Laos (24.7%); Cambodia (13.1%); Venezuela (8.2%)...

However, even with traditional markets such as Laos and Cambodia, according to Minister Nguyen Chi Dung, investment results are still modest, the scale of investment capital tends to decrease, there are not many more large, strategic projects, creating a breakthrough in investment and economic cooperation between Vietnam - Laos and especially Vietnam - Cambodia...

“Some large projects have difficulties and problems that have not been resolved in a timely manner. The potential and space for investment cooperation is being narrowed in some areas, such as hydropower, mineral exploitation and processing, large-scale agriculture and forestry…”, Minister Nguyen Chi Dung once emphasized.

At present, efforts to stimulate the flow of investment capital from Vietnam abroad are still being made. Mr. Vu Van Chung, Deputy Director of the Foreign Investment Agency, said that the recent slowdown in overseas investment by Vietnamese enterprises is only temporary.

“The reason is that the economy is difficult, investment, production and business activities of enterprises are still difficult. In the long term, the potential for overseas investment activities will be more positive,” said Mr. Vu Van Chung.

The above assessment is probably similar to the results of a survey recently published by UOB Bank. Accordingly, UOB said that despite the difficult economic situation, nearly 90% of Vietnamese enterprises surveyed expressed interest in expanding their business abroad. Up to 2/3 of them said that the top motivation was to increase revenue. And the market that businesses want to target is ASEAN, in which Thailand, Singapore, and Malaysia are important choices.