Local firms expand investments in developed countries

Overseas direct investments of local firms have been increasing thanks to relaxed investment rules. Notably, local investors have recently expanded to developed countries such as Japan, the U.S., Canada.

Data of the Foreign Investment Agency under the Ministry of Planning and Investment shows that four projects were granted certificates of outbound investment registration during the first month of the year, with total capital investment of US$1.05 million. Of these, two projects worth a total of US$600,000 are in the retail sector, while the two remaining projects focus on communications, information and technology.

Although the pledged capital for outbound investments remains modest, local investors have started investing in developed countries including Singapore, Japan and Finland in January. This means that local firms no longer focus on only traditional investment markets in Laos, Cambodia, or Myanmar.

The number of local companies making overseas investments is forecast to rise in the coming time as the legal corridor for outbound investment and investment procedures has become more relaxed.

The State Bank of Vietnam recently issued Circular No.36/2018/TT-NHNN on lending to outbound investment by credit institutions and foreign bank branches in Vietnam. It will take effect on February 15.

The circular regulates new lending conditions and sets loan limits for borrowers who plan to invest overseas. Borrowers can only apply for loans at credit institutions after they are granted a certificate of outbound investment registration and complete investment procedures in the investment recipient country. In addition, the maximum loan stipulated in this circular make up 70% of outbound investment capital of the borrower.

According to a survey of Vietnam Report, some 45% of local firms expect to make outbound investments in the next five years.

To date, over 1,200 outbound investment projects were recorded throughout the country, with total registered capital exceeding US$22 billion. Many local firms are finding new destinations to expand their business operations overseas.


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