The Southeast Asian country came top in the second annual study of 14 countries by fDi Intelligence, an FT data division, which looked at inbound greenfield investment in 2015 relative to the size of each country's economy.
Vietnam scored 6.45 in the index, punching almost 6.5 times above its economic weight and far ahead of next placed Hungary and Romania, and its regional competitors Malaysia and Thailand, as the table shows.
Vietnam's performance cements several years of efforts to make its economy more receptive to investment.
According to the World Bank's latest Doing Business report, improvements include reducing the time taken to register a company and to get it connected to the electricity supply, better access to information on credit and cuts in the rate of corporate income tax, as well as making it easier to pay.
Nevertheless, the pace of investment into Vietnam has slowed. The country's score fell 1.41 points — the biggest fall of any of the 14 countries — as its share of global greenfield FDI projects fell slightly (from 1.89 per cent to 1.77 per cent) and the number of projects it attracted fell from 244 in 2014 to 224 in 2015. At the same time, Vietnam's share of global gross domestic product increased slightly, from 0.23 per cent to 0.24 per cent, as the economy grew almost 10 per cent in nominal terms in 2015.
Just under half of the projects it attracted last year (47.8 per cent) were in manufacturing. Financial services was the top sector, followed by electronic components.
Hungary, ranked second in the index, had the largest annual increase of 0.65 points because of increased greenfield FDI (+10.7 per cent) and a sharp decline in GDP (-7.6 per cent). Hungary offers investors particular expertise in car components and industrial equipment sectors. Over half (52.7 per cent) of its total projects received in 2015 were in manufacturing.
Of the 14 EMs analysed, 10 scored more than 1 and four scored less. A score of 1 indicates that a country's share of global inward greenfield FDI matches its relative share of GDP. Vietnam, with its score of 6.45, is attracting more than six times the amount of greenfield FDI that might be expected given the size of its economy.
The index uses a methodology devised by Unctad, the UN trade and development body, for overall FDI and applies it to only greenfield FDI — leaving aside mergers and acquisitions, intracompany loans and other forms of cross-border investment.
China has a comparatively small share of global greenfield FDI relative to GDP. Its 2015 score fell once again to 0.41 — a second year-on-year decline.
In developed markets, the study has been running for 13 years. Of the top five countries globally for economic output, only the UK (2.21) and Germany (1.48) have a score greater than 1. The US scored 0.49 and Japan 0.22, with China at 0.41 making up the five.
Greenfield FDI data used in the index is derived from fDi Markets, and excludes investments in the retail sector. The 2015 index analysed data for 67 countries, all of which received at least 25 greenfield FDI projects in the year. The 2014 figures were revised from last years' index as further project information became available in 2015/2016. Gross domestic product figures were also revised based on more recent data.
Glenn Barklie (Financial Times)
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