UOB Survey: Vietnam is the destination of choice for Malaysian enterprises expanding into Southeast Asia

According to the United Overseas Bank (UOB) Asian Enterprise Survey 2016[1], close to two in five (38 per cent) Malaysian companies chose Vietnam as their preferred Southeast Asia expansion destination in the next three to five years.

Malaysian businesses said they are drawn to Vietnam’s political stability (44 per cent), large and growing customer demand (42 per cent) and favourable tax and regulatory environment (32 per cent).  Its economic growth rate of six per cent in 2016[2] and its young workforce where 60 per cent of its 90 million-strong population are under 35 years old[3] make the country an attractive investment destination.

Mr Wong Kim Choong, Chief Executive Officer of United Overseas Bank (Malaysia) Bhd (UOB Malaysia) said the findings of the UOB Asian Enterprise Survey 2016 reaffirmed the entrepreneurial spirit of Malaysian businesses as they continue to expand beyond their home market in search of growth and trade opportunities.

“Malaysian investments into 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,” Mr Wong said.

 Deepening ties with Vietnam

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. Most recently, on 23 March 2017, 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, thereby connecting clients to cross-border opportunities through UOB’s extensive regional network. UOB’s dedicated Foreign Direct Investment (FDI) Advisory Unit in Vietnam, its ninth unit in the region[4], will continue to offer seamless and integrated services to clients expanding their businesses within Vietnam.

Last week, UOB Malaysia collaborated with the Vietnam Singapore Industrial Park to host a half-day seminar entitled Vietnam in 2017: Opportunities for Foreign Direct Investments. In 2016, Vietnam received a record US$15.8 billion of investment inflows and in the first two months of 2017, the country attracted US$3.4 billion of foreign direct investment, up 21.5 per cent from the same period in 2016[5].

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.

“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,” Mr Wong said.

The UOB Asian Enterprise Survey 2016 found that 27 per cent of Malaysian businesses do not expand abroad because they lack local business contacts, while others are uncertain about operating in the local regulatory and tax environment (25 per cent).

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.

For further information about the UOB FDI Advisory Unit, please visit www.uob.com.sg/corporate/FDI/.

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 About United Overseas Bank (Malaysia) Bhd

United Overseas Bank (Malaysia) Bhd (UOB Malaysia) is a subsidiary of Singapore-based United Overseas Bank Limited and has had a presence in Malaysia since 1951.  UOB Malaysia offers an extensive range of commercial and personal financial services through its branches, subsidiaries and associate companies: commercial lending, investment banking, treasury services, trade services, cash management, home loans, credit cards, wealth management, and bancassurance products.

In line with the UOB Group’s regional corporate social responsibility initiatives focusing on children, education and the arts, UOB Malaysia has organised the annual UOB Heartbeat Run since 2008 to raise funds for charity. In 2011, UOB Malaysia established the inaugural Painting of the Year Competition and Exhibition.

For further information, please visit www.uob.com.my.

 [1] The UOB Asian Enterprise Reports 2016 interviewed 2,500 key financial decision makers of Asian enterprises from Malaysia] to explore how they are capitalising on business opportunities amid global and regional economic trends and trade flows. Malaysian businesses included in the survey had to be in operation for at least three years with an annual sales turnover of at least RM15 mil (US$ 3.5 mil)

[2]Global Economic Prospects, East Asia and the Pacific, World Bank, 10 January 2017

[3] Doing Business In Vietnam, International Enterprise Singapore

[4] UOB has dedicated FDI Advisory Unit teams in China, Hong Kong, India, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam

[5] FDI hits USD3.5 billion in the first two months of 2017, Vietnam Ministry of Finance e-Portal