HCM City (VNS/VNA) - Vietnamis among the top three investment destinations in Southeast Asia forSingapore-based companies in the next two years, according to the latest HSBCstudy.

The survey, done by the Singapore BusinessFederation for HSBC, asked 1036 companies about their interest in overseasexpansion.

Eighty-six percent of them are SMEs, defined asthose with an annual turnover of 100 million SGD (73 million USD) or less than200 workers.

Seventy-six percent said they already haveoperations in Vietnam and 30 percent of them expect to expand theirbusiness in the country in the next two years, a rate exceeded only byIndonesia and Malaysia.

Vietnam’s growing consumer market and overallinvestment climate are key drivers for future inbound investment, the surveyfound.

It said 81 percent of respondents who planto invest or expand in Vietnam cited potential customer demand in thecountry, 75 percent highlighted overall investment climate and 63 percentpointed to business costs.

Winfield Wong, country head of wholesalebanking, HSBC Vietnam, said: “Whilst Vietnam’s growing consumer base is alreadywell recognised by Singapore corporations, the report shows that manybusinesses are looking to double down on our demographic dividend.

“Beyond the consumer piece, Vietnam’smanufacturing – whilst already strong - is now entering into the higher-endspace. So while many corporations may base their treasury and other back-officefunctions in Singapore, a lot of revenue-making operations are [carried out in]Vietnam. This is only expected to ramp up with Vietnam climbing up thesupply and value chain.”

Partnership opportunities

Most of the Singapore-based SMEs entering orexpanding in Vietnam will have or are seeking an in-country relationship. Theresearch found more than 63 percent of those surveyed had a distributor orjoint-venture arrangement in Vietnam.

“Most Singapore-based SMEs recognise that therecipe for success in overseas ventures includes selecting the right localpartners and advisers,” Wong said.

“To seize these opportunities, local enterprisesneed to take a proactive stance, by plugging into the network and activelyreaching out to expanding Singapore-based SMEs in advance,” he added.

In 2016 Singapore was the third largest sourceof FDI for Vietnam, accounting for 2.41 billion USD.

As of October last year the island nation hadinvested a cumulative 41 billion USD, according to the Vietnam Trade PromotionAgency.-VNS/VNA