Foreign investment in Vietnam has dropped by about a third since September 2011, with some blaming a weakening economy, inflation, high debt, and the fallout from a property market crash.

With sustainable growth around 5% a year, Vietnam should be able to reduce the risk of high inflation.

These economic woes have also led to political tensions between Prime Minister Nguyen Tan Dung and President Troung Tan Sang. These may surface at the Communist Partys Central Committee meeting currently taking place, and there will certainly be discussions during the meeting about how the weakening Vietnamese economy can be recharged.

Whatever the outcome of the meeting, we can still expect to see plenty of ongoing interest in Vietnam by Thai investors, as most businesses with a presence in the country of 90 million will continue to focus on their long-term strategy and creating real value.

According to the Thai Consulate in Ho Chi Minh City, Thailand is the 11th largest investor in Vietnam and the third largest among Asean members, with total investment value of US$5.9 billion (182 billion baht). This is concentrated in the processed foods, paper, plastic, animal feed and motorcycle parts sectors.

I am confident that Vietnam will bounce back from its recent difficulties, and more quickly than people think. Even though the pace of economic growth in Vietnam is slowing, a World Bank forecast released at the beginning of October is still forecasting 5.2% growth in 2012 and 5.7% expansion in 2013.

Going forward, I believe there are four key areas for consideration by investors:

1. Vietnam is changing: In the past, corrupt loans to inefficient state- and privately owned companies resulted in a rise in non-performing loans and pressure on the wider economy. The Vietnamese government is now taking steps to remedy these problems in the banking sector. President Truong Tan Sang has given interviews and public speeches pledging action against corruption and I believe this, more than any other factor, can support confidence that Vietnam will provide solid medium and long-term investment growth.

2. Growth is stable: The current growth rate of around 4% is predicted to average out at around 5% over the next two years. This is a sustainable level of growth, and will keep excessive inflation at bay, while also helping Vietnam prepare for the economic integration prompted by the Asean Economic Community.

3. Vietnam is a springboard to opportunity lying just beyond its borders: Laos and Cambodia are dynamos of growth and Vietnam can provide a gateway for Thai investors wishing to access these markets, directly or through Vietnam subsidiaries.

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Don’t turn your back on Vietnam