Vietnam has topped the 2015 emerging market performance index for greenfield foreign direct investment.

The south-east Asian country ranked number one in the annual study by fDi Intelligence, which examined inbound greenfield investment in 2015 relative to the size of each country’s economy. Results were first published in the Financial Times' EM Squared emerging markets news service. Vietnam scored 6.45 in the index, far ahead of next-placed Hungary and Romania, and its regional competitors Malaysia and Thailand.

According to the World Bank's Doing Business 2016 report, Vietnam made several improvements to its business environment, including: reducing the time taken to register a company; reducing the time taken to establish an electricity connection; expanding borrower coverage to improve its credit information system; reducing the corporate income tax rate; and making procedures for paying much easier.

Although Vietnam was head and shoulders above the other emerging markets, its lead has shrunk. In fact, it witnessed the largest annual drop in score of any of the 14 emerging market economies, at -1.41 points. Seven other markets also observed a fall in performance compared to the previous year.

Greenfield foreign investors created 224 projects in Vietnam in 2015, down from 244 in 2014. Almost half (47.8%) of these were manufacturing-based. Financial services and electronic components were the country’s top sectors for inward greenfield FDI.

The country’s 8.2% decline in investment projects certainly hit its performance index score. However, arguably its strong gross domestic product (GDP) growth made a greater contribution, increasing by almost 10% in nominal terms in 2015.

On the other hand, Hungary – ranked second in the index – saw the largest annual increase of 0.65 points due to increased greenfield FDI (+10.7%) but a sharp decline in GDP (-7.6%). Hungary offers investors particular expertise in automotive components and industrial equipment sectors. More than half (52.7%) of the country’s total projects received in 2015 were manufacturing-based.

Of the 14 emerging markets analysed, 10 had a score greater than 1, while four had a score of less than 1. A score of 1 indicates that a country’s share of global inward greenfield FDI matches its relative share of global gross domestic product; a score greater than 1 indicates a larger share than indicated by its GDP, and a score of less than 1 indicates a smaller share. Vietnam, with a 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.

China has a comparatively small share of global greenfield FDI relative to GDP. Its 2015 score fell once again, to 0.41, continuing its year-on-year decline. Of the top five countries globally for economic output, only the UK (with 2.21) and Germany (1.48; its peak over the 13 years of analysis) have a score greater than 1. The US (0.49), China (0.41) and Japan (0.22; the lowest ranked country) all have scores of less than 1.

The index uses a methodology devised by UN trade and development body Unctad for overall FDI, and applies it to only greenfield FDI, leaving aside mergers and acquisitions, intracompany loans and other forms of cross-border investment.

Greenfield FDI data used in the index is derived from fDi Markets, an FT data service, and excludes retail investments. The 2015 index analysed data for 67 countries, all of which received at least 25 greenfield FDI projects in 2015. The 2014 figures were revised from last year’s index as further project information became available in 2015/2016. GDP figures were also revised, based on more recent data.