SINGAPORE (Aug 6): Vietnam is the ultimate Southeast Asian success story.
Freed from the ravages of war just some two generations ago, it has emerged from conflict as one of the fastest-growing economies in the region.
Here are three reasons why should investors look to Vietnam for the next investment opportunity.
1. Bounced back from hard times
After the unification of the country under the current administration, the introduction of economic and political reform in 1986 – called the Đổi Mới – spurred the country to grow rapidly.
The Asian Financial Crisis took its toll back in 1998, but the country has since bounced back.
Driven by the twin engines of export manufacturing and domestic demand, its GDP has grown from US$36.6 billion in 1987 to US$255 billion in 2018.
The World Bank also forecasts Vietnam’s GDP growth for 2019 at a robust 6.6% – a healthy figure compared to the rest of the region, where average growth is estimated at 5.1%.
It also notes that the extreme poverty rate is estimated to have declined to below 3%.
2. Foreign-friendly policies
The Vietnamese government has been welcoming foreign investment with open arms. In fact, the country’s top leaders credit foreign investment as the driver of growth in Vietnam.
And market experts agree.
ASEAN+3 Macroeconomic Research Office lead specialist Luke Hong and economist Jade Vichyanond say that some of the major advantages in investing in Vietnam include the government’s favourable treatment of foreign companies, from tax incentives to land use rights.
“It also benefits from competitive labour costs, geographic proximity to key regional markets, and access to global markets through multiple free trade agreements,” they note. “Furthermore, serving the country’s domestic market is fast becoming another key incentive for investing in Vietnam in light of the country’s burgeoning middle class and rising income level.”
3. Growing manufacturing and tech powerhouse
Enterprise Singapore has identified manufacturing and tech as some key segments in Vietnam.
“Vietnam’s abundant labour, competitive wages, good network of Free Trade Agreements and connectivity to global centres of demand make it a choice location for manufacturing,” say Leon Cai and Hong Anh Bui Thi, the agency’s directors in Ho Chi Minh City and Hanoi, respectively.
“It is well connected to existing consumer and manufacturing hubs in Asia, making it easy for manufacturers to integrate Vietnam into existing supply chains,” they add.
Additionally, costs in Vietnam are relatively competitive, making it a viable alternative for manufacturing activities.
Meanwhile, the tech scene is also exciting.
Justin Nguyen, Vietnam-based partner at Southeast Asia early-stage tech venture capital firm Monk’s Hill Ventures, says the time is now for tech start-ups and companies in Vietnam.
“All that GDP growth has allowed consumption levels to reach a point where venture-sized returns are quite honestly possible,” he adds.
Find out more about the secrets to Vietnam’s success and where the opportunities are in our cover story, “Vietnam: Asia's next top model of growth”, in The Edge Singapore (Issue 893, week of Aug 5), available at newsstands now. Subscribers can log in to read the story here. Not a subscriber" https://www.theedgesingapore.com/subscribe" target="_blank">here.
