Workers at an electronic spare part manufacturing plant in Vietnam (Source: VNA)
According to the article, Vietnam attracted USD17 billion in FDI commitments last year, arguably the largest for an emerging market relative to its 250-USD-billion GDP, the magazine said.
In the first quarter of 2018, it became the fourth largest Initial Public Offering market in the region, surpassing the Republic of Korea (RoK), Singapore and Australia. The realty market in Ho Chi Minh city is booming and GDP is growing at about 7 percent per annum.
It said the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and EU-Vietnam Free Trade Agreement (EVFTA) are expected to be ratified in the coming months, helping Vietnam further integrate in the global economy. Meanwhile, in 2020, the capital Hanoi will host the Formula 1 Grand Prix.
Explaining the reason behind such progresses, the article pointed to the fact that the country’s leadership has agreed on an economic development vision that focuses on offering highly productive, cost effective labor for labor-intensive export manufacturing. This has driven record FDI inflows, largely from more mature Asian economies such as Japan, the RoK, and Taiwan (China), of which over 90 percent are going into manufacturing. It said Vietnam has become integral to the global supply of many goods, from smartphones and electronics to catfish and cashews. The country is also poised to be a major beneficiary of the ongoing US-China trade tension, as foreign companies seek to restructure their supply chains.
The article noted the government’s plan to equitise hundreds of state-owned enterprises (SOEs) has been critical to Vietnam’s growth story. It said the equitisation is attracting a flood of portfolio investment across several sectors, most notably consumer and healthcare. According to the writer, such investment interest is likely to accelerate, following recent legislation drafted by the local Ministry of Finance, which stipulates that foreign ownership caps on listed companies - currently at 49 percent - will be lifted in 2019.
In addition, it mentioned the country’s young, educated entrepreneurial population of 95 million, which is rapidly urbanising and experiencing real spending power for the first time.
The article said it is easy to understand why international brands like Apple, Starbucks and McDonalds are betting big on Vietnam, adding that the country’s tech scene is also thriving./.