Vietnam created both macroeconomic and social stability which would encourage more foreign investment as investors love the predictable environment.
|Car production at Vinfast's plant. Photo: Pham Hung|
Warrick Cleine, Chairman and CEO of KPMG Vietnam and Cambodia stressed the view in a webinar hosted by HSBC Vietnam on November 3, titled “Vietnam Day- Open for Opportunities” for nearly 400 participants who are international and local investors, business leaders.
According to Cleine, Vietnam’s other advantages are the economic growth story and the government’s engagement with the global community.
“Vietnam is on the right track of quality domestic reform with good quality law and policy, and still the pretty good environment for foreign businesses and investors,” he said.
Vu Van Chung, Deputy General Director of Foreign Investment Agency, Vietnam’s Ministry of Planning and Investment added Vietnam advocates selected foreign investment with quality, efficiency, technology, and environmental protection as the key criteria.
“The Foreign Investment Agency - Ministry of Planning and Investment is committed to accompanying and facilitating the effective, successful, and long-term business investment of foreign investors in Vietnam,” he added.
Sharing Chung’s view, Surendra Rosha, Co-Chief Executive HSBC Asia Pacific called Vietnam one of the “great success stories of the modern era.”
“This is a country that has embraced the opportunities of global trade to carve out a large and growing role in global supply chains while building a thriving domestic economy,” he said.
Recovery at pace
Discussing the recovery of Vietnam’s economy when it started to gradually reopen, Frederic Neumann, Co-Head of Asian Economics Research at HSBC said given the possible Fed’s rate hike, Vietnam would be less likely exposed to high US interest rates due to strong fundamentals and its export-driven economy, although it could be a headwind for economic growth.
Neumann also suggested the rising energy prices and energy crunch can drive inflation up in oil-dependent economies like Vietnam and slow the country’s growth recovery. In addition, energy prices could increase in the coming winter months but is expected to improve next March. Overall, he saw stabilization from the second half of 2022.
Alain Cany, Chairman of Jardine Matheson Vietnam and EuroCham Vietnam, added thanks to strong fundamentals, Vietnam’s economy would gradually rebound at least for the coming six months until its momentum becomes stronger in the second half of 2022.
Cany pointed out that some sectors still have benefited during the pandemic, such as E-commerce with a growth of 18% to reach a revenue of more than US$11 billion in 2020. The market is set to continue growing as consumers become more accustomed to purchasing goods and services online. On the other hand, thanks to the FTAs that Vietnam joined, seafood, coffee, clothes, shoes, and mechanical equipment production and export will also recover soon.
Besides foreign investors, the local private sector suffered lots of difficulties in recent months and eagerly expects the growth momentum to be back on track.
Truong Gia Binh, Deputy Chairperson of the Advisory Council of Prime Minister and Dean of the Private Sector Development Committee (Committee IV), referred to a recent survey of the Committee IV that showed 16% of enterprises closed due to no revenues and working capital, 35.5% of enterprises had to temporarily close due to supply chain disruption, almost all surveyed enterprises suffered labor shortage since workers left for their hometown.
On the other side, Binh noted the positive spirit and confidence to overcome challenges among businessmen. Imports exports revenue remained resilient, reaching $$483 billion, an increase of 24.4% y-o-y. Newly registered FDI has continuously increased and positive GDP growth in the first nine months contributed to setting a brighter outlook for Vietnam’s economy.
Since the government has adjusted Covid policy from this October, the fast movement of economy reopening and going digital has started. Currently, a new financial package to support the economic recovery is being planned while the government has also adopted and applied technology in their Covid control. More solutions to come and the application of AI and technology is also expected to support the situation management and a quick economic recovery at the soonest.
New focuses in the new normal
It seems the economy has found its way to get out of the dark days. The time for business leaders to execute their transformation and new focuses have started. Based on KPMG’s CEO survey conducted from April 2020 to April 2021, Warrick Cleine from KPMG Vietnam and Cambodia said the confidence of corporate leaders has come back and they believed more in the return of normality.
Another change recognized is the shifting mindset of business leaders, from focusing only on employees’ health and safety and business survival back to growth, while some leaders have also turned their attention to organic growth opportunities.
In front of plenty of new opportunities and trends in the upcoming time, EuroCham’s Alain Cany suggested international businesses should keep Vietnam in the middle of their radar screen. The country offers a great domestic market, good opportunities for manufacturing and export at the same time.
With its growing middle-class consumers, which are expected to make up more than half of the population by the end of this decade, it provides a promising growth market for international enterprises in sectors and industries ranging from automobile importers to private education providers, Cany noted.
Corporates should take advantage of a number of FTAs that Vietnam has joined and considered M&A as a popular method to tap into the local market and build partnerships with potential suppliers and partners, he continued.
In agreement with Cany, Binh said that the economy is well-positioned to recover at the soonest and strongly suggested this market for global investors.
“Despite the challenges that we have recently experienced, we are still of the view that the future for Vietnam is bright,” concluded Tim Evans, CEO of HSBC Vietnam, “As we pull out of the Covid restrictions there will be opportunities for those who are prepared for them. Our role as a leading international bank is to ensure that we support our customers locally and internationally to help capture the opportunities that present themselves.”