Vietnam remains a regional manufacturing hub in electronics, textiles, and footwear, with a growing number of international companies planning to shift their supply chains to Vietnam.

Production at Yen Phong Industrial Park. Photo: Pham Hung

The Finanzmarktwelt (Germany) quoted Tim Lee Lahaphan, an economist at Standard Chartered Bank, in its article on the country’s economic prospects.

According to the article, Vietnam suffered setbacks in the fight against the pandemic last year with the spread of the delta variant, but now the country is completely open, also for foreign visitors.

While the Omicron variant is spreading in Vietnam, the country has chosen to live with the virus, it noted.

In March 2022 Vietnam posted a record trade turnover of US$67.37 billion, in which exports totaled 34.71 billion, surpassing the previous record set in July last year. 

July is traditionally the busiest month of the year as goods and products for Christmas are shipped to Europe and America. The article, therefore, anticipated a new record year in terms of trade revenue for Vietnam.

The Asian Development Bank forecasts that Vietnam's economy will grow by about 6.5% in 2022.

Electronic products - especially mobile phones - form the basis for Vietnam's export boom. This came as Vietnam has further integrated into the value chain rather than just assembling phones in the past.

The textile industry is also in good shape. This year, the manufacturing activities of Vietnamese apparel companies continued to show strong growth. According to the president of the Vietnam Textile and Garment Association, Vietnam exported textile and garment products worth nearly $8.2 billion in the first two months of this year, up 59% year-on-year. In the first quarter of this year, the industry is expected to generate exports of around $12.7 billion.

Representative of the Ho Chi Minh City Clothing, Textiles, Embroidery, and Knitting Association said many textile and apparel companies have received enough orders to produce by the middle of this year or even September.

More and more companies now have to turn down orders because they can't find enough workers to process the orders, it said.

Companies in Vietnam's timber industry have also received a large number of orders, indicating that some of the timber processing companies are working at full capacity into the third quarter. 

Vietnam is currently one of the world's largest exporters of wood products.

According to Tim Lee Lahaphan, an economist at Standard Chartered Bank, more and more international companies are planning to shift their supply chains to Vietnam, a regional manufacturing hub in electronics, textiles, and footwear.

Domestic tourism ticking up

Not only foreign trade and manufacturing are booming, but Vietnamese domestic tourism is also gradually picking up. 

Last weekend, Vietnam marked the start of Labor Day, which lasted until May 5. Many flights and trains to tourist destinations are almost fully booked - the number of passengers traveling by plane during the long weekend holiday was estimated to have increased by 25 to 30% compared to usual and by about 90 to 95% compared to the same period last year.

Vietnam announced on March 15 that it would reopen its borders to international tourists and fully resume international tourism activities from that day.

Tourism is considered vital to the Vietnamese economy. In 2019 before the pandemic, tourism accounted for 9.2% of Vietnam's gross domestic product (GDP) and received more than 18 million international tourists throughout the year. Since the beginning of this year, the Vietnamese government has hoped to encourage tourism to recover soon and make up for the losses of the past two years.

Zhou Shixin, an associate researcher at the Asia-Pacific Research Center of the Shanghai Institute of International Studies, stressed that the opening up of international travel will support the return of international managers and will also benefit Vietnam's manufacturing industry.