Gulf Today: Vietnam powers ahead in economic growth
Vietnam’s success in curbing the coronavirus so far, while its Southeast Asia neighbours struggle, is
The Gulftoday of the United Arab Emirates (UAE) has recently published an article including the comments of many foreign experts, in which, Vietnam is ahead of many countries in the region in economic growth and large investment attraction, thanks to the country’s successes in the Covid-19 prevention.
The newspaper quoted the World Bank (WB) director in Vietnam, Carolyn Turk emphasized Vietnam’s successful control of the pandemic that: “The successful management of the pandemic to date has already enabled the country to capture a larger share of global trade and foreign direct investment (FDI) during 2020,” said Carolyn Turk, the World Bank’s country director in Vietnam.
Meanwhile, Chairwoman Jareeporn Jarukornsakul of the WHA Group, a Thai logistics company which has expanded its industrial estate business in Vietnam, said costs are cheap in Vietnam and its government is very quick with investment, allowing provinces to issue their own regulations and investment incentives.
It is cited that Vietnamese Parliament has set an economic growth target of 6% for this year, but Prime Minister Nguyen Xuan Phuc, looking to extend his term or rise up the Communist Party of Vietnam’s ranks, said last month that Vietnam would target 6.5%.
At WHA Group, a Thai logistics firm which has expanded its industrial estate business in Vietnam, Chairwoman Jareeporn Jarukornsakul said investors who had wanted to relocate operations to Thailand from China had not been able to do so because the coronavirus had spread in Thailand.
While infrastructure and regulatory issues are worse in Vietnam than in Thailand, she said, “Costs are cheap in Vietnam and its government is very quick with investment, allowing provinces to issue their own regulations and investment incentives.”
Still, there is much work to be done, even if the country does retain its prowess in handling the coronavirus: Vietnam suffers from a lack of highly-skilled labour, its dated bureaucracy is in need of digitisation and there is an over-reliance on polluting coal imports to fuel development.
But the cocktail of positives flowing through the economy currently has left foreign-invested asset managers in Vietnam able to raise significant amounts, for example, with some reporting oversubscribed funds.
Recently, the Ho Chi Minh City-based Mekong Capital said it had raised 246 million USD for its largest-ever fund – nearly 25 percent more than the original target of 200 million USD.
Dominic Scriven, Chairman of the Vietnamese asset manager Dragon Capital said a combination of the country’s trade deals, more cash in the economy and political stability had underpinned better-than-expected interest across three new funds launched by his firm.
“We were very pleasantly surprised by the market uptake,” said Scriven.
Development was also boosted by the two free trade deals signed last year, including the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading bloc, and an agreement with the UK modelled on the EU-Vietnam Free Trade Agreement (EVFTA), which Vietnam ratified in June.
Vietnam also has bilateral trade deals with both the Republic of Korea and Japan, its largest sources of foreign direct investment, and is a signatory to the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
According to Chief Executive of the EU-Malaysian Chamber of Commerce Sven Schneider, trade deal push has given Vietnam an advantage over some of its regional competitors.
Experts shared the view that Vietnam is well placed to pull ahead of its regional rivals in 2021 as long as it keeps the virus – resurgent in many countries – at bay.
WHA Group’s Jareeporn also said the EVFTA had given Vietnam an advantage. “If an industry needs cheap labour, it’s definitely going to Vietnam,” Jareeporn said.
In the short term, Vietnam is well placed to pull ahead of its regional rivals in 2021, just as it holds a massive Communist Party meeting to select a new leadership later this month.
“It’s safe, the government functions smoothly, and in face of impediments like COVID the country rises to the challenge without hesitation and wins,” Chad Ovel, partner at Mekong Capital, said.
