HCM City at night. — Photo hochiminhcity.vn
HANOI — An article published by US magazine Forbes named Vietnam the hottest investment destination in Asia.
According to the article, Vietnam attracted US$17 billion in FDI commitments last year, arguably the largest for an emerging market relative to its $250 billion GDP.
In the first quarter of 2018, it became the fourth largest Initial Public Offering (IPO) market in the region, surpassing the Republic of Korea (RoK), Singapore and Australia. The realty market in HCM City is booming and GDP is growing at about 7 per cent per year.
The Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) are expected to come into force in the coming months, helping Vietnam further integrate into the global economy. In 2020, the capital Hanoi will host the Formula 1 Grand Prix.
The article said such rapid progress could be due to the fact that the country’s leadership has settled on an economic development vision that focuses on offering highly productive, cost effective labour to manufacture export goods. This tactic has driven record FDI inflows, largely from more mature Asian economies such as Japan, RoK , and Taiwan (China), of which more than 90 per cent goes 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 tensions as foreign companies seek to restructure their supply chains.
The article said the Government’s plan to equitize hundreds of State-owned enterprises (SOEs) has been critical to Vietnam’s growth. The equitization is attracting a flood of portfolio investments across several sectors, most notably retail and healthcare.
According to the writer, investment interest is likely to accelerate following recent legislation drafted by the Ministry of Finance, which stipulates that foreign ownership caps on listed companies – currently set at 49 per cent – will be lifted in 2019.
In addition, it mentioned the country’s young, educated entrepreneurial population of 95 million, which is rapidly urbanizing 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 thriving.