What does the world say about Vietnam's economy in the context of the pandemic?
(Baonghean.vn) - The Covid-19 pandemic is happening globally and seriously affecting the economic growth of all countries, including Vietnam. However, the world media is still optimistic that if it knows how to take advantage of its own advantages, the Vietnamese economy will overcome the challenges posed by the pandemic, becoming a destination for many foreign investment flows.
POSSESS MANY STRENGTHS
INTHEBLACK - CPA Australia's business magazine published monthly in 100 countries and with a digital edition - said in an article in August that Vietnam's demographics and strong manufacturing base developed over the past two decades have put it in a good position to meet current challenges.
 |
| The World Bank forecasts Vietnam's economic growth in 2021 with optimism (in photo: A corner of Ho Chi Minh City). Photo: Document |
Accordingly, before the World Bank's forecast ofeconomic growthVietnam's GDP growth in 2021 is at the threshold of 6 - 6.5%, Warrick Cleine - CEO of KMPG Vietnam said that it is not an unbelievable number, and analyzed that success can come based on 4 main factors.
First, throughout 2020 and early 2021, Vietnam implemented better border controls and tracing measures than most countries, including its Southeast Asian counterparts.
Second, Vietnam is benefiting from more than two decades as a major player in global trade and manufacturing.
Third, Vietnam is less dependent on the tourism industry than its neighboring countries.
Fourth, the young population is fueling a strong domestic economy, acting as a buffer against the global downturn.
Meanwhile, Michael Kokalari, chief economist at investment firm VinaCapital, said he could not see any immediate threat to Vietnam’s manufacturing capacity from its Southeast Asian neighbors. For example, wages in Vietnam are much lower than in Thailand, while bottlenecks inlogisticsThis is Indonesia's problem, while high costs and an aging workforce are challenges facing Malaysia, not to mention the fact that Vietnamese people work very hard.
 |
| An article by INTHEBLACK magazine stating that Vietnam is well-positioned to overcome current challenges (left) and an article on the prospects of attracting investment to Vietnam on Digitimes. |
According to the article on Asianews, while the pandemic is complicated, the good news is that Vietnam is really showing its ability to perform multiple tasks. One of the examples that proves this is the positive trend in the relationship with the US under President Joe Biden. In July, the two sides reached an agreement, which confirmed that Vietnam is bound under the Articles of Agreement of the International Monetary Fund to avoid manipulating its exchange rate to prevent an effective balance of payments adjustment or to gain an unfair competitive advantage and will not allow any competitive devaluation of the Vietnamese dong. This commitment is said to facilitate development.Vietnam-US bilateral economic relationsin the near future.
Economist Rajiv Biswas at IHS Markit Asia-Pacific also said that even as Vietnam is trying to increase its vaccination rate, it continues to attract investors thanks to its potential and competitive strengths.
“Vietnam will continue to benefit from its relatively low manufacturing costs relative to China’s coastal provinces, where manufacturing wages have risen rapidly over the past decade. Second, Vietnam has a relatively large, educated workforce compared to many of its Southeast Asian competitors, making it an attractive hub for multinational manufacturing companies.”
 |
| Da Nang, the largest city in the central region and one of the country's most important ports. Photo: nhandan.vn |
INVESTMENT ATTRACTION
A report by KPMG, the world’s largest professional services provider, titled “Investing in Vietnam: Redrawing the Horizon, 2021 and Beyond”, stated that in 2017, the foreign direct investment sector contributed 40% of Vietnam’s GDP. In 2019, the total registered capital was 17 billion USD, of which manufacturing accounted for 72%. The government has issued favorable laws and regulations to improve the investment and business environment.
KPMG said this means “anything related to Vietnamese consumers” is an investment opportunity, alongside sectors such as financial services and real estate development. Given Vietnam’s export strengths, the expert believes industrial parks and logistics operations will attract corporate and private equity investors, explaining that these are attractive sectors that will not decline in value in the future.Covid-19 crisis.
Taiwan-based technology news site Digitimes recently confirmed that, despite the impact of the Covid-19 pandemic, Vietnam is still continuously attracting foreign investment in the electronics industry. Foreign electronics companies still maintain factories in the North despite the ongoing pandemic. In addition, Vietnam's semiconductor industry is expected to grow strongly in the next 5 years.
 |
| Vietnam is still chosen by many foreign investors at present. Illustration photo: Document |
Fitch Solutions also has a similar assessment, that in the context of Covid-19, Vietnam is still chosen by many foreign investors as a destination to build production facilities, especially in the electronics sector. About 65% of foreign electronics enterprises set up production facilities in the Northern localities, while about 30% build factories in the South, the rest are located in the Central region. According to a report by Technavio, a global technology research and consulting company, Vietnam's semiconductor market is expected to grow by about 19% in the period 2020 - 2024, reaching a value of 6.16 billion USD.
It can be seen that Vietnam's economic prospects in the eyes of the international community are still quite optimistic. Vietnam needs to make great efforts and determination to soon defeat the epidemic and take advantage of favorable trends to accelerate the economy.
