International media outlets have highlighted Vietnam’s thriving economy which is among the fastest-growing in Southeast Asia in 2019 amid the global economic slowdown.
An appealing investment destination
Vietnam is one of the best growing economies in the region which has become an attractive destination for investment from all over theglobe, said the Bangkok Post in a news story last week.
“Thegovernment of Vietnam has put a lot of effort into making the country a goodhost for incoming investment and companies,” the Thai newspaper said. “Several companies have movedtheir units across the border to Vietnam from China. They include techcompanies like Nokia, Samsung and Olympus, as well as shoe manufacturers suchas Nike and Adidas.”
It addedthat the ease of doing business index for Vietnam is at 69th in 2019. “Vietnam has maintained a GDP growth rate of more than 6 percent since 2000, whereas other neighbouring Southeast Asiancountries have faltered badly due to the trade wars,” it said.
A key factor in Vietnam that attracts industries isthe lucrative corporate tax rate for large firms that are looking to relocate. “A few large firms in Vietnamhave managed to get tax rates as low as zero for the first five years, 5 percent for the next decade and10 percent for the subsequent next two,” itexplained.
In a recentseminar in the United States, Deborah Elms, executive director of the Asian TradeCentre in Singapore, said Vietnam was doing well in improving its internal capacity to cope with effects of theUS-China trade war and lure more foreign investment.
Vietnam hasso far signed 12 free trade agreements with foreign partners around the globe,including the
Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).In June, Vietnam inked a FTA and an Investment Protection Agreement with theEuropean Union (EU).
According toReuters, foreign direct investment (FDI) is crucial for Vietnam to maintaineconomic growth since the FDI firms account for about 70 percent of thecountry’s total exports.
Russia’sRegnum news agency also hailed Vietnam for jumping 15 places on the ranking of besteconomies to invest in, surging past other regional peers like Malaysia,Singapore and Indonesia.
Jumps in competitive rankings
The World Economic Forum (WEF)’s 2019 Global CompetitivenessIndex (GCI) report revealed that Vietnam rose 10 spots from last year to land at 67th out of 141 economies,making it the most improved country this year.
Against the backdrop ofweakening global economy, Vietnam standouts the most with a robust and stableeconomic growth, said Professor Vladimir Mazyrin, Director of the Centre for Vietnameseand ASEAN studies at the Institute for Far Eastern Studies of the RussianAcademy of Science.
The key to such an impressivegrowth remains in the country’s ability to provide a favourable businessclimate and corporate supports, particularly for small and medium enterprises(SMEs), he said.
The Vietnamese government hastaken drastic moves to boost the economy, he continued, highlighting the signing of a number ofnew-generation FTAs; streamlining of business conditions andverification procedures; launch of e-government and thedigital economy; and encouragement of startup businesses.
Vietnam jumped three ranks onthe 2019 Global Innovation Index (GII) to place 42nd out of 129 economies. Itis the highest ranking Vietnam has ever achieved.
Sacha Wunsch Vincent, head of the WIPO’s Composite Indicator ResearchSection, Economics and Statistics Division and Co-Editor of the GII, hailed Vietnam as a model country among those surveyed by theWIPO over the past three years.
The country also climbed inthe ranking of best countries in which to invest this year issued by the USNews and World Report, up from 23rd last year to eighthout of 29 economies. According to the report, “Doi Moi” (renewal)economic policy reforms beginning in 1986 have helped Vietnam transition to becoming a more modern, competitivenation.
It was voted as thesecond-best destination for expats to live and work in 2019 in an Expat Insidersurvey published by InterNations. The country moved up 12 steps in just oneyear from the 14th out of the 68 destinations last year, said InterNations, theworld’s largest expat community with 3.6 million members.
Promising economic outlook
Economists have lifted growth projections for Vietnamafter the latest data showed the economy surged more than 7 percent in the third quarter,according to Bloomberg.
Citigroup Inc. revised its full-year forecast of Vietnam’sGDP to 6.9 percent from 6.7 percent, on the basis of another solidperformance in the fourth quarter.
Analysts at Maybank Kim Eng Research Ltd. also upgraded their forecast of Vietnam’seconomic expansion to 7 percent fromtheir previous prediction of 6.8 percent.
According to two economists of Maybank – Linda Liu and ChuaHak Bin, rising foreign direct investment and “buoyant domestic demand, assuggested by the recent robust retail sales growth”, will keep the momentumgoing through the year-end and in early 2020.
Currently, manyinternational financial institutions are issuing very positive assessmentsabout the prospects of Vietnam's economy in the coming time.
HSBC predicted thatinflation in Vietnam will be kept below 2.7 percent,while GDP growth is expected to ease to 6.7 percent inthe whole year.
Edward Lee, chiefeconomist for ASEAN and South Asia at Standard Chartered Bank Global Research,said he believes that Vietnam will be the fastest growing economy in ASEAN thisyear with a projected growth reaching 6.9 percent, and this is expected tocontinue until 2021.
Vietnam’seconomy has performed well in 2019, with GDP expanding by an estimated 6.8 percent, whilepublic debt reduced by nearly 8 percentage point of GDP since 2016, and a tradebalance surplus for fourth year in a row, the World Bank (WB) said in a report released earlerthis month. It described the results as remarkable amid global downturn.
The WB emphasised the resilience of the Vietnameseeconomy, saying GDP growthhas continued to be driven by a strong external sector with exports expandingby about 8 percent this year,nearly four times faster than the world average.
The country has also remained an attractive destination for foreign investors,with FDI inflows averaging 3billion USD per month. In addition, private consumption has emerged as animportant contributor to GDP growth as the result of an expanding middle-incomeclass and rising wages. Private firms also increased investment by 17 percentduring the same period./.