Economic Development Opportunities in Vietnam
Let’s first look at the most intuitive data –
In 2020, Vietnam’s total GDP is 271.158 billion US dollars, a year-on-year increase of 2.91%, an increase of 155.226 billion US dollars compared to 2010; per capita GDP is 2785.72 US dollars, a year-on-year increase of 1.98%, an increase of 1467.83 US dollars compared to 2010; per capita gross national income is $2,660, a growth rate of 2.7%, an increase of $1,410 compared to 2010. In the past 20 years, the scale of imports and exports has increased by 17 times.
This is the “phase result” of Vietnam’s implementation of free market reforms in the 1980s. With the transfer of global industries, Vietnam’s foreign trade is still accelerating, and everything may be just the beginning.
Opportunities in Vietnam
Vietnam’s most fundamental advantage lies in its abundance of young, cheap labor. Among Vietnam’s more than 90 million people, the proportion of the working-age population aged 15-65 is about 69.3%, which means that Vietnam has a working population of about 65 million, and the fertility rate of 1.94 means that the “young” advantage still exists. will last for a while. The monthly salary of front-line workers in Ho Chi Minh City, the largest city in Vietnam, is only about RMB 2,000, which is 1/2-1/3 of the average income of workers in China’s first-tier cities. Young and cheap labor is what really fascinates the industrial giants, and it is also an important foundation for Vietnam’s further development in the next ten years.
The biggest opportunity for Vietnam lies in the frequent “Jacques” (free trade agreements). Since joining the World Trade Organization (WTO) in 2007, it has successively signed free trade agreements with Japan, South Korea, the United Kingdom and other countries around the world, becoming one of the countries that signed the most free trade agreements among regional countries, and actively joined regional free trade agreements, such as The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-EU Free Trade Agreement (EVFTA), the Vietnam-UK Free Trade Agreement (UKVFTA), and most recently the Regional Comprehensive Economic Partnership ( RCEP), etc. The tariff preferences provided by various trade agreements have greatly facilitated Vietnam’s international trade and reduced trade costs.
Vietnam’s strategy of taking both sides makes international industries continue to move into Vietnam. Not only Samsung, Nike and other international capitals use Vietnam as a new global production base, but also international chain brands such as Uniqlo, Adidas, and HM have also moved their factories to Vietnam. More and more suppliers from Taiwan and mainland China are also investing in Vietnam. Coinciding with the intensification of competition between China and the United States, Vietnam can neither offend China, but also has increasingly close relations with the European Union and the United States. In the increasingly hot trade between the United States and Vietnam, it has reached what the United States Ambassador to Vietnam, Daniel, has ever said—the strongest partner ever. relation. At this stage, Vietnam seems to be single-mindedly “centered on economic construction”, and as long as it is conducive to economic development, there is a lot of enthusiasm to participate.
Vietnam’s future opportunities may lie in the new battlefield of the Internet digital economy. After 2010, Vietnam and other Southeast Asian countries began to follow the Chinese Internet model and created Southeast Asian versions of Alibaba, JD.com, and Meituan. According to the “2021 Southeast Asia E-commerce Report” jointly released by Google, Temasek and Bain & Company, Vietnam’s Internet economy will reach US$57 billion by 2025, surpassing Indonesia and becoming the No. 1 in Southeast Asia. Ho Chi Minh City is also pushing for a “digital transformation plan”, striving to make the digital economy account for 25% of the city’s GDP by 2025, and increase to 40% by 2030. The Vietnamese government also pays more attention to data protection in the digital economy era. In March 2022, the Vietnamese government passed Resolution No. 27/NQCP on the draft Personal Data Protection Law. important laws in the over-the-border transmission regulatory system.
Foreign investment will continue to boost Vietnam’s economic development in the coming period. Over the past decade, there have been thousands of M&A transactions in Vietnam. In 2021, the amount of newly approved and newly approved foreign direct investment and equity mergers and acquisitions in Vietnam will be 31.15 billion US dollars, a year-on-year increase of 9.2%. Foreign investment in the processing and manufacturing industry accounted for 58.2% of the total, followed by electricity accounting for 18.3% and real estate accounting for 8.4%. Entering 2022, the rapid inflow of foreign capital will continue. Andrew Jeffries, chief representative of the Asian Development Bank (ADB) in Vietnam, said that amid the pandemic and global geopolitical volatility, global investment flows have declined, but foreign investment inflows into Vietnam are likely to be Growth against the trend.
A few days ago, Li Ka-shing’s real estate flagship Cheung Kong Group and Japan’s ORIX Group, through Vietnam’s local partner Wanshengfa Group, met with the mayor of Ho Chi Minh City, Vietnam, Phan Van Mai, to discuss investment in Ho Chi Minh City. Zhao Guoxiong, president of Changshi Group, said at the meeting that Cheung Kong promised to inject a lot of capital into these fields together with Wanshengfa in the shortest possible time. It will position Ho Chi Minh City as a strategic center of finance and technology, and promise to introduce high-end real estate projects covering residential, office, commercial centers, entertainment and other businesses. The attractiveness of Vietnam is evident.