GDP a bright spot amidst the gloom

Many investors still are upbeat in their view Vietnam is a long-term venue to do business

Vietnam’s economy is slowly crawling out of a deep hole, with foreign firms’ more upbeat views on the nation. The government last week announced the gross domestic product (GDP) growth  for this year’s first nine months was estimated at 4.73 per cent against last year’s corresponding period, when GDP growth climbed 5.76 per cent year-on-year.

“Though the January-September GDP is lower than that in the same period last year, it mirrors great efforts of the government in a context that the government has to focus on curbing inflation and stabilising the macroeconomy,” said Vu Duc Dam, Chairman of the Government Office.
GDP has increased from 4 per cent in the first quarter to 4.66 per cent in the second quarter and 5.35 per cent in the third quarter.

“Foreign investors remain upbeat about Vietnam’s recovering economy. The 4.73 per cent rate is low as compared to the initial target, but far higher than the GDP growth levels in so many countries in the world,” said Minister of Planning and Investment Bui Quang Vinh. Some foreign firms said this rate was “impressive” and they stayed optimistic about the economy’s health.

“Vietnam has seen impressive GDP growth as a result of economic reforms. The growth rate is forecast to be around 5 per cent for the next two years. The rate should be the envy of many developed economies,” said James Turley, global chairman and CEO of Ernst & Young.

Ernst &Young forecast rapid-growth markets performers in 2013 in Asia were expected to be China and Hong Kong (8.6 per cent), India (8.5 per cent) and Vietnam (7.1 per cent).

“Since 1986, Vietnam has been on a journey of economic reforms – stimulating economic growth, while opening the country up to new international markets. Vietnam has made great strides in becoming a global player. Not least through WTO accession in 2007  and, is increasing its competitiveness relative to others in the region, particularly China,” Turley stressed.

Benjamin Keswick, managing director of the UK’s Jardine Matheson Holdings, said the GDP growth rate [of 4.73 per cent] was “a big effort and impressive achievement” of the government in macro-monitoring.

“Jardine has a big investment portfolio in Vietnam. We believe that Vietnam’s economic difficulties are short-term, meaning that we will continue our investments in this market in the long-term.”
Echoing these views, Malaysian-backed Hong Leong Bank’s chief executive officer Yvonne Chia said most foreign investors foresaw Vietnam’s big future potential and showed great confidence in the government’s economic monitoring. Hong Leong Bank last week opened its fourth branch in Vietnam, in southern Binh Duong province.

The government reported that the industrial production index had increased month-on-month, from 2 per cent in June, 3.2 per cent in July and 4.1 per cent in August to 4.6 per cent in September. Meanwhile, the inventory had reduced from 34.9 per cent in March to 32.1 in April, 29.4 in May, 26 in June, 21 in July and 20.8 in August down to 20.4 per cent in September. Also, the total retail and service revenue in September ascended 1.08 per cent on-month. The on-month increase level was 0.7 per cent in August and 0.1 per cent in July. In June, the revenue decreased 0.5 per cent on-month.

“These figures show the economy is gradually recovering,” Dam said. However, he said to reach the target of 5.2 per cent GDP growth this year, the remaining three months had to see an average GDP growth rate of 6.5 per cent. “This is a difficult job and the government must monitor the economy skillfully.”