HSBC’s Vietnam Day confirms Vietnam’s opportunities in post-COVID-19 world

The three-hour event was among a series of HSBC Vietnam’s activities to promote Vietnam globally, in its role as the official partner of Vietnam’s Ministry of Planning and Investment (MPI) to attract foreign direct investment (FDI) to the country.

In his opening speech, Vu Van Chung, deputy general director of the Foreign Investment Agency (FIA), shared: “I appreciate HSBC's efforts in organising this webinar. This is a good opportunity for us to share new investment trends, share our plans to reform Vietnam's investment environment, and provide suggestions to improve cooperation in investing and doing business in Vietnam. Vietnam advocates selected foreign investment with quality, efficiency, technology, and environmental protection as the key criteria. The FIA is committed to accompanying and facilitating the effective, successful, and long-term business investment of foreign investors in Vietnam.”

“Vietnam is one of the great success stories of the modern era,” said Surendra Rosha, co-chief executive of HSBC Asia-Pacific, “This is a country that has embraced the opportunities of global trade to carve out a large and growing role in global supply chains while building a thriving domestic economy. HSBC is proud to have been able to use our global reach to connect international investors to opportunities in Vietnam, and to help Vietnamese companies find and work with new customers and suppliers around the world.”

A recovery at pace

The panel discussion “Vietnam – A Recovery at Pace”, participated by Frederic Neumann, co-head of Asian Economics Research, HSBC; Alain Cany, chairman of Jardine Matheson Vietnam and chairman of EuroCham Vietnam; Dr. Truong Gia Binh, deputy chairperson of the Advisory Council of the Prime Minister, dean of the Private Sector Development Committee (Committee IV), chairman of FPT Group; and Warrick Cleine, chairman and CEO of KPMG Vietnam and Cambodia, delineated the recovery of Vietnam’s economy and new opportunities.

Commenting on the Fed rate, Neumann said Vietnam would be less likely exposed to high US interest rates due to strong fundamentals and its export-driven economy, although it could be a headwind for economic growth. Neumann also said the rising energy prices and energy crunch can push inflation up in oil-dependent economies like Vietnam and slow the country’s growth recovery. He said energy prices could increase in the coming winter months, but is expected to improve next March. Overall, he saw stabilisation from the second half of 2022.

The pandemic’s influences seem to put some hurdles in Vietnam’s way to recovery. The global investor community will surely track carefully how the government steers the economy through the storm, which will definitely impact their investment decisions in the upcoming time.

Cleine indicated that Vietnam created both macroeconomic and social stability which would encourage more foreign investment as investors love the predictable environment. Vietnam’s other advantages are its economic growth story and the government’s engagement with the global community. He said that Vietnam is on the right track of quality domestic reform with good quality law and policy, and still a pretty good environment for foreign businesses and investors.

Commenting on this economic return, Cany thought that thanks to strong fundamentals, Vietnam’s economy would gradually rebound at least for the coming six months until its momentum becomes stronger in the second half of 2022. Factories in southern industrial zones could rebound at a slower rate than others due to longer and stricter lockdown during the recent months.

Despite the current gradual reopening, sectors such as tourism, hospitality, and events, that were the first to close, are still under strict control, which deters consumers and as a result dampens other sectors in the value chains. Some corporates in labour-intensive industries that have scaled down their production during the fourth COVID-19 wave could face new challenges in recruiting and training people.

However, Cany pointed out that some sectors still have benefited during the pandemic, such as e-commerce with a growth of 18 per cent to reach the revenue of more than $11 billion in 2020. The market is set to continue growing as consumers become more accustomed to purchasing goods and services online. On the other hand, thanks to the free trade agreements Vietnam joined, seafood, coffee, clothes, shoes, and mechanical equipment production and export will also recover soon.

Besides foreign investors, the local private sector suffered lots of difficulties in recent months and eagerly expects the growth momentum to be back on track. Dr. Truong Gia Binh listed out three main findings from his team’s weekly meetings with the corporate community and the survey result of Committee IV and VnExpress: 16 per cent of enterprises closed due to no revenues and working capital, 35.5 per cent of enterprises had to temporarily close due to supply chain disruption, almost all surveyed enterprises suffered labour shortage since workers returned to their hometowns.

On the other side, Dr. Binh and his team witnessed the positive spirit and confidence to overcome challenges among businessmen. Export-import revenue remained resilient, reaching $483 billion, an increase of 24.4 per cent on-year. Newly-registered FDI has continuously increased and positive GDP growth in the first nine months contributed to setting a brighter outlook for Vietnam’s economy.

Since the government has adjusted its COVID-19 policy in October, fast economic reopening and digitalisation have started. Currently, a new financial package to support the economic recovery is being planned while the government has also adopted and applied technology in their COVID-19 control. More solutions to come, and the application of AI and technology is also expected to support the situation management and a quick economic recovery at the soonest.

New focuses in the new normal

It seems that the economy has found the light at the end of the tunnel. The time has come for business leaders to execute their transformation and new focuses. Based on KPMG’s CEO survey conducted between April 2020 and April 2021, Warrick Cleine said confidence between corporate leaders has come back and business leaders believed more in the return of normality. Another change recognised is the shifting mindset of business leaders, from focusing only on employees’ health and safety and business survival back to growth, while some leaders have also turned their attention to organic growth opportunities.

In front of a great deal of new opportunities and trends in the upcoming time, Cany suggested international businesses to keep Vietnam on their radar. The country offers a great domestic market, as well as good opportunities for manufacturing and export at the same time. With its growing middle-class consumers, which are expected to cover more than half of the population by the end of this decade, it provides a promising growth market for international enterprises in sectors and industries ranging from automobile importers to private education providers.

Corporates should take advantage of the free trade agreements that Vietnam has joined and consider mergers and acquisitions to tap into the local market and build partnerships with potential suppliers and partners. Dr.Binh said that the economy is well-positioned to recover at the soonest and strongly suggested this market for global investors.

After providing a broad picture for the Vietnamese economy and opportunities, the webinar continued giving a view and vision on Vietnam's planned market upgrade as well as the outlook of its equity market up to 2025, followed by a glimpse of the local retail fund market’s recent developments and its outlook to 2025.

“Despite the challenges that we have recently experienced, we are still of the view that the future for Vietnam is bright,” concluded Tim Evans, CEO of HSBC Vietnam, “As we pull out of the COVID-19 restrictions, there will be opportunities for those who are prepared for them. Our role as a leading international bank is to ensure that we support our customers locally and internationally to help capture the opportunities that present themselves. This event is held on an annual basis as a way of both engaging with our existing and prospective customers while helping to promote the exciting Vietnam story.”