US companies seeking investment opportunities in Hanoi

Nirav Patel, president and co-founder of The Asia Group

Bullish on Vietnam’s economic future

Vietnam is one of the most dynamic and exciting growth markets in the world. Its demographics paint a clear picture of its future potential: tens of millions of talented and hard-working Vietnamese are entering the workforce and large global corporations are setting up shop to take advantage of the country’s desire to become a hub for innovation and a stable destination for complex supply chains and manufacturing.

As trade tensions between the world’s largest economies are pushing globalised firms to diversify manufacturing operations into new markets, Vietnam has become a leading destination for those looking to capitalise on its well-educated, low-cost labour pool. Even before tensions between the United States and China threatened to rupture regional supply chains, forward-looking international investors and multinationals were drawn to Vietnam’s strategic location and favourable demographics. Add in a rapidly growing middle class and rising domestic consumption, and it’s easy to understand the country’s appeal.

In the decade since Vietnam’s accession to the WTO, the country has made significant steps towards shifting to a modern, market-led economy, and Vietnamese people have reaped the rewards. Incomes have more than tripled from around $700 to nearly $2,400, and the broader economy has averaged at over 6 per cent annual growth, quickly expanding as Vietnam became an integral part of Asian supply chains. From a baseline of textiles and simple household goods, Vietnam has now matured into a robust manufacturing base for mobile phones, computers, and complex electronics components, as well as a regional leader for tech startups.

In 2018, the Vietnamese economy expanded by an impressive 7.1 per cent, and it is expected to nearly match that at 6.8 per cent growth in 2019. Expansion in the services and value-added manufacturing sectors is lifting wages and supporting a fast-growing middle class with increasingly sophisticated tastes and demands for consumer goods. The country’s strong fundamentals are expected to keep growth strong in the near-term, but Vietnam has an even greater prize within reach if it can implement an intelligent and business-friendly regulatory regime to unlock the tremendous potential of the digital economy.

Prime Minister Nguyen Xuan Phuc has ambitiously called for Vietnam to seize the opportunities presented by the Fourth Industrial Revolution to supercharge the country’s economic development. His support of an innovative and entrepreneurial domestic private sector has set the stage for rapid development of the country’s digital economy and has put Vietnam at the forefront of regional high-tech development. Indeed, growth in the digital economy has been remarkable, with revenues doubling to $2 billion over the last two years.

The government of Vietnam and its people stand at a historic moment: now is the time to attract American companies seeking to invest in the local markets, streamline bureaucratic procedures to create the efficient decision-making that companies require and ensure a level playing field for foreign businesses. American companies and investors are bullish on Vietnam’s future – now is the time to invest and act.