Vietnam becomes high-light of ASEAN in trade growth

Vietnam becomes high-light in ASEAN in trade growth

Improved infrastructure and business facilitation are key factors that help strengthen Vietnam's trade support capacity. Meanwhile, the rapid growth rate is focused on sustainability and stability, especially in export turnover, which is the driving force of economic dynamism.

Vietnam ranked sixth on the list of 20 economies with the strongest trade growth potential in the Trade20 report of Standard Chartered.

The list of Trade20 of Standard Chartered

Standard Chartered expressed on its website that each market’s potential for trade growth was determined by analysing changes across a wide range of variables over the last decade, including three equally-weighted pillars: economic dynamism, trade readiness, and export diversity.

According to the report, Vietnam has strong foundations for promoting growth, such as the stable political situation, favourable conditions to participate in global supply chains, and a young population. The government has effectively exploited these factors, including focusing on reforming and reducing regulations on business conditions, investing in human resources, infrastructure, and promoting trade liberalisation.

The report also pointed out that the manufacturing sector with foreign direct investment (FDI) and exports will continue to be the main growth engines of Vietnam. The increase in the number of tourists coming to Vietnam as well as domestic visitors thanks to the increase in wage income is expected to help the country maintain its growth rate.

Vietnam is a member of many free trade agreements, with the most recent one being the EU-Vietnam Free Trade Agreement (EVFTA). The agreement is expected to eliminate 99 per cent of tariffs and open the doors to public procurement and service markets.

In the context of ongoing trade tensions, FDI is expected to continue flowing into Vietnam as global businesses are seeking low-cost alternatives to set up production bases. As forecast by Standard Chartered Bank, FDI inflows to Vietnam will remain high in 2019 and 2020, reaching nearly $15 billion.

Nirukt Sapru, chief executive officer, Standard Chartered Bank Vietnam, shared that, “Vietnam is reaping the result of the process of opening its economy and integrating into the world. Vietnam is currently the fastest-growing economy in the region, a clear testament to the benefits that an open economy brings to the country. With government efforts to improve trade facilitation capacity and business environment and the momentum of FDI inflows, Vietnam is expected to witness stronger trade growth in the near future."

Recognising the importance of digital trends for future development, the government has proposed a draft to put 50 per cent of businesses on the digital platform by 2025 and set the goal that the digital economy will account for about a quarter of the GDP. Standard Chartered Bank forecasts that the Vietnamese economy will continue to grow strongly in the short term, with a growth rate of nearly 7 per cent.