Explore our insights

As we have seen in recent months Vietnam is proving to be a major beneficiary of the trade tensions between the USA and China. 2019 will be another year of 7% plus GDP growth more than 0.2% over the annual forecast and bilateral foreign trade will exceed US$ 500 billion for the first time and FDI has achieved a 10 year record high with commitments of US$ 38 billion and remitted capital exceeding US$ 20 billion.

The recent news that the developers of CocoBay, in Danang, will be unable to pay the high guaranteed returns to buyers/investors should not come as a surprise to the industry. Such a default has been "an accident waiting to happen".

This week I moderated a panel on the subject, at the Horasis Asia Meeting which took place in Binh Duong Province and I thought I would share some of the key points from the discussion. The Impact of technology and globalization on Asian labour markets has emerged as an important policy issues as millions of jobs may be lost in the coming years. It will be challenging but possible to absorb these workers given greater investment in as yet unknown industries.

The impending ratification of the EU Vietnam FTA is expected to foster rapid development of the logistics sector because of the forecast increase in trade due to the significant tariff reductions for Vietnamese goods entering the EU.

The sector seems to be attracting a lot of attention from both private airlines and the regulators, whilst Vietnam Airlines the state owned carrier records record number of passengers and a growing fleet of aircraft.

Vietnam sets a fair course with mounting headwinds

Insights, Labour Productivity- is a breakthrough imminent?

On Friday the British Ambassador HE Gareth Ward addressed members of the British Business Group Vietnam on the UK’s new industrial strategy and opportunities in line with the Vietnamese Governments Industry 4.0 Strategy. I quote below

With the continued rapid development of Vietnam and the growing rate of urbanisation and the growth in the middle class, the Government is finally accepting that one of the best solutions to fill the massive gap in the funding needs, is to improve the PPP regulatory environment and to address gaps still remaining under the 2018 Decree 63.

The themes were attracting market segments of tourists with high spending power (which I spoke at); Completing Institution and Fundamental arrangements for the digital economy in Vietnam; Tapping into CPTPP….; Facilitating medium and long term capital flows; creating sustainable value chains for agriculture, forestry and fisheries; and new business models and innovation in Vietnam plus a panel discussion with Businesswomen on the aspirations for a prosperous Vietnam.

For many years the moan of many foreign investors, particularly in the manufacturing sector, was energy and the brownouts and blackouts and the projected future shortages. We do not hear too many complaints these days and I will highlight some of the reasons why. Since the year 2000 Vietnam has increased the supply of energy to the economy 8 times.

In emerging economies around the world SME’s, SMEs contribute up to 45% of total employment and 33% of GDP. When taking the contribution of informal businesses into account, SMEs contribute to more than half of employment and GDP in most countries irrespective of income levels . Vietnam is no different and with over 600,000 private companies, of which over 94% are SME’s or micro companies.

In 2018, Gross regional Domestic Product increased 8.3% (higher than the national average) driven by the service sector which registered an 8.4% increase. Tax collection also registered an 8.3% year on year increase. The City’s export turnover grew 7.5% to reach US$ 38 billion and the international Visitors to the city recorded a record level of 7.5 million (an increase of 17%). Foreign Direct Investment increased by 11.8% to US$ 7.4 billion with FDI contributing 58% of the city’s exports.

The need for Innovation and Human Resource Development Chairman's Insights

Whilst we have talked about the significant potential benefits for Vietnam of membership of the Comprehensive and Progressive Agreement for Trans Pacific Partnership (“CPTPP”) the flip side is that Vietnam has also to deliver on some fairly tough requirements and commitments under the signed Agreement.

The Government has over the last 12 months been highlighting the lack of linkages between the foreign invested sector and the domestic sector, enabling the growth of domestic companies and enabling them to participate in the global supply chain. The Government has also signaled their intention to focus more on higher value added investment into the manufacturing sector to ensure sustainability and higher productivity growth.