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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.

Chairman’s Insights

2018 saw Vietnam achieve or exceed all socio economic forecasts for the year and this accompanied by the high level of business confidence, maybe with the exception of the construction industry, augers extremely well for 2019. GDP growth exceeded the target of 6.8% recording an 11 year high of 7.08% putting Vietnam as one of the strongest growth economies in Asia and the world. The strongest driver for GDP growth were the manufacturing industries with a growth figure of 12.98% . At the same time inflation remained at under 4%.

This was the theme of the semi-annual plenary session of the Vietnam Business Forum (“VBF”) held in Hanoi, on Tuesday December 4th, which was attended in full by the Prime Minister Nguyen Xuan Phuc. This was also the 21st year of the VBF which was established under the auspices of the Wortld Bank and IFC together with the Vietnam Chamber of Industry and Commerce to provide a platform for dialogue between the private sector and Government.

Chairman’s Insights

Chairman's Insights

Chairman's Insights

In October, I attended a celebration of 30 years of Foreign Investment in Vietnam, which started with “Doi Moi” in 1986 and the passing of the first Foreign Investment Law in December 1987. Sadly former Party Leader Do Muoi passed away last week at the age of 101, but he has to take a lot of the credit for the initial success of Vietnam’s Doi Moi or renovation policy.

In 2017 global travel industry gross bookings reached US$1.6 trillion, making it one of the largest and fastest growing sectors in the world. The developing trend is expected to continue in 2018 thanks to increasing disposable incomes of citizens and a newfound ability to experience the world.

Vietnam among the economic outperformers

Condotels friend or foe for the tourism industry?

The Government is currently in discussions with employers and the Molisa and the National Wages Council on the increase in the minimum wage for 2019. In 2018 Vietnamese employees received the highest regional salary increases at 10% compared to Thailand at 5% and a regional average of 8% In fact it has been a trend for many years that the Government, at the request and through the lobbying of the Trade Unions and support from Molisa, has raised the minimum wage way higher than the increase in inflation and in fact far more than the increase in productivity.