The first 7-Eleven store is about to open in Vietnam, in the coming days, with a store in Ho Chi Minh City, interestingly in the lobby of a commercial office building on the edge of the CBD.
In the 16th survey on the Private Equity sector, carried out by Grant Thornton Vietnam, in March 2017, the majority of respondents (78%) were positive about Vietnam’s economy and the economic outlook.
Much has been written and discussed about the impact of the demise of the Trans Pacific Partnership on foreign direct in Vietnam. With the first quarter statistics on FDI now available we can confidently say that there has been no significant impact on FDI.
The region accounts for 90% of the nation’s coffee growing area and over 90% of the country’s beans, however most of the production is Robusta with very little Arabica and although Vietnam is the world’s second largest coffee producer it is not well known internationally because Robusta is generally blended with a loss of identity. The central highlands has really failed to attract foreign investment of any real magnitude benefiting from only US$ 3.5 billion of foreign direct investment just about 1% of the total for the country since Doi Moi in 1988 and of that US$ 2 billion has been invested into wind power projects.
The number of new SME’s continues to grow at a healthy rate with approximately 14,500 new enterprises established in the first 2 months of 2017, a year on year growth of 3.9%. In this period the registered capital of these newly established firms was US$ 6.7 billion an increase of 35% against the same period as last year. With over 600,000 registered SME’s and growing at over 100,000 per annum SME’s are an important sector of the economy. However the number of firms ceasing operations or closing has not been insignificant but over the last 12-18 months the number resuming operations has been increasing.
Challenges in Applying DTAs for Tax Protection
ASEAN was in itself a US$ 2.4 trillion economy in 2015 making it the 5th largest in the world. The Asian Economic Community (“AEC”) came into being at the end of 2015/start of 2016 but seems to have been overshadowed by all the talk of TPP and EU Vietnam Free Trade Agreement.
With the likely demise of the Trans Pacific Partnership (“TPP”), following g the withdrawal by the USA, the big question is how will this impact Vietnam and what it means for the bi-lateral Vietnam –USA relationship. Whether or not Vietnam will lose its attraction in terms of FDI, is not in my opinion directly related to TPP, although we did see some US investment on the back of the expected TPP, but more to do with how foreign investors perceive the investment environment in Vietnam and the ease of doing business.
Mergers and Acquisitions continue to be buoyant Vietnam continues to see foreign interest in the M & A market, with significant interest and completed deals in 2016, from Thai firms, in particular. Of the US$24.4 billion committed last year in Foreign Direct Investment US$ 3.4 billion was from M & A, according to the General Statistics Office.
If you live in Vietnam or visit the country, particularly the major cities, have you ever wondered about the apparent level of disposable income relative to the reported average per capita income of US$ 2,200 per annum or less than US$ 200 per month. The average figures for Hanoi and HCMC are over US$ 5,000 per annum. Overseas remittances to Vietnam are running at a level of US$ 12-13 billion per annum or about 80-90% of the remitted foreign direct investment. This is also equivalent to more than 7% of GDP.
How will the failure of the TPP Agreement really impact Vietnam
Concerns of Foreign Investors heard and understood
Vietnam Business Forum - Strengthening the Private Sector
Is reality dawning and are we about to enter the second phase of Doi Moi?
