Viet Nam: A rising star in emerging markets
VGP - The best-known growth driver for Viet Nam is its step-change in foreign direct investment (FDI), benefiting from an increase in exports.
According to the United Kingdom-headquartered news magazine Portfolio Adviser, Viet Nam has a thriving, young, working age demographic with more than 70 percent of its population aged under 35 and who come at much lower cost than their equivalents in China or the U.S.
Many years of consistently high GDP growth have been due to a highly attractive combination of political stability with sound pro-market execution which has managed to slash poverty from 17 percent to less than 5 percent in a decade.
As a result, Viet Nam is benefiting from companies diversifying their supply chains, told the magazine.
The Southeast Asian nation continued to sign more than a dozen key trade agreements during lockdown, including the Regional Comprehensive Economic Partnership (RCEP).
These partnerships will make it easier for companies to do business in Viet Nam, positioning itself ever more as a manufacturing expert with ease of access to broad, international markets and benefitting from 3,000 kilometers of coastline and the close connections to China.
The runway for growth is undeniably large and the targets ambitious but Viet Nam is now moving more towards manufacturing higher value products, more in electronics rather than textiles. Electronics have increased to more than 40 percent of goods exported from less than 15 percent in 2010.
As testament to this, last August Apple announced they would start producing MacBooks and Apple Watches via their suppliers in Viet Nam, in addition to some iPad production they moved there during the pandemic. This will involve the buildout of large plants and greater commitment to investment in the country.
One of Viet Nam's most critical FDI sources is Samsung Electronics. The South Korean technology giant employs tens of thousands of people in Viet Nam across a number of sites and is the largest investor in the country, with 50 percent of its handsets being produced there.
There is frequent hope that Viet Nam will be upgraded from its current, off-benchmark, frontier market status to emerging market status by Morgan Stanley Capital International (MSCI).
The Viet Nam stock market overall now meets the size and liquidity requirements to be included, with a four-fold surge in retail participation during the past 2-3 years, driven by digital account technology, noted the Portfolio Adviser./.