Vietnam has become Asia’s hottest investment destination. Last year the country attracted $17billion in FDI commitments, arguably the largest for an emerging market relative to its GDP of $250billion. In the first quarter of 2018, the country became the fourth largest IPO market in the region, felling larger incumbents such as South Korea, Singapore and Australia. The property market in Ho Chi Minh is booming and GDP is growing at or about 7% per annum. Pending ratification of the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and a free-trade agreement with the EU (EVFTA) are expected in the coming months, further integrating Vietnam in the global economy. Starting in 2020 Hanoi will host the newest Formula 1 Grand Prix. In short, there are many reasons to take a positive long-term view on the country.
How has this happened?
Broadly speaking, the country’s leadership has agreed on a vision of economic development focused on offering highly productive, cost effective labour for labour-intensive export manufacturing. This has driven those record FDI inflows – largely from more mature Asian economies such as Japan, Korea, and Taiwan – over 90% of which is going into manufacturing. The country has become integral to global supply in everything from smartphones and electronics to catfish and cashews. Vietnam is also poised to be a major beneficiary of the ongoing US-China trade as foreign companies seek to restructure their supply chains.
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