Reuters: Keeping coronavirus at bay, Vietnam revs up economy to race ahead of rivals

Vietnam’s success in curbing the coronavirus so far, while its Southeast Asia neighbours struggle, is helping the country power ahead in economic growth and attracting funds, foreign investors, experts and analysts say.
January 09, 2021 | 07:36
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Shipping containers are seen at a port in Hai Phong City, Vietnam. Photo: Reuters

Vietnam’s success in curbing the coronavirus so far, while its Southeast Asia neighbours struggle, is helping the country power ahead in economic growth and attracting funds, foreign investors, experts and analysts say.

Vietnam watchers expect the country to ride high as long as it keeps the virus - resurgent in many countries - at bay, according to Reuters.

Thanks to rigorously targeted testing, a centralised quarantine programme and early border closures, Vietnam’s coronavirus tally stands at just over 1,500 cases and 35 deaths to date - far fewer than any comparable country given its population of nearly 98 million.

The successful management of the pandemic to date has already enabled the country to capture a larger share of global trade and FDI (foreign direct investment) during 2020,” said Carolyn Turk, the World Bank’s country director in Vietnam.

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Employees work at a shoe factory for exports in Hanoi, Vietnam. Photo: Reuters

At WHA Group, a Thai logistics firm which has expanded its industrial estate business in Vietnam, chairwoman Jareeporn Jarukornsakul said costs are cheap in Vietnam and its government is very quick with investment, allowing provinces to issue their own regulations and investment incentives.

Recently, Ho Chi Minh City-based Mekong Capital said it had raised $246 million for its largest-ever fund - nearly 25 percent more than the original target of $200 million.

Dominic Scriven, chairman of Vietnamese asset manager Dragon Capital said a combination of the country’s trade deals, more cash in the economy and political stability had underpinned better-than-expected interest across three new funds launched by his firm.

We were very pleasantly surprised by the market uptake,” said Scriven.

Pulling ahead

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Vietnam becomes an attractive destination for investors thanks to success in curbing COVID-19. Photo: VNA

That extra cash, along with savings accounts offering declining interest rates after three cuts in the central bank’s policy rate since March, has created a surge in local stock market investors, Reuters said.

The number of new investors has increased so much that the benchmark Ho Chi Minh City Stock Exchange has been forced to halt afternoon trading in order to process the surge.

Development was also boosted by the two free trade deals signed last year: the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading block, and an agreement with Britain modelled on the EU-Vietnam Free Trade Agreement (EVFTA), which Vietnam ratified in June.

Hanoi also has bilateral trade deals with both the Republic of Korea (RoK) and Japan, its largest sources of foreign direct investment, and is a signatory to the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The trade deal push has given it an advantage over some of its regional competitors. The EVFTA in particular has “put Vietnam clearly on the map”, said Sven Schneider, Chief Executive of the EU-Malaysian Chamber of Commerce.

In the short term, Vietnam is well placed to pull ahead of its regional rivals in 2021.

Vietnam has clearly earned its position as the most attractive investment destination in Southeast Asia,” Chad Ovel, partner at Mekong Capital, said./.

Vietnam’s gross domestic product (GDP) this year is expected to grow by 2.91 percent compared to 2019, according to the General Statistics Office (GSO).

Although the figure was the lowest during the 2011-2020 period due to the COVID-19 pandemic, Vietnam’s growth remains among the world’s highest.

Specifically, it expanded by 3.68 percent in the first quarter, 0.39 percent in the second quarter, 2.69 percent in the third quarter and 4.48 percent in the fourth quarter.

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