Samson: Việt Nam remains attractive destination for US investors
9th August, 2021
Việt Nam remains an attractive destination for US investors in the Indo-Pacific, heard a webinar recently held by The Asia Group.
The event aimed to share business opportunities and updates on the fight against COVID-19 and economic prospects in Việt Nam, drawing over 40 executives and representatives from US firms in the fields of energy, finance, technology and manufacturing such as Blackstone Group, Google, Facebook, Ford, UPS and Walmart.
Speaking at the event, Vietnamese Ambassador to the US Hà Kim Ngọc highlighted Việt Nam’s economic achievements, and informed participants about the country's incentives in foreign direct investment (FDI) attraction. He underscored the Vietnamese Government’s determination to selectively attract FDI and strengthen Việt Nam’s role in restructuring the global supply chain. As for the US investors, the active development of the Việt Nam – US comprehensive partnership and Việt Nam’s network of free trade agreements are conducive to their activities in the country, he said.
Việt Nam is ready to hold constructive dialogues, deal with difficulties and ensure a stable business environment for US enterprises, he added.
According to the ambassador, the Vietnamese Government has been exerting utmost efforts to effectively fight the pandemic, maintain important supply chains and create favourable conditions for economic development. He thanked the US administration, people and business community for supporting Việt Nam, especially the delivery of two batches of five million Moderna vaccines. Ngọc also suggested US businesses continue helping Việt Nam access more vaccines, medical supplies and COVID-19 medicines, thus contributing to Việt Nam’s economic development.
On the occasion, he also highly valued the US firms’ support for Việt Nam regarding the currency valuation investigation, and asked for their continued backing in the case related to timber so as to maintain trade and investment growth for the benefit of both sides. Participants at the event expressed their trust in Việt Nam’s determination and efforts against the pandemic. They vowed to continue partnering with Việt Nam in the joint effort.
Several firms expressed interest in specific issues such as addressing differences in digital trade, and considering a direct flight between the two nations. They wished that the Vietnamese Embassy in the US will continue serving as a bridge to collect recommendations and feedback while raising understanding about Việt Nam among the US business community. LINK
Samson: Việt Nam’s current account surplus forecast at 6.2% of GDP in 2021
11th August, 2021
Việt Nam’s current account surplus is forecast at 6.2 per cent of GDP in 2021 and will narrow over the coming decade as part of a general long-term narrowing trend.
According to a recent report from international financial data provider Fitch Solutions, the surplus is slightly narrower against its 6.6 per cent estimate recorded last year.
“Improved market access from the EU-Việt Nam free trade agreement (FTA), UK-Việt Nam FTA, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and Regional Comprehensive Economic Partnership will support a widening of Việt Nam’s goods trade surplus. However, an urgent need for transport and logistical infrastructure development in Việt Nam, which tend to heavily involve foreign consultants and other services, will see the services deficit widen.
Moreover, with foreign-invested enterprises being the key driver of export growth, rising corporate profit remitted overseas will widen the primary income deficit over time,” the report stated. “From a structural perspective, an increase in investment opportunities domestically as the external facing sector develops and the middle class grows in Việt Nam will also see the excess of savings over investments narrow, and reduce the current account surplus accordingly over the long run.”
According to Fitch, Việt Nam’s continued current account surplus will be spearheaded by its goods trade surplus and supported by a gradually growing secondary income surplus which will expand in line with the global economy on the back of rising remittances from Vietnamese migrant workers overseas.
Việt Nam’s goods trade surplus will continue to widen as an open-door trade policy, foreign direct investment (FDI) friendly policies, favourable population demographics, and a generally good business environment position it well to attract capital from businesses seeking to diversify their supply chains in the region. “This component will be the main driver of Việt Nam’s current account surplus, with the goods trade surplus growing from 11.2 per cent of GDP in 2020 to 12.1 per cent in 2030. With the Vietnamese government also actively seeking to improve its international market access and diversify its export markets through free trade agreements, we expect the goods trade surplus to continue widening over the coming decade,” Fitch noted.
As part of Fitch’s outlook, it expects the country’s manufacturing exports to remain mostly in low-middle value-added goods over the coming decade; such goods account for 85 per cent of Việt Nam’s goods exports.
Although the government aims to push the country’s manufacturing operations up the value chain, it is faced with several challenges and the transition will be slow, according to Fitch.
In Fitch’s view, Việt Nam’s economic development closely resembles that of China two three decades ago, with the country’s manufacturing engaged in low-value-added activities in Special Economic Zones (SEZ) set up by the government. Such zones typically grant businesses operating within the tax and tariff concessions and other benefits to attract foreign investment. However, a reliance on SEZs for growth implies a reliance on FDI and export processing, which given the high import content of Vietnamese exports, suggests little scope for knowledge transfer to domestic businesses and manufacturers.
Moreover, raising the level of human capital in the country will also be crucial to take on more complex manufacturing. Many foreign manufacturers continue to flag a shortage of skilled labour in the country, and while the government is aware and trying to address the shortage through education and labour reform, this will not be a problem easily solved within the next five years, with ten years also being a stretch.
According to Fitch, another challenge that the Government will have to address is the infrastructure deficit in the country, which will come under increasing pressure amid an influx of FDI in the manufacturing sector. The inability to bring in foreign experts will also be a challenge in project development amid the pandemic in 2020 and 2021. This suggests that an urgent push by the government to develop essential transport and logistical infrastructure over the coming decade will increase services imports.
Meanwhile, a burgeoning middle class in Việt Nam along with relatively rapid economic growth will also see an increase in outbound leisure travel post-pandemic and this will also see services imports rise. Both of these will widen the services trade deficit, counteracting the expansion of the goods trade surplus and slow rise in the secondary income surplus on the current account balance. A widening primary income deficit will also act to narrow the current account surplus, according to Fitch. LINK
Samson: Việt Nam looks to become AI hub in ASEAN by 2030
11th August, 2021
The Vietnamese Government has issued a national strategy on the research, development and application of artificial intelligence (AI) till 2030 with a view to gradually turning Việt Nam into an innovation and AI hub in ASEAN and the world.
Deputy Minister of Science and Technology Bùi Thế Duy said the strategy aims for Việt Nam to be among four leading countries in ASEAN and 50 nations globally in terms of AI research, development and application by 2030; build 10 prestigious AI trademarks in the region; and develop three national big data and high-performance computing centres. By 2030, Việt Nam will set up 50 interconnected open databases in economic sectors in service of the effort.
To such end, the country is fine-tuning legal documents and creating a legal framework regarding AI, as well as promoting international cooperation in the field. Further attention should be paid to human resources training and building databases that are synchronous with computing infrastructure.
Since the COVID-19 pandemic broke out nearly two years ago, the application of AI in healthcare in Việt Nam has become a bright spot in the world. AI has helped ease burdens on medical workers and anti-pandemic forces through tracing apps and epidemiological maps.
The Hà Nội University of Science and Technology officially debuted an international centre on AI under the model of a mixed international research centre. It is expected to conduct basic studies and create “Make in Việt Nam” core technologies.
Prof. Hồ Tú Bảo, director of the centre, said the digital environment was creating invaluable opportunities to develop the country and master important technologies, including AI. Minister Duy said construction on the National Innovation Centre began at Hoà Lạc Hi-Tech Park to support the start-up system in Việt Nam, contributing to renewing the country’s growth model based on advanced technologies. LINK