Japan has nearly 5,000 valid FDI projects in Vietnam with a total registered investment capital of nearly 70 billion USD. Photo: Tuan Anh/TTXVN
Attractive market in the eyes of international organizations
Within the framework of the Annual Spring Conference of the International Monetary Fund (IMF) and the World Bank (WB) taking place in Washington DC (USA), Head of the Vietnam Macroeconomic Monitoring and Consulting Delegation of the IMF, Mr. Paulo Medas, shared with Vietnam News Agency reporters that Vietnam is an attractive destination for foreign investment (FDI) in the context of global economic fluctuations and increasing geopolitical instability. IMF experts assess that in the context of supply chains shifting to Asia, Vietnam continues to be one of the attractive markets, attracting a large amount of FDI thanks to a stable investment environment and a growing economy. High growth, large domestic market and young human resources.
Previously, the International Monetary Fund forecast that Vietnam’s Gross Domestic Product (GDP) according to purchasing power parity (PPP) would reach nearly 2,343 billion USD in 2029, surpassing Australia and Poland, ranking 20th on the list. world. However, to maintain its attractiveness, Vietnam needs to continue to improve the business environment, reduce administrative procedures, develop infrastructure, especially green energy, and promote innovation. .
The World Bank’s latest 6-month economic update report released last week also predicted that Vietnam’s economy will grow by 5.5% in 2024 and gradually increase to 6.0% in 2024. 2025. According to the WB, after experiencing a period of deceleration in 2023, the economy is showing some signs of recovery in early 2024. Exports are recovering, domestic consumption and private investment are also on the rise. momentum gradually increases. In addition, the real estate sector is also expected to recover stronger at the end of this year and next year, boosting domestic demand as investors and consumers gradually regain confidence.
Meanwhile, the Asian Development Bank (ADB) is more optimistic when it expects Vietnam’s economy to grow by 6.0% in 2024 and 6.2% in 2025. According to ADB, demand The global slowdown and high international interest rates have impacted Vietnam’s growth in 2023. However, a rapid shift to pro-growth monetary policy and large-scale public investment is one of Key measures were taken to sustain growth recovery. A relatively comprehensive recovery in the export processing and service industries and the stable operation of the agricultural sector are expected to support Vietnam’s recovery.
In Korea, according to an article published in Donga Ilbo newspaper, Vietnam is being considered a “next generation factory” and a developing market to replace some other markets, becoming a research center. and advanced development (R&D). The article clearly shows that Vietnam’s R&D competitiveness benefits from changes in Government policy. The Vietnamese government aims to go beyond the previous “Made in Vietnam” model, which was limited to the role of a processing facility, to become a manufacturing center with its own technology and production capacity. and is increasing efforts to promote the information and communications technology (ICT) sector.
Strategic destination for foreign businesses
Workers of Samsung Electronics Vietnam Company Limited located in Yen Binh Industrial Park (Dong Tien ward, Pho Yen town, Thai Nguyen province) produce smartphones. Photo: Anh Tuan/TTXVN
Not only international organizations, many foreign businesses have also made very positive assessments of Vietnam’s economy. Most recently, US technology group Apple announced that it will increase spending on supply chain partners in Vietnam, which is considered a key production center. This announcement was made when Apple Chief Executive Officer (CEO), Tim Cook, had a two-day visit, starting on April 15, in Vietnam. According to Apple’s announcement, Vietnam is one of the world’s top 5 countries in mobile game production. Mr. Cook said Apple is committed to continuing to strengthen connectivity in Vietnam.
Previously, in March 2024, General Director of Samsung Vietnam Complex Choi Joo Ho said that in 2023, Samsung would invest an additional 1.2 billion USD, bringing the total investment capital in Vietnam to 22.4 billion USD. USD. Samsung pledges to continue investing an additional 1 billion USD each year in Vietnam. Samsung’s Research and Development Center currently has 2,400 working engineers, of which Vietnamese engineers are the “core” force in researching artificial intelligence (AI) features in phone lines. The new Galaxy S24, highly appreciated by Samsung Group for its capabilities.
The newly released report of Singapore-based UOB bank maintains Vietnam’s growth forecast this year at 6%. UOB said “the outlook for 2024 is positive although risks remain”. Challenges include the Russia-Ukraine and Hamas-Israel conflicts that could disrupt global trade and energy and commodity markets. In return, the grounds for optimism for growth in the coming quarters include the recovery of semiconductor industry demand, stable growth in China and the region, and the ability of central banks to loosen monetary policy. major challenges as well as beneficial shifting trends in the supply chain for Vietnam and ASEAN.
Previously, in the article “Assessment of the ASEAN digital economy”, experts from HSBC bank said that the ASEAN digital economy is entering a new bright phase, in which Vietnam has become a leading market. leader in the digital industry for domestic and foreign businesses. Ms. Amanda Murphy – Director of Corporate Banking, South and Southeast Asia, HSBC Asia – Pacific said that Vietnam’s digital economy will grow the fastest in ASEAN in 2022 and 2023 and is expected to maintain this position until 2025. Vietnam is also forecast to have 67.3 million smartphone users by 2026, accounting for 96.9% of Internet users.
Fiscal growth drives growth
Mr. Shantanu Chakraborty, ADB Country Director in Vietnam, shared that Vietnam’s economy is expected to grow at a solid pace this year and next, despite the challenging global environment. “However, global geopolitical uncertainties and domestic economic structural constraints could impact this outlook. Policy measures in 2024 will therefore need to incorporate short-term growth support measures to boost domestic demand with long-term structural improvement solutions to promote sustainable growth.”
The ADB representative noted that to promote growth, Vietnam needs stronger measures to address domestic structural weaknesses such as the heavy dependence on the export processing industry of businesses. FDI, loose linkages between export processing industries and the rest of the economy, nascent capital markets, overreliance on bank credit, as well as complex regulatory barriers complicated for businesses.
Mr. Nguyen Ba Hung, ADB Chief Economist in Vietnam, noted that there is not much room left for monetary policy and interest rate reduction. Amid limited monetary policy space, fiscal spending and investment will be key to growth in 2024.
Sharing this point of view, the latest report of the WB also emphasizes the importance of fiscal policies to strengthen the recovery of Vietnam’s economy. The report recommends accelerating the pace of implementation of infrastructure investment projects funded by public resources. This would help stimulate the economy, with a potential GDP growth of 0.1 percentage point for every 1 percentage point increase in public investment as a proportion of GDP.
“Investing in public infrastructure projects creates many long-term benefits in addition to immediate economic stimulation” – that is shared by Mr. Sebastian Eckardt, Regional Director of East Asia and the Pacific of World Bank Macroeconomics, Trade and Investment said.
Expert Eckardt also said: “Efforts to strengthen public investment management will also address important infrastructure bottlenecks in energy, transportation and logistics, which are the foundation for long-term economic growth. term of Vietnam”.
