Commenting on this economic return, chairman of EuroCham Vietnam Alain Cany thought that thanks to strong fundamentals, Vietnam’s economy would gradually rebound at least for the coming six months until its momentum becomes stronger in second half of 2022.
Factories in Southern industrial zones could rebound with a slower rate than others due to longer and stricter lockdown during the recent months.
Despite the current gradual reopening, sectors such as tourism, hospitality, events – the first to close, are still under strict control, which deters consumers, as a result, dampens other sectors in the value chains.
In addition, some corporates in labour-intensive industries that have scaled down their production during Covid’s fourth wave could face new challenges in recruiting and training people.
However, Cany pointed out that some sectors still have benefited during the pandemic, such as e-commerce with growth of 18 per cent to reach the revenue of more than $11 billion in 2020. The market is set to continue growing as consumers become more accustomed to purchasing goods and services online.
On the other hand, thanks to FTAs Vietnam joined, seafood, coffee, clothes, shoes, and mechanical equipment production and export will also recover soon, he said in the webinar “Vietnam Day – Open for Opportunities” hosted by HSBC Vietnam.
Commenting on the Fed rate, Frederic Neumann, co-head of Asian economics research of HSBC, said Vietnam would be less likely exposed to high US interest rates due to strong fundamentals and its export-driven economy, although it could be a headwind for economic growth.
He added that the rising energy prices and energy crunch can push inflation up in oil dependent economies like Vietnam and slow the country’s growth recovery.
Energy prices could increase in the coming winter months, but is expected to improve next March. Overall, he saw stabilisation from the second half of 2022.
In term of foreign investment, global investor community will surely track carefully how Vietnam government steers the economy through the storm, which will definitely impact their investment decisions in the upcoming time, according to Warrick Cleine, chairman and CEO of KPMG Vietnam and Cambodia.
Vietnam created both macroeconomic and social stability, which would encourage more foreign investment, as investors love the predictable environment. The country’s other advantages are economic growth story and the government’s engagement with global community.
He said that Vietnam is on right track of quality domestic reform with good quality law and policy, and still the pretty good environment for foreign businesses and investors.
Beside foreign investors, local private sector eagerly expects the growth momentum to be back on track after suffering lots of difficulties in the recent months.
The survey conducted by Private sector development committee (Committee IV) showed that 16 per cent of enterprises closed due to no revenues and working capital while 35.5 per cent of enterprises had to temporarily close due to supply chain disruption. Almost all surveyed enterprises suffered labour shortage since workers returned to hometown.
However, Truong Gia Binh, Dean of Committee IV, affirms the positive spirit and confidence to overcome challenges among businessmen.
The results are imports exports revenue remained resilience, reaching $483 billion, an increase of 24.4 per cent year on year. Newly registered FDI has continuously increased and positive GDP growth in the first nine months contributed to setting a brighter outlook for Vietnam’s economy.
Since the government has adjusted Covid policy from this October, the fast movement of economy reopening and going digital has started.
Currently, a new financial package to support the economic recovery is being planned, while the government has also adopted and applied technology in their Covid-19 control.
More solutions to come, and application of AI and technology is also expected to support the situation management, and a quick economic recovery at the soonest, he emphasized.
New focuses in the new normal
It seems the economy has found its way to go out of the dark days. The time that business leaders to execute their transformation and new focuses has started.
Based on KPMG’s CEO survey, Warrick Cleine said confidence between corporate leaders has come back, and business leaders believed more in the return of normality.
Another change recognised is the shifting mindset of business leaders, from focusing only on employees’ health and safety and business survival back to growth, while some leaders have also turned their attention to organic growth opportunities.
In front of a great deal of new opportunities and trends in the upcoming time, Alain Cany suggested international businesses to keep Vietnam in the middle of their radar screen.
The country offers great domestic market, good opportunities for manufacturing and export at the same time.
With its growing middle-class consumers, which are expected to cover more than half of population by the end of this decade, it provides a promising growth market for international enterprises in sectors and industries ranging from automobile importers to private education providers.
Corporates should take advantages of a number of FTAs that Vietnam has joined, and consider M&A as a popular method to tap into the local market and build partnerships with potential suppliers and partners.