Econ
Stability required to attract investors
Andy Ho, Chief Investment Office at Vietnam Opportunity Fund (VOF), VinaCapital`s flagship fund, believed the Vietnamese government has created a foundation of stability to attract foreign investors.
On CNBC, Ho said the Vietnamese government has recognized that "instability isn't going to attract foreign direct investors. "Therefore, over the past five to 10 years, they have created a foundation of stability where the FX (foreign exchange), the legal infrastructure, the inflation, the interest rates - all of that is stable."
Ho highlighted the presence of technology firms Intel and Samsung in the country as examples of the government realizing that foreign direct investment is creating wealth. The creation of jobs, crucial given the country's youth population bulge, as well as the growth of urban areas provides an investment opportunity according to Ho.
"This is where we invest, because as people move into the city, they're going to want basic goods and services," he added.
Opportunities lie in sectors such as banks, education and pharmaceuticals, he added.
The International Monetary Fund sees growth for Vietnam at 6.6 percent in 2018, well above the emerging market average of 4.9 percent. Vietnam is among Asia's best performing stock markets, though volatility persists. April 2018 marked both its record high and its worst month in two years. Nonetheless, the Vietnam Index in Ho Chi Minh City has risen 42 percent in the last 12 months.
Strong foreign capital inflows - of which direct investment is roughly $20 billion annually - stabilize the currency and enables the management of inflation and interest rates, Maarten-Jan Bakkum, a senior strategist for emerging markets at NN Investment, said in a note on Tuesday.
"The consumption boom that results from this is currently one of the strongest in the entire emerging world," he said.
"Over the last twenty years, Vietnamese exports have grown five times faster than the average growth in the emerging world and twice as fast as the export growth in China, the country known as the export champion," Bakkum explained.
For Ho, the country's promising export potential is boosted by its vast coastline, which pertains to the creation of ports connecting to markets including southern China.
But, the Southeast Asian country does face headwinds. While Vietnam's current labor cost is one third that of China, "the biggest concern over the next five to 10 years is wage inflation," Ho said.
Total registered investment to Vietnam in the first 4 months of 2018 reached US$8.06 billion, equivalent to 76.1% compared to the same period of last year, according to the Foreign Investment Agency under the Ministry of Planning & Investment.
As at March 20, disbursement progress of FDI projects reached US$3.88 billion, increasing 7.2% year on year.
Specifically, 618 new projects have been approved with total investment capital of US$2.12 billion, down 27.3% over the last year's period, while 199 existing projects have adjusted capital investment with additional fund of US$1.79 billion, a decrease of 54.6% year on year.
The data shows that 76 countries and regions have on-going projects in Vietnam, with Korea ranked first for US$1.84 billion, contributing to 31.6% of total investment. Hong Kong came in the second place with around US$689 million, while the third place belonged to Singapore with US$649 million.
Illustration photo.
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"This is where we invest, because as people move into the city, they're going to want basic goods and services," he added.
Opportunities lie in sectors such as banks, education and pharmaceuticals, he added.
The International Monetary Fund sees growth for Vietnam at 6.6 percent in 2018, well above the emerging market average of 4.9 percent. Vietnam is among Asia's best performing stock markets, though volatility persists. April 2018 marked both its record high and its worst month in two years. Nonetheless, the Vietnam Index in Ho Chi Minh City has risen 42 percent in the last 12 months.
Strong foreign capital inflows - of which direct investment is roughly $20 billion annually - stabilize the currency and enables the management of inflation and interest rates, Maarten-Jan Bakkum, a senior strategist for emerging markets at NN Investment, said in a note on Tuesday.
"The consumption boom that results from this is currently one of the strongest in the entire emerging world," he said.
"Over the last twenty years, Vietnamese exports have grown five times faster than the average growth in the emerging world and twice as fast as the export growth in China, the country known as the export champion," Bakkum explained.
For Ho, the country's promising export potential is boosted by its vast coastline, which pertains to the creation of ports connecting to markets including southern China.
But, the Southeast Asian country does face headwinds. While Vietnam's current labor cost is one third that of China, "the biggest concern over the next five to 10 years is wage inflation," Ho said.
Total registered investment to Vietnam in the first 4 months of 2018 reached US$8.06 billion, equivalent to 76.1% compared to the same period of last year, according to the Foreign Investment Agency under the Ministry of Planning & Investment.
As at March 20, disbursement progress of FDI projects reached US$3.88 billion, increasing 7.2% year on year.
Specifically, 618 new projects have been approved with total investment capital of US$2.12 billion, down 27.3% over the last year's period, while 199 existing projects have adjusted capital investment with additional fund of US$1.79 billion, a decrease of 54.6% year on year.
The data shows that 76 countries and regions have on-going projects in Vietnam, with Korea ranked first for US$1.84 billion, contributing to 31.6% of total investment. Hong Kong came in the second place with around US$689 million, while the third place belonged to Singapore with US$649 million.
