In this episode: Vietnam’s positive changes in recent years, as well as why now is the time to be here.
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Below is a transcript of the episode, edited for readability.
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Granger: I’ll give you some overview numbers. There’s a lot of them. The population is about 97 -98 million, over half of them are in the labor force. The unemployment rate is about 2%. The income per capita is around 2,5-2,600 dollars now. It’s really increasing. Our global competitiveness here, our index is about 60% out of the top hundred. GDP growth has been 6 to 7% for the last five years. Industrial growth in the first 11 months of 2018 was 12.2%, the highest level since 2011. Agriculture, forestry, fishery are about 15% growth. Construction, 35%, Services, 41%, Taxes only 9.98%. Incredible numbers! If you look at the numbers that Vietnam has been putting out, it is really incredible to see.
Vietnam’s Economic Performance and Changes
Granger: Economic performance, the International Monetary Fund (IMF) macroeconomic stabilization starting from 2011 for Vietnam has brought positive results. Very low inflation. The gap between GDP and people in Vietnam compared to other countries and is increasingly shortened. The World Bank’s Doing Business in 2018 Vietnam ranked 69th. It’s increasing every year.
Granger: It’s really the light beam of an emerging market in Southeast Asia. Vietnam has a recorded growth that has exceeded forecast in spite of the deficit in its trade and balance. And as forecast, GDP growth in 2019 is between 6.5 and 7%, depending on who you look at.
Granger: There’s great economic freedom here. The rule of law for property rights, government integrity, judicial effectiveness, government spending, Vietnam scores very high. Regulatory efficiency is getting better every day. The fiscal health is about 30/100. From a business freedom standpoint, that’s getting better every day here. It’s a very open market.
So, why Vietnam? Why now?
Granger: So, why Vietnam? Why now? And you could list a lot of things, right? We’re a full member of the WTO, CPTPP (The Comprehensive and Progressive Agreement for TPP), that’s not really in place today. Fast growing economy. The FDI inflows are strong. Inflation’s moderate. Exchange rates are stable. Political stability. We’re a key partner in the Asian market with Japan, Korea, Taiwan, and et cetera. The transfer and high tech skills and know how is increasing every day. The proximity to China and East Asian markets. Vietnam is bordered by a huge ocean and has many ports. FTA with EU is ratified this year and there are so many potential opportunities. Certainly, Vietnam is a likely key winner of the US-China trade war, which we all hear about every day.
Granger: But that’s not really what I see. I see, of course, the rising middle class, more disposable income, but when I really see is excitement. People are excited to be here. The energy is incredible here. Every day, I enter a meeting, I enter a room, I see smiles on people’s faces. I see hands being stuck out to handshake, welcoming new business people, welcoming new opportunities. I see people who listen and want to learn, who want to grow, who want to be trained, who want mentors, skilling up all the time looking to expand, looking to make their lives better. You know, it’s an amazing time here. As I always say, it’s kind of the golden age of Vietnam. So many opportunities, so much excitement.
Granger: You know, we can talk about all the different things that are happening on the government side. They’re really trying to reform and get the banking system stronger. They’re trying to put new decrees in place for data privacy and for a cashless society where you could have more digital banks and e-wallets, and all these things. These are wonderful goals to set out. They’re going to take a lot longer than we think, but the fact that the country is doing it and that there are so many entrepreneurs here. I mean, I always tell people, it just reminds me of New York. I don’t know if I’ve been in a more capitalist country and time like it is right now. Everybody is an entrepreneur. It seems like everybody has a side job. Everybody’s trying to figure out how they can get a piece of the pie. The dream, the Vietnamese dream, if you will. It’s really exciting, folks! I tell you, it’s a great time to be.
But what about the challenges?
Granger: There are some real challenges. The infrastructure here, the roads, transportation, train, other public transportation needs to get fixed. We really need that to get fixed. We need transparency and the legal system. We need structural reforms to be completed in the banking system and the public investment and the stock market. We need more utilization. We don’t want the middle-income trap to happen. We want to be able to show growth in a way to create more growth. Really making sure that the medical industry grows. And, making sure that there’s a lot of supporting industries, not just manufacturing, but supporting new technology and other growth opportunities coming in the future.
Granger: It’s an amazing place. It’s an amazing economy. It’s an amazing time to be here. I’ll tell you, this is the place to be right now. I just told you about Vietnam’s positive changes. I hope you feel the same way I do. I look forward to seeing you on the street or in the next meeting. Thanks and have a great weekend!
The Lotus Talks is produced by The Vietnam Group. This episode was produced by Granger Whitelaw, Cameron Lynch and Toan Tang.
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