VIETNAM IN FOCUS

THE RAPID EVOLUTION OF VIETNAM

... Urbanization and modernization are transforming the landscape ...

 

CLOSING THE GAP (WITH THE REST OF ASIA)

Vietnam has demonstrated a remarkable pace of economic and societal evolution and development  since the early 2000s. The transformation from rice fields and bicycles to high tech business parks and streets filled with luxury cars has been nothing short of breath-taking. At the same time, the true success of Vietnam has been the ability to combine this growth with relative stability throughout the political and economic spectrum.

Underpinned by positive demographics, wide spread liberalization and record inflows of foreign direct investment Vietnam has been one of the fastest growing economies in the world. While  GDP has doubled since 2010, the currency has been stable against the USD and inflation has remained below 5% and unemployment below 2.5% for the past five years. In 2018 inflation was under 3.5% and GDP was over 7%.

Accompanied by one of the highest rates of literacy the young population has been an enthusiastic adaptor of everything from social media and smartphones to motorized transport. The entrepreneurial spirit within the young population is evidenced by the vibrant start-up ecosystem that permeates the country. Increased exposure to overseas education, together with the rapid expansion of technology through the economy has facilitated a wave of new privately-run companies.

These factors combined to create a modern economy within Vietnam that is now experiencing a series of growth bottlenecks, all of which create opportunities for investment. We are particularly focused on energy infrastructure, real estate development and transportation infrastructure as offering critical solutions to sustaining the pace of growth within the country.

Relationships remain a critical cultural component within Vietnam. For the activities of ECV and our partners, these are pivotal to the successful navigation of local, provincial and state bureaucratic intricacies, especially within this transitional environment.

... Liberalisation and deregulation have been important for FDI opportunities  ...

 

STRUCTURAL IMPROVEMENTS TO LAW AND GOVERNANCE

Against a stable political backdrop, with 2016 marking the transition to a new government, under Prime Minister Nguyen Xuan Phuc, there have also been important legislative reforms that have supported inward investment into Vietnam.  These include improvements in the investment law, the liberalization of property rights and strengthening of minority shareholder rights. As a result foreign direct investment is currently averaging more than USD7bn a quarter, led by regional investors such as Japan, Korea and Singapore.

Within the capital markets the removal of foreign ownership limits, in combination with an accelerated privatization process since 2016 have spurred a sharp expansion in both liquidity and market multiples. There are now more than 1,400 listed companies with a combined market capitalisation of more than USD150bn. As these measures have spread through the market the number of companies with a billion dollar market capitalisation has doubled within the last two years alone.

Furthermore, we have been greatly encouraged by the modifications to legislation that have overhauled public-private-partnership structures to provide better guidelines and transparency. The Vietnamese government has also focused on massive deregulation and privatization, and in just the past two years have cut business regulations by over 55% and customs regulations by over 68% and is recognized as a rapidly opening economy with 12 Free Trade Agreements (FTA) signed and another four FTA’s under negotiations.

We believe these structural improvements serve as important pre-conditions for encouraging the next wave of foreign investment into the country as they help in securing returns and exit opportunities for foreign investors.

 

... Commercial and residential real estate is expanding as the economy transforms ...

 

THE UNITED STATES: A KEY STRATEGIC PARTNER

Vietnam continues to strengthen its relations with the United States against this remarkable backdrop of industrial and societal evolution. Mutual and strategic interests between them are supported by geopolitical tailwinds which have given rise to a series of initiatives aimed at bringing the two countries closer together.

Guided by the 2013 US-Vietnam Comprehensive Partnership and the 2015 bilateral Joint Vision Statement, the two nations have built an overarching framework to advance bilateral relations and advance cooperation on political and diplomatic relations, science and technology, education and training, environment, health, trade and economic issues.

Vietnam’s adoption of global standards of performance in economic policy and important reforms related to governance, at both government and corporate levels, have contributed significantly towards its integration into the global economy. This ongoing co-operation has coincided with Vietnam’s improved ranking among globally monitored economic freedom metric systems, including Transparency International’s global anti-corruption index.

External References :

- US Trade & Development Agency

- Overseas Private Investment Corporation

- US Department of Energy

... US technology transfer spans renewable energy through to traffic control systems ...

 

THE BOTTOM LINE: A STABLE GROWTH OPPORTUNITY

The combination of growth and stability that has been demonstrated by Vietnam is a standout opportunity within the Asian region over the coming decade.

Strict adherence to the prevailing laws in both the United States and Vietnam is also paramount to all of our activities at ECV. And within this framework of one vision, two countries we continue to develop multi-asset class opportunities across a range of different sectors.

We look forward to welcoming new partners as we continue this exciting and compelling journey.

... Vietnam's airports are handling record levels of traffic from both business and tourist arrivals ...