REGIONAL FOCUS: VIETNAM
xxx 55% of Vietnam’s
population is under 35 years old
important,” says Huynh Buu Quang, Chief Country Officer for Vietnam at Deutsche Bank. “Vietnam has also been able to maintain very good relationships with both neighbouring countries as well as the Americas, Europe and Australia.” The country has more than 50 bilateral investment treaties (BITs) − the third highest tally in ASEAN and sixth highest in Asia.
The 13th National Party Congress saw the reappointment of Nguyen Phu Trong as General Secretary of the VCP, confirming the continuity of the country’s political direction. Its one-party system provides local and foreign businesses and investors with stability, and the VCP’s handling of the various Covid-19 waves has further bolstered public confidence.
A safe haven for FDI BITs are just part of the story. Vietnam’s efforts to enter into treaties with investment provisions and investment- related instruments also helps garner foreign direct investment (FDI). For example, further evolution in the nation’s economic stability and integration into the global trade system came when it joined the World Trade Organization in 2007.
Since then, Vietnam has received a total of US$108bn in FDI.
The country has also facilitated foreign competition, including opening up more than 50 industries in 2015 alone. The latest chapter in Vietnam’s accumulation of investment treaties is still being written: the UK-Vietnam Free Trade Agreement signed at the end of 2020, the EU-Vietnam Investment Protection Agreement of June 2019, the EU-Vietnam Free Trade Agreement signed in June 2020, and the Regional Comprehensive Economic Partnership completed in November 2020, all of which Vietnam entered into in the run-up to and during the country’s recent chairmanship of ASEAN. These agreements, once in full force, are expected to further boost its FDI and export-led growth.
Vietnam does not just attract foreign investors: it also has a track record of treating them fairly. On the very rare occasions foreign investors have aired grievances by using treaty provisions to bring arbitration claims against it, independent adjudicating arbitration panels have almost invariably exonerated the conduct of the state.
While Vietnam has a broad and diverse base of trading partners, perhaps its most important are China and South Korea. Many inputs for its factories, both multinational and state-owned, depend upon China, while FDI from South Korea − in particular from Samsung − has helped bolster macroeconomic fundamentals.
The country’s top exports have become progressively more value-added, from basic agricultural products in the 1980s, to footwear and textiles during the 1990s−2000s, through to electronics in recent decades.1
FDI is also becoming
even more ‘high tech’. Developments such as Samsung’s US$220m research and development plant, which is scheduled for completion by the end of 2022, will create a virtuous circle of value-added production and upskilling for the Vietnamese economy and workforce.2
“Samsung is
the number one export revenue earner for the country and that investment is a gamechanger,” notes Quang.
Sound economic management The government spends around 5.7% of its annual GDP on infrastructure improvements; the highest percentage
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