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Photo courtesy of Vietnam News Agency (VNA)

Development prospects to become a regional economic centre of Vietnam

Continuous high economic growth for many decades has helped Vietnam in having a good foundation to keep up with the leading economies of ASEAN.

After more than 30 years of reform, Vietnam's economy now has a completely new look. Continuous high economic growth for many decades has helped Vietnam in having a good foundation to keep up with the leading economies of ASEAN such as transport infrastructure, industrial parks, urban areas, human resources, high-quality resources, and budget reserves.

Compared to the period before 1986, Vietnam's economy now integrates deeply with the world economy and the region. Vietnam participates in signing many free trade agreements, connecting directly with most of the developed economies globally as well as major economic centres of the world (10 multilateral FTAs ​​and 4 bilateral FTAs).

More than 2 years of the pandemic, Vietnam's economy has experienced harsh challenges like most countries. At the early stage of the pandemic, Vietnam succeeded in its no-COVID-19 policy and even when the pandemic lasted longer and new strains appeared continuously, Vietnam’s rapid vaccination policy has helped it achieve a miracle of vaccine coverage for more than 80% of the population within just 6 months. This strategy has helped Vietnam transition to an adaptive policy of living with COVID-19, which is currently being applied by many countries around the world.

Moreover, Vietnam's GDP growth in 2022 is forecasted to be quite high at around 6-6.5% with a per capita income of about USD3,900.

Opportunities for Vietnam to become an important link in the regional economy

With assets built over many years, Vietnam now has economic and financial centres that meet national standards in all three regions of the country, including Hanoi, Da Nang, and Ho Chi Minh City. The outstanding construction and planning of these economic centres aim to help in connecting Vietnam’s regions and serve as connection points with the ASEAN economy and major economies.

Vietnam is also planning to form hi-tech industrial parks, hi-tech agricultural zones, financial and monetary centres—all according to world standards—with Ho Chi Minh City prospected to become an emerging financial hub in the region. The high-speed railway system from Hanoi to Ho Chi Minh City alongside major airport constructions (including Long Thanh and Dong Nai airports) are expected to connect Vietnam's regions conveniently.

With the current trend of shifting investment from Northeast Asian countries to the South is increasing, especially from Japan, Korea, Taiwan and including China, it is expected to awaken the potential of many economic centres in Vietnam. With a large area of more than 3400 km of coastline and a natural area of ​​more than 331,000 km2, economic centres are spread across the country, which can help Vietnam adapt to the different needs and desires of investors from multiple countries.

Most importantly, Vietnam's economic development policy has also been clearly shaped in an open direction, meeting international standards. Vietnam’s vision of wanting to become a link in the regional and world economy helps it to gradually open up about policies and laws. Cities of international standards are being built gradually and are becoming increasingly present in the country. This is a major development in Vietnam's development mindset. 

Opportunity to take the lead in the digital economy and industrial revolution 4.0

Vietnam's recent digital economic development policies have been bold, rapidly developing its digital government, digital society, and 5G technology. In 2021, three corporations Viettel, Ericsson, and Qualcomm successfully carried out a test where their 5G data transmission speed reached 4.7Gb/s, 40 times higher and 2 times faster than 4G speed. Technical infrastructure along with a large number of people who are increasingly digitally and digitally savvy will also be the driving force for Vietnam to continue to develop in the era of industrial revolution 4.0. In 2021, the value of some Vietnamese technology companies increased by about 200% on the Ho Chi Minh City Stock Exchange, showing that Vietnam's digital technology industry is nascent but fastest-growing.

The COVID-19 pandemic shows the great resilience of Vietnam in applications and digital transformation. Despite having an average digital base, Vietnam has adapted and maintained political, economic, commercial, and social activities on its digital platforms very well just in a short time, showing that there is a lot of potential in Vietnamese society that has never been known before. 

According to statistics, the average time spent with devices using the internet of Vietnamese people is about 3.6 hours/day, nearly 2 times higher than that of the UK (1.8 hours/day), the US and the US. Japan (2 hours/day). In the corporate sector, the rate of digital payment usage is up to 51%. The consumer growth rate on e-commerce platforms in Vietnam in 2017 reached about 63%. This rate has increased much higher in recent times. The percentage of private businesses using e-mail and owning their own website to interact with customers and suppliers is up to 90% and 50%, compared to 70% and 40% of the world average.

Although there has not been any official digital economic agreement with any country yet, Vietnam is considering and will join a digital economy agreement in the near future. At the macro and policy level, Vietnam is undergoing a very rapid transformation so that it can develop a fast digital economy in the near future.

Vietnam as a destination for international investment in the post-COVID-19

There are many economic hubs in the region that are emerging in the post-COVID era. In ASEAN, competition amongst countries is also very strong to gain a superior advantage in becoming an investment attraction centre in the post-COVID-19 period.

Vietnam is expected to become an emerging focal point in the region. Investors from the US, Europe and Northeast Asian countries are more interested in Vietnam. The expectation that international investors want to get from Vietnam is due to the profitability of investing in Vietnam.

Vietnam has the advantage that labour costs have not yet risen too high with the number of young human resources and skilled and trained workers increasing. Land prices and taxes in Vietnam are still average compared to other countries in the region. Furthermore, its geopolitical position is a very important factor. If used well, Vietnam can be an important economic connection point from mainland ASEAN to maritime ASEAN, from Northeast Asian countries to the South, and from non-ASEAN economies with the intra-ASEAN region.

The Vietnamese market is also densely populated. Road and air connections between Vietnam and China, Cambodia, Laos, Thailand, and Myanmar are maintained well which is expected to create an impetus for the world's manufacturers and traders in post-COVID-19. There are many ways for the world to access the large market in ASEAN, but there are not many centres where the world can reach all of ASEAN through just one point.

The President of Vietnam, Mr Nguyen Xuan Phuc, visiting Singapore in early 2022 is an important milestone with Vietnam seeking more cooperation relations in order for the two countries to develop together in the near future. With Singapore considered as a regional economic, financial, and monetary centre for the past decades, this would help increase Vietnam’s competitiveness as an emerging economic centre and bring many development advantages to countries and regions.

The visit by President Nguyen Xuan Phuc has been the first state visit in Singapore since the start of the pandemic. This reaffirms Vietnam’s excellent ties with Singapore, as both countries commemorate the 50th anniversary of the establishment of diplomatic relations and the 10th anniversary of the establishment of the Strategic Partnership in 2023.     

Faced with many opportunities that are opening up, it is important for Vietnam now to clearly define the goals and model that Vietnam wants to create in the future. It can be a 4.0 technology industry development centre or a model where Vietnam has advantages such as an airport centre, a seaport or a centre for artificial intelligence and automation. It can also be a development model that combines multi-objective and multi-disciplinary.

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