Foreign experts say now is a good time to invest in Vietnam.

Director of Vietnam Prosperity Strategy Fund explains why now is a good time to invest in Vietnam - Asia's “sweet spot”.

Workers at a packaging company in Nghe An province. Photo: Hai Nguyen

Germany-based asiafundmanagers.com published an interview with Shasha Li Mafli, Director of the Vietnam Prosperity Strategy Fund, part of Eric Sturdza Investments, who said that now is a good time to invest in Vietnam. Ms. Mafli said that Vietnam is undergoing rapid industrialization and urbanization, and is a country that directly benefits from the trend of global businesses diversifying their supply chains and outsourcing production, thereby reducing their dependence on China. Commenting on the Vietnamese stock market, which has performed better than emerging markets since 2018, Ms. Mafli said that thanks to higher government investment in infrastructure leading to new spending on many large projects, stocks in the materials and energy sectors have benefited. These sectors will continue to have strong growth and be re-rated. In addition, over the past few years, Vietnam has continued to gain market share in global manufacturing and exports, and is an attractive destination for foreign direct investment (FDI). This has had a major impact on stock valuations. Corporate earnings, reflecting the country’s improving economy, are forecast to post double-digit growth by 2024. Retail and consumer stock valuations are also attractive. Recent economic data point to improving growth and consumer confidence. Vietnam’s growing middle class with increasing spending power is a favorable factor, creating incentives for foreign companies to invest. In addition, according to Ms. Shasha Li Mafli, Vietnam’s remarkable economic growth this century is partly due to its young, well-educated population of 100 million people and a productive, skilled workforce. Vietnam also benefits from stable, business-friendly economic policies and political stability. With numerous trade agreements and strong infrastructure, the economy is moving up the value chain – from agricultural exports to textiles and garments – and electronics, which now account for more than a third of the country’s exports.

Chip products of Intel (USA) displayed at the opening ceremony of the Vietnam National Innovation Center. Photo: Hai Nguyen

Ms. Mafli believes that Vietnam is poised for high growth, offering foreign investors unique opportunities during its economic transition period. Ms. Mafli noted: "We are also optimistic about the real estate market. In the long term, urbanization is driving demand for affordable housing in cities. Industrialization is driving demand for industrial space and retail modernization is increasing demand for commercial real estate. In the past 6 to 8 months, interest rates have fallen, liquidity conditions have improved and supported this real estate demand. We intend to continue investing in this sector." Ms. Mafli also said that Vietnam is considered a frontier market and the Vietnamese government has set a target of transforming the country's economy into an Emerging Market by 2025, while increasing market capitalization to 100% of GDP from the current 56%. Vietnam is currently one of the fastest growing economies in the world, with impressive annual GDP growth of 6-7% over the past two decades. The government’s economic ambitions have implications for financial market development. The State Bank of Vietnam has cut interest rates to boost the economy and we expect growth-supportive policies to continue, said Ms. Mafli. The result has been improved market liquidity and higher trading volumes. At the fiscal level, public debt is 37% of GDP, which will allow the government to continue investing in the country’s infrastructure while FDI, particularly in manufacturing, remains strong and has a positive impact on growth and employment. Vietnam is proving attractive to foreign investors. FDI in Vietnam will increase by nearly a third to about $37 billion by 2023. "As mentioned above, there are many factors for increased international investment in Vietnam. The country has a target market capitalization, is classified as an Emerging Market, has many trade agreements and diverse trading partners, political stability and consistent economic policies, infrastructure investment and a young and highly educated population with low wages by international standards. The country has enormous growth potential. We believe that combined, these factors will continue to support investment in Vietnam," Ms. Mafli affirmed.

Laodong.vn

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