Are Vietnamese businessmen getting 'rich'?

Real estate prices have increased to a "suffocating" level, causing the investment vortex to "haunt" the business community - Photo: QUANG DINH

When dissecting the growth structure to answer the above question of Tuoi Tre, Mr. Tran Ngoc Bau - founder and general director of WiGroup - the largest economic data provider in Vietnam today - believes that the numbers show that businesses are gradually recovering, but are not "getting rich" as quickly as the growth rate...

Why is growth still high after the storm?

* Did Vietnam's GDP growth surprise you when it was announced?

- When the third quarter GDP data was released, many people were surprised because many believed that Typhoon Yagi would drag down growth in many northern localities, thereby negatively impacting the entire economy.

	GDP
2011	6.19
2012	5.34
2013	5.26
2014	6.11
2015	6.85
2016	6.4
2017	6.49
2018	7.35
2019	7.30
2020	2.19
2021	1.53
2022	8.98
2023	4.4
2024	6.82

Mr. Tran Ngoc Bau

However, for those of us who work with economic data and spend a lot of time working with numbers, it's not too surprising.

There are three main reasons:

Firstly, industry and services account for over 80% of the contribution, while agriculture, forestry, fishery and aquaculture only account for an average of 11% and are gradually shrinking.

If the storm devastates the industrial capital, the impact on growth would be huge.

But agriculture, forestry and fishery are the most damaged sectors recently. Statistics also confirm that this sector has slowed down, only 2.58% compared to the same period.

Dissecting GDP growth data by quarter by sector

Second, about how to calculate GDP. The GDP figure announced at the end of the third quarter is actually only compiled up to the third week of the last month of the quarter. The last week will use estimates.

Typhoon Yagi made landfall and caused major damage in mid-September, so it's possible that the model estimates may not accurately account for the damage caused by the storm.

On the other hand, according to the principle, GDP is only calculated on the newly created value added in the period, not on the value of accumulated assets. Storms destroy houses, ships, means of production, infrastructure... things that are not counted in GDP in the period.

The consequences of destroyed production facilities and infrastructure will impact future earnings, which may become more evident in the fourth quarter.

With the orientation of promoting FDI attraction and accelerating exports, the positive point is that Vietnam's growth is no longer subject to major fluctuations due to natural disasters, storms, and floods as before.

Be careful, domestic consumption growth rate is weakening.

* Can you share more clearly, from the extracted data, what do you see as the "worrying" issue?

- Vietnam has had two impressive GDP growth periods, but it seems like we are always surrounded by complaints, so what is going on? Based on data and personal opinion, I think there are two reasons.

Firstly , exports are making an increasingly large contribution to the economy and the impressive growth in the last two quarters was largely determined by this sector.

This sector recorded very strong growth in the first 9 months of the year, up to 15.4% compared to the same period last year. Meanwhile, domestic consumption is clearly slowing down, growing only 8.7% compared to an average of 11-12% per year.

However, the problem is that Vietnam's exports are currently dominated by FDI enterprises, accounting for 72% of export turnover.

Vietnam's export proportion by region

Second, the real estate market has a huge impact on people's financial health and consumer psychology.

Their working income may have recovered somewhat, but their income or housing burdens are still hanging over their assets.

When people feel poor, the first thing they do is cut back on spending. Thus, the difficulties in the real estate market have negatively impacted domestic consumption and the real economy.

Thus, if the economy is increasingly surrounded by FDI and real estate, in the short and medium term, many figures will no longer reflect accurately, causing distortions in management decisions.

Hope businesses will be listened to more, stable business environment

* So Vietnamese businessmen, enterprises, and Vietnamese people have not become rich as this foreign newspaper said about our "rocket" growth?

- In the economy, there will be areas that recover well, and areas that are still struggling. But to say whether Vietnamese people are really getting rich when looking at the GDP growth rate that is considered "miraculous" is a matter of much debate.

On the people's side, perhaps the decline in consumption figures, especially luxury consumption, has shown us part of the reality.

Domestic manufacturing enterprises still face many difficulties due to weak demand - Photo: QUANG DINH

On the business side, data on dissolved, closed and newly opened businesses will also partly confirm the difficulties of this group.

Regarding total registered capital, there was a slight growth in the first 9 months of this year but continued the downward trend of the past 5 years. If businesses saw business opportunities, we probably would not have this number.

Profitable	44.6
loss enterprise	46.9
Break even	8.5

Data: White Book of Enterprises 2024 published by General Statistics Office

The more real estate prices increase, the more enthusiastic the real estate business becomes, and the fewer people want to get involved in business and production.

Objectively, the growth of the FDI sector will greatly contribute to the growth of the economy in general, pay taxes, create jobs, create income for many people and bring money-making opportunities for supporting businesses in the chain.

But a rich and prosperous country still fundamentally has to rely on internal strength and self-reliance.

To reduce dependence on FDI, it is necessary to increase domestic strength first, and the important thing to do is to get rid of "reliance" on real estate and bank credit.

But the real estate mindset has been deeply rooted in the thinking of many Vietnamese entrepreneurs and businesses. Whoever does business in any field, eventually accumulates a little bit of savings and gradually shifts to real estate, the reason is that real estate has high profitability and in Vietnam, only this channel can absorb large amounts of capital.

* On the occasion of Vietnamese Entrepreneurs' Day October 13, you are both an entrepreneur and a provider of products and services to the business community, what do you have to share?

- I just hope that Vietnamese businessmen always have confidence in the path they have chosen. Because in front of businessmen is the future of the country, behind them is the food and clothing of many families.

Hopefully, businesses will be listened to and given more favorable conditions in terms of policies, procedures and a stable business environment, so they can confidently devote their passion and resources to the development of the country, society and family!

* Thank you very much.

Source: https://tuoitre.vn/doanh-nhan-viet-co-dang-giau-len-20241011193150571.htm