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| Vietnam's economy has optimistic growth prospects. (Source: BCC) |
Removing "bottlenecks" in the real estate market
Assessing Vietnam's real estate market, Mr. Helmi Arman, economist at Citi Vietnam, said that after a period of "freezing", the real estate sector is recovering. The government is promoting structural reforms to lay the foundation for a sustainable recovery in the real estate sector.
The revised Land Law, passed in January 2024, changes land ownership and use rights, abolishing the land valuation framework and land price list so that the land price list is updated annually and approaches market prices.
Changes in agricultural land tenure will allow for large-scale farming to enhance food security. Land rental payments will be allowed in lump sum or annual payments.
According to Helmi Arman, the above efforts will not bring immediate results. But these measures are designed to help remove "bottlenecks" in the real estate sector when demand is stagnant.
Mr. Khanh Vu commented: “There are new signs of recovery in the real estate sector, especially in the secondary market when transactions increased by 10-20% in the last two quarters of 2023 in major cities compared to the same period in 2022”.
FDI bright spot
For international investors, Vietnam's manufacturing sector remains the most attractive, especially the smartphone and consumer electronics supply chain.
For domestic investors, the export of garments, footwear, and furniture is of most interest. The trend of shifting production activities out of China has brought many benefits to Vietnam.
The Vietnamese government wants to boost semiconductor manufacturing and is also looking to increase scale across the entire supply chain by improving capacity in both semiconductor chip testing and packaging.
To do this, the Government plans to train 50,000 engineers by 2030.
At the same time, the strength of the manufacturing sector is positively impacting exports. Exports also increased thanks to increased demand ahead of the Lunar New Year.
“There are some signs of stabilizing exports and some stocks are being restocked,” said Kenglin Tan, senior portfolio manager, equities at Manulife Global Asset Management.
Potential investment areas in 2024 are areas that global manufacturing companies are interested in when investing in Vietnam.
“Demand for industrial real estate and demand for renewable energy are sectors that will have greater growth momentum in 2024,” said Mr. Tan.
Vietnam will apply a global minimum tax rate, so there were some concerns that this would impact investment flows. However, this did not happen.
“From the perspective of foreign investors, whether investing in Vietnam or other countries such as Mexico or Thailand, investors are affected by the global minimum tax policy. After looking at the foreign direct investment (FDI) inflows in December 2023 and after the global minimum tax policy was announced, we can see that investors are not hesitant at all,” Mr. Tan affirmed.
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| Vsip 2 Industrial Park, Tan Huyen District, Binh Duong. (Photo: Quynh Tran) |
In addition, in 2023, FDI capital will also flow strongly into Vietnam.
Mr. Khanh Vu, Deputy CEO of VinaCapital Fund Management, assessed: "In 2023, Vietnam recorded a record of 23 billion USD in disbursed FDI capital and nearly 30 billion USD in committed FDI capital - an increase of more than 30% in 2023. This will 'pave the way' for a strong increase in FDI capital in the future".
Citing the example of US President Biden’s visit in September 2023, Mr. Khanh Vu emphasized that the visit encouraged many companies to consider relocating or expanding outside of China. There are clear signs that FDI continues to shift out of China and into Vietnam.
In addition, South Korea has pledged to support investment in Vietnam and aims to exceed $100 billion in total investment by 2025.
To date, the land of kimchi has invested 84 billion USD in Vietnam, mainly in the manufacturing sector, with 62 billion USD invested in more than 4,600 projects, with large manufacturing corporations such as Samsung, LG and SK.
Optimistic growth
Regarding growth rate, international organizations and experts assess that in 2024, Vietnam's economy will grow optimistically.
Mr. Khanh Vu commented: “The recovery in GDP growth is thanks to the growth in exports, manufacturing, tourism, and the slight recovery in domestic consumption and consumer confidence.
Public sector wages will increase from mid-2024. This is one reason for the sharp increase in domestic spending in 2024 compared to 2023.”
Vietnam's economic growth is also thanks to preferential interest rates.
Mr. Khanh Vu noted that it is encouraging that companies are now borrowing for working capital and capital expenditure. A year ago, businesses borrowed at interest rates of 9-11%, but now they can borrow at interest rates of 5-7%. Deposit interest rates are falling faster than lending interest rates, so lending interest rates will probably fall further.
Bloomberg news agency forecasts that Vietnam's economic growth in 2024 will reach 6% in the first and second quarters of 2024, while for the whole year of 2024, the growth rate is forecast to reach 6%, then surpass 6.4% in 2025.
Inflation in 2024 as a whole is forecast to be 3.5%, before falling to 3.2% in 2025 - below the target of 4-4.5%.
Also with a rather optimistic perspective, the forecast of the Investment Analysis and Consulting Center under SSI Securities Company expects that in 2024, GDP growth will improve to 6-6.5% with the recovery of trade, consumption and public investment.
"The government maintains loose fiscal and monetary policies while the message is still focused on growth, as macroeconomic stability has been ensured," the Investment Analysis and Consulting Center informed.
However, there are still certain "headwinds" affecting the economy. For example, the slowing growth of the world economy and increasing geopolitical conflicts are risks to watch in 2024.
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