In the last days of the Year of the Cat, Mr. Vicente Nguyen, Chief Investment Officer (CIO) of AFC Vietnam Fund, shared with PV. VietNamNet about the economic outlook in the Year of the Dragon 2024, the bright spots and difficulties.

"FDI magnet"

- Despite facing many difficulties, the Vietnamese economy has had an impressive recovery in the year of the Cat 2023 with most macroeconomic indicators remaining stable. Economic growth reached more than 5%, credit growth rebounded at the end of the year. How do you evaluate the Vietnamese economy and the Government's efforts over the past year?

Mr. Vicente Nguyen: In 2023, the Government made great efforts to restore the economy, including stabilizing the banking and financial market, lowering lending interest rates, cutting taxes and fees, and boosting public investment.

The increased construction of highways and Long Thanh Airport has had certain results. Thanks to that, the economy will increase again in the last quarters of 2023. That is a very remarkable effort.

- In the Year of the Cat, Vietnam has many important foreign affairs activities. Relations with the US, China, Japan, Australia, India, etc. have all improved, even reaching new heights. How do you think this will contribute to Vietnam's economy?

In the context of many political instabilities on a global scale such as the Russia-Ukraine conflict or the volatile situation in the Middle East, Vietnam's establishment of many relationships and upgrading many strategic relationships is a great and brilliant success.

This will help Vietnam attract more foreign investment and introduce Vietnamese products to many countries around the world, helping to increase exports, thereby promoting a strong and growing economy.

- Vietnam has recently been considered a destination for FDI capital flows and is expected to strongly participate in the global supply chain. Economic growth is forecast to rank second in Southeast Asia and top in Asia as assessed by WB, HSBC,... What is your assessment of the above forecasts and comments? Is this an opportunity for Vietnam to make a breakthrough in the Year of the Dragon and the next decade?

We are taking advantage of the opportunities and opportunities along with the big challenges. Many big countries such as the European Union (EU), the US and major economic alliances are interested in Vietnam. This helps Vietnam become a strong FDI magnet.

Becoming the second fastest growing economy in 2024 is entirely possible, even in the next 1-2 decades. However, we must also strengthen major issues to maintain strong growth momentum such as population, administrative procedures, legal corridors, etc.

- With a very high economic openness, including a series of multilateral and bilateral trade agreements, how do you evaluate Vietnam's manufacturing and export industry in the new year 2024?

In 2023, the global economy will face many difficulties, with high inflation in major markets such as the US and the EU. These countries have pushed interest rates to very high levels in decades. For example, the US has raised interest rates to the highest level in 40 years. This has significantly reduced the consumption of goods. Therefore, Vietnam's exports will face many difficulties. In more than 14 years, this is the first time we have had negative export growth.

However, in 2024, the situation will change positively, from the last 4 months of 2023, positive growth will be recorded again. Consumption in major countries will gradually recover, and the possibility of the US lowering interest rates in 2024 will gradually increase. This will stimulate consumption and help Vietnam regain export growth momentum.

I believe that exports will grow strongly in 2024.

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Mr. Vicente Nguyen, Chief Investment Officer (CIO) of AFC Vietnam Fund.

VND is getting stronger and stronger

- Credit growth rate reached 13.71% in 2023 thanks to a breakthrough in the last month, from an increase of more than 9% at the end of November. The strong increase in credit at the end of the year, in your opinion, promises a positive signal?

One thing I am sure of is that the economy will be better in 2024. The economic and financial situation will also gradually improve due to the Government's economic stimulus measures and the global economy gradually returning to orbit. However, the acceleration of disbursement in the last month of 2023 shows many things to be concerned about.

Can you elaborate on this?

Interest rates have hit rock bottom, that is my personal opinion. Deposit interest rates are extremely low. The problem now is not to lower deposit interest rates but lending interest rates and how to speed up loan disbursement into key areas such as investment, export and production and business.

By November 2023, credit growth was only 9%, showing that businesses were hesitant to invest and people were hesitant to borrow for consumption. What we need to do is to strengthen investment and consumption confidence, from which credit will increase again. If we cannot stimulate it again, even if interest rates decrease a lot, credit will still be quite slow. But in any case, lower interest rates will help people and businesses a lot.

- The Vietnamese currency (VND) is among the most stable currencies in the world. The State Bank of Vietnam (SBV) forecasts that the VND will be stable in 2024. What do you think about the SBV's forecast?

I believe that VND will continue to be stable in 2024, even 2025 and the next 10 years. Because we are growing strongly, attracting good FDI capital. Strong export growth, VND is getting stronger and stronger, which is understandable.

- Private investment in 2023 will only increase by 2.7%, the lowest in 10 years, lower than the 3.1% during the Covid-19 period. In your opinion, what is the cause of this phenomenon and how can we improve investment in this sector, avoiding negative impacts on the economic outlook?

Due to the instability of the global economy, consumption, exports and employment have decreased, leading to a decline in confidence. In addition, many of our economic management policies have not been consistent, leading to many risks in business.

Therefore, what we need is to clarify policies, reduce administrative procedures, create conditions for businesses to operate and develop, and private investment to increase again. Otherwise, it is really a long-term concern.

Accelerate public investment

- Recently, many large transportation projects have been strongly promoted and many projects are planned to be implemented soon such as Long Thanh Airport project, highway system, metro lines, belt roads in Hanoi and Ho Chi Minh City. How do you evaluate the above efforts, the implementation ability as well as the impact of public investment on the economy?

Public investment accounts for about 5% of GDP, if public investment increases by 20%, it will contribute about 1% to GDP. We need to actively disburse and promote public investment to stimulate economic growth, especially focusing on infrastructure projects such as roads, bridges, airports and energy.

These projects not only stimulate the economy in the short term but also provide growth momentum in the long term. Therefore, we need to urgently and actively accelerate public investment.

- Recently, countries around the world tend to focus on technology, especially artificial intelligence (AI) as well as digital transformation programs. This is the premise for domestic enterprises to become global companies. How do you evaluate this trend in Vietnam and the ability of Vietnamese enterprises and workers to integrate technology?

Vietnam has a good high-tech human resource base but has not received proper investment. Besides FPT, there are currently only a few businesses focusing on this field. We need to encourage businesses to invest heavily in AI to avoid falling behind.

Promoting technology transfer is also a way for us to try to narrow the gap with developed countries. Without strong investment, we seem to be left behind and unable to integrate.

- Over the past year, the agricultural sector has had outstanding achievements, bringing in a lot of money from exports and being a pillar for the economy, helping Vietnam control inflation. How do you evaluate the potential for large-scale agricultural production and green agriculture in Vietnam in the coming time, especially when the Land Law takes effect early next year and technology is increasingly applied?

The economy is developing, businesses are getting bigger and bigger, capital accumulation is better, budget is more. This helps businesses to be able to implement many large-scale agricultural projects, with modern technology. Compared to 10-20 years ago, we are developing extremely fast in this field.

I believe that large-scale agricultural production will continue to develop, especially green agriculture. People's needs will increase as income and living standards increase.

Furthermore, new policies such as the Land Law will also help the agricultural sector have more legal conditions to implement large projects. Hopefully that will happen soon.

- In the first days of the new year, at the extraordinary session on January 18, the National Assembly passed two important laws: the Land Law (amended) and the Law on Credit Institutions (amended). In your opinion, how will these laws impact these two sectors in particular and the economy in general?

The two laws have many new points, some are loosened and some are tightened. At the present time, there are still many unclear issues in the law. Personally, I think we need to wait for sub-law documents such as decrees or circulars, then it will be easier to evaluate.

Thank you!

Vietnam's economy will continue to recover and grow well . Vietnam is witnessing better economic growth prospects in the coming time. Foreign direct investment (FDI) inflows are still expected to be positive. However, risks still need to be closely monitored.