Investment Strategy in the Rapidly Growing Economy in Vietnam
Vietnam is among the fastest-growing economies in the world. Vietnam’s improved governance, focus on infrastructure, fight against corruption, cheap labor, and openness towards the private sector make the country among the best investment destinations.
As market research Vietnam indicates, Vietnam will keep growing rapidly in the foreseeable future. To invest in the country, a proper investment strategy is a must.
Growth of FDI
Over the past decade, the growth rate of FDI in Vietnam is in double digits. This amazing growth rate is due to various government incentives and low labor costs.
In 2018, the total FDI entering the country has reached $331.2 billion with total disbursement reaching $180.7 billion. Currently, FDI accounts for 22% of Vietnam’s GDP and 70% of its exports.
Three Sectors in Focus
There are three sectors put in focus for FDI: manufacturing and processing, real estate, and retail and wholesale.
Manufacturing and processing
Vietnam government sees that manufacturing and processing is the key to boost the country’s socio-economy development.
This is why the industry is restructured to increase localization rates as well as support domestic production.
Real estate
The real estate market continues to attract not just domestic but also foreign investors.
Large infrastructure projects, increased tourism are used to push the demand further.
Retail and wholesale
According to http://www.marketresearchvietnam.com, the growth of the middle class in Vietnam is among the fastest in the region.
This, in turn, drives the significant growth of the retail and wholesale sector. As Vietnam is becoming more open economically, more and more foreign investors are eager to invest in this sector.
Benefits of Investing in Vietnam
Rapid economic growth
Since 1997, the growth rate of the Vietnam economy is around 4% and 8%. In 2019, Vietnam’s GDP has grown approximately 6.8%, which is more than double the world’s GDP growth and second highest in the Asia Pacific.
Self-powered economy
The economy of Vietnam is self-powered. The country relies on its petroleum industry to meet domestic energy consumption as well as export. Vietnam’s crude oil production in the future is projected to decline albeit gradually.
Risks of Investing in Vietnam
Many key industries are controlled by the government
Although Vietnam has transitioned from a central-planned economy, many of its key industries are controlled by the government. In certain cases, this limits foreign investments.
Early-stage market economy
Vietnam is growing fast. That said, the country’s economic development is still in its early and vulnerable stage. This means that investing in Vietnam is riskier than in developed markets.
Investing in Vietnam: Exchange-traded Funds and Close-ended Funds
Two of the best ways for investors to invest are close-ended funds and exchange-traded funds. Many investment companies allow foreign investors to invest in these two funds.
Close-ended funds offer a mix of private equity and investments in publicly-listed firms while exchange-traded funds offer exposure to publicly traded companies listed or domiciled in Vietnam.
Closing
As market research Vietnam has shown, the country’s economy has an amazing growth rate. To drive its rapid economic growth, Vietnam needs FDI.
Two of the best ways to invest in Vietnam are through close-ended funds and exchange-traded funds.
Like any investment, there are benefits and risks in investing in Vietnam. As such, a good investment strategy is a must.