Foreign investors optimistic about Vietnam’s economic outlook

QNN |

VOV.VN - The Vietnam Briefing of Dezan Shira & Associates group published an article on December 31 stating that foreign investors continue to be confident about the local economy’s growth prospects ahead in 2022, despite the negative impact of the COVID-19 pandemic.

Foreign investors are still confident about the local economy’s growth prospects ahead in 2022
Foreign investors are still confident about the local economy’s growth prospects ahead in 2022
 

The article highlights the range of factors which are expected to contribute to economic growth moving into 2022, of which free trade agreements (FTAs) are considered an important factor in attracting investors.

It says Vietnam has used numerous FTAs as an instrument to ensure increased economic power and financial security. The country’s economic development will continue to shift away from exporting low-tech manufacturing products and primary goods into more complex hi-tech goods such as electronics, machinery, vehicles, and medical devices.

According to the author, the implementation of the EU-Vietnam free trade agreement (EVFTA) last year is a perfect example of this.

Furthermore, the Regional Comprehensive Economic Partnership (RCEP) due to come into force on January 1, 2022 will contribute to reducing tariffs, whilst also setting trade rules and helping to link supply chains, particularly as various governments grapple with the lasting effects of COVID-19.

The article notes that Mergers and Acquisitions (M&A) are also likely to continue to play a key role in the local economy’s development in 2022. While 2020 saw M&A activities disrupted due to the pandemic, in the first nine months of 2021 M&A deals with total disclosed value totaled US$3 billion.

It predicts that during the period of economic recovery, further robust M&A deals can be expected ahead in 2022, particularly as the Government has moved to ease some requirements in the investment and enterprise laws to facilitate such transactions.

“Due to the pandemic, the government unveiled several support packages for businesses and individuals to help spur the economy. Businesses should prepare for 2022, using these government measures to improve cash flow,” says the article.

The tourism sector also significantly contributed to Vietnamese economic growth over the past year.

“From 2022 the Government plans to allow international arrivals that are fully vaccinated to self-quarantine at home or their places of accommodation as long as they test negative,” the article notes.

The Ministry of Culture, Sports, and Tourism has proposed that the Prime Minister consider restoring visa exemptions for tourists who stay for less than 15 days. In addition, nine international flight routes, including to the United States, Thailand, the Republic of Korea, China, and Taiwan (China) have been given the green light to resume commercial flights.

In conclusion, the article stresses that the past year has brought significant challenges for many locally-based businesses who were forced to deal with local market developments, along with concerns plaguing global supply chains which have been exacerbated by the pandemic.

Several issues which faced the country in 2021 are likely to continue into 2022. Nevertheless, a more targeted and focused development in key areas of the economy will present greater opportunities for growth, particularly, in areas that help to prop up the country’s bottom line of economic stability and people’s livelihoods

“While Vietnam has suffered, its economy is on course to record positive growth in 2022. For the next year, Vietnam remains a strong candidate for investment from ASEAN and beyond. Given its investor-friendly policies, relative economic and political stability, cost efficiency, and consumer demand prospects, Vietnam is likely to continue gaining from supply chains restructuring in Asia in addition to attracting a new range of investors in terms of geography and sectors,” it concludes.

VOV

Vietnam Briefing

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