Population (2017): 95 million
GDP: US$223.8 billion
World Bank “Ease of Doing Business” Rank (2018): 68
Bilateral Trade with Singapore: S$21.6 billion
Trading Partner Rank (2017): 12
With consistently strong annual growth of over 6% since the start of the decade, Vietnam has become an attractive destination for many investors. Indeed, Vietnam’s GDP grew by 6.8% in 2017– the highest figure since 2011. This came on the back of stronger domestic demands, record export earnings and continued economic reforms by the government.
Looking ahead, Vietnam’s GDP growth is expected to remain strong in 2018-2022, with projections placing it at 6.2% 1. Domestic demand is likewise expected to rise in the next few years, fuelled by rapid wage growth, a booming tourism sector, and reformative government policies to encourage private-sector investment. The Straits Times outlines why Vietnam has become "one of the most attractive emerging economies in Asia”.
1 Source: Economist Intelligence Unit (EIU) Country Report, Feb 2018.
Economic liberalisation continues to gain momentum in Vietnam. More state-owned enterprises are set to be converted to publicly-listed corporations, along with an increase in public-private partnerships and the expansion of key manufacturing sectors. With updates to Vietnam’s Investment Law, foreigners can look forward to carrying out business more easily, while changes to real estate laws also mean they can now purchase land and buildings, subject to certain conditions.
To top it off, Vietnamese Prime Minister Nguyen Xuan Phuc signed Decree 8 on 15 Jan 2018, which seeks to eliminate 675 out of 1,216 business and investment conditions under the Ministry of Industry and Trade (MOIT). Private businesses in eight sectors, including those in food retail, electricity, and e-commerce, can expect less red tape.
The 2018 World Bank rankings on the ease of doing business saw Vietnam jump 22 places to reach 68th – a nod to the positive momentum of these reforms. We explore how the latest reforms have generated renewed optimism among investors when it comes to doing business in Vietnam.
Bilateral trade between Singapore and Vietnam has also grown steadily over the past decade. In 2017, bilateral trade reached S$21.6 billion, an 8.9% increase year-on-year2.
Singapore firms have been consistently investing in Vietnam through the years. 2017 saw Singapore’s cumulative investment hit US$43.2 billion across 1,800 projects – making us Vietnam’s largest investor in ASEAN, and third-largest worldwide.
Numerous initiatives from both countries have spurred greater collaboration across a wide range of sectors. The Singapore-Vietnam Connectivity Framework Agreement, which came into force in 2006, is one such example. It is the overarching pillar of the bilateral economic relationship, covering six sectors of cooperation: (i) education and training; (ii) finance; (iii) information technology and telecommunications; (iv) investment; (v) trade and services; and (vi) transportation. The Connectivity Ministerial Meetings (CMM) are now held annually and are co-chaired by Minister (Trade) and Vietnam’s Minister of Planning and Investment (MPI).
2 Enterprise Singapore StatLink
With a range of free trade agreements (FTAs) already in place, Vietnam is still in the process of negotiating and ratifying more. This ties in with the government’s long-term plans for international integration and economic liberalisation. Manufacturers which venture into Vietnam will enjoy low tariffs, boosting their exports to top markets such as the EU, US, Japan and Australia – an advantage which cements Vietnam’s position as a rising manufacturing hub.
Vietnam’s trade figures are set to climb with its participation in the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This is especially with Canada, Mexico and Peru – countries Vietnam does not currently have FTAs with. Another trade deal of note is the Vietnam–EU FTA, which could see Vietnam’s exports to the European Union grow by as much as one-third3. Closer to home, Vietnam continues to pursue regional agreements through the ASEAN Economic Community (AEC) as Southeast Asia strengthens economic linkages.
3 Source: “International Agreements in Progress: EU-Vietnam Free Trade Agreement”, European Parliament Think Tank, Feb 2018