Population (2020): 97 million
GDP (2020): US$343 billion
World Bank “Ease of Doing Business” Rank (2020): 70
Bilateral Trade with Singapore (2020): S$22.7 billion
Vietnam has been one of Southeast Asia’s fastest growing economies. In 2020, Vietnam recorded GDP growth of 2.91%, making it one of the few countries in the world to achieve positive economic growth amid the COVID-19 pandemic1. This was largely attributed to Vietnam’s early decisive steps to contain the health and economic fallout from COVID-19, as well as its diversified export markets, which include the US, EU, China, ASEAN, Japan and Korea.
The government has also made concerted efforts to make it easier to do business in Vietnam, the latest of which include amendments to the Law on Enterprises and Law on Investment and the approval of a new Law on Public-Private Partnerships in 2020.
Hence, Vietnam is also increasingly a preferred choice for many manufacturers, especially those adopting a “China Plus One” strategy to diversify supply chains.
1 “Global Economic Prospects”, The World Bank, Jan 2021
From now till 2023, Vietnam’s middle class is expected to grow at a CAGR of 9.2% -- the fastest among Southeast Asian economies. By 2035, more than half of the country’s population is expected to be middle class2.
Meanwhile, household spending in the country has been projected to grow by 7.0% year-on-year in 2021, a leap from 0.8% in 20203. These signal an increasing demand for higher value-added products and services, making Vietnam an attractive consumer market.
2 “Seizing the fast-growing retail opportunity in Vietnam”, McKinsey & Company, 19 Sep 20193 “Vietnam’s Consumer Recovery Getting Under Way in 2021”, Fitch Solutions, 4 Feb 2021
Over the last 15 years, Vietnam has invested heavily in science, technology, engineering, and math (STEM) education, creating a rich pool of engineering and IT talent. Its universities are estimated to produce some 80,000 IT graduates a year4.
This has made Vietnam attractive to many firms, from tech startups to global corporations. Ride-hailing startup Grab, for instance, has set up an R&D centre in Ho Chi Minh City to capitalise on Vietnam’s tech talent.
Similarly, South Korean electronics giant Samsung, a long-time investor in Vietnam, announced the construction of a new R&D centre in Hanoi in 2020.
4 “4 Factors Turning Vietnam into Southeast Asia’s Next Growth Story”, Tech in Asia, 29 Nov 2019
Vietnam has wide trade links, given its 14 Free Trade Agreements (FTAs) with more than 50 economies around the world, including the EU-Vietnam Free Trade Agreement (EVFTA) and Regional Comprehensive Economic Partnership (RCEP).
Manufacturers venturing into Vietnam will thus enjoy low tariffs and the ability to boost their exports to top markets such as the EU, US, Japan and Australia.
In addition, Vietnam continues to attract foreign direct investments (FDI). Even with COVID-19 dampening business sentiment, Vietnam drew over US$28.5 billion in foreign investments in 2020, signalling investors’ long-term commitment to and confidence in the market.
Singapore is Vietnam’s largest foreign investor within ASEAN, and one of the largest globally, having invested a total of US$57 billion across more than 2,600 projects as of December 20205.
5 Foreign Investment Agency, extracted on 15 Apr 2021
The relationship between Singapore and Vietnam has gone from strength to strength since the two countries established ties in 1973, with bilateral trade hitting S$22.7 billion in 20206.
Both countries also enjoy economic cooperation across various sectors including investment, IT, finance, trade and services, education, and transport.
Bilateral initiatives include the Singapore-Vietnam Connectivity Framework Agreement, which came into force in 2006, as well as the Vietnam Singapore Business Council (VSBC), launched in 2019.
In 2021, Singapore and Vietnam affirmed their cooperation at both a bilateral and ASEAN level. They also agreed to expand cooperation to new growth areas such as digital economy, cybersecurity, clean energy, sustainable development, and smart cities.
6 Statlink, extracted on 10 Mar 2021