VN can meet 6.8% growth target in 2017: Forbes

Tuesday, Jan 10, 2017 09:17

Foreign investment will be an engine that guarantees Viet Nam faster economic growth in 2017. — Photo

Viet Nam will keep attracting investment, expanding export production and watching domestic consumption spread in 2017, according to Forbes’ forecast.

The country can also meet its economic growth target of 6.8 per cent set by the Government thanks to these advantages, Forbes said.

According to Forbes, US President-elect Donald Trump is expected to scrap Trans-Pacific Partnership (TPP), the 12-nation trade agreement that would particularly help member Viet Nam as an exporter. However, there are some who suspect Trump will somehow salvage it.

If not, according to Forbes, Viet Nam already takes part in 16 free trade agreements (FTAs), including with economic powerhouses China and Japan. It can pursue bilateral agreements with other TPP members if the US Congress declines to ratify the deal signed in 2016.

Viet Nam is also on the list to join a Chinese-championed Regional Comprehensive Economic Partnership trading group that would encompass 30 per cent of the world’s GDP.

Besides this, Viet Nam will also keep giving foreign companies reasons to invest, Forbes said, adding that foreign investors already benefit from lower tariffs under the trade deals. Some also get lavish tax breaks.

In 2015, the country made its rules on foreign investment clearer and sped up permit processing.

Last year was a “transition year” for those changes, and in 2017, Viet Nam will start to “collect the fruits of having a more structured and competitive business legislation, which has had an impact on attracting more FDI and also helped Viet Nam become one of the major manufacturing hubs in the world,” Forbes quoted Oscar Mussons, international business advisory associate with Dezan Shira & Associates consultancy in HCM City, as saying.

In addition, Vietnamese people are getting richer and spending more. The country’s middle class will double by 2020 to 33 million people and that means more consumption, the Boston Consulting Group estimated last year. People in that group earn at least US$714 per month, enough for phones, motorcycles, travel and health products, items that usually make the short list of local consumer preferences.

The middle class has got where it is because wages are rising along with a boom in jobs linked to growth in export manufacturing.

According to Forbes, factory work in Viet Nam is moving up in value from traditional industries. High-tech’s share of total exports from the country reached 25 per cent in 2015 from five per cent in 2010 and kept going last year, with no signs of abating currently.

Investments by electronics giants Hon Hai Precision, Intel and Samsung – worth billions of dollars – have led the shift. Samsung Display is considering a new $2.5 billion investment in a project already worth about $4 billion, according to a stock market research firm in Ha Noi.

Electronics are replacing traditional industries, such as garments and shoes, production of which is slowly moving to other Asian countries.

Policymakers in Viet Nam aim to increase annual export value by 8-10 per cent this year, Louie Nguyen, editor and founder of the news website Vietnam Advisors, said. The trend will bring new skills, higher wages and more revenue for those companies making high-value products.

Private business is, meanwhile, expanding and doing more kinds of work in Viet Nam. – VNS

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