Vietnam: A Rapidly Developing Country

A thousand years ago, the economic center of the world was in Asia, just north of India and west of China.

Today, it seems quite clear that the world’s economic center of gravity is shifting back to Asia.

Vietnam is ideally located in South-east Asia. It has a long coastline with many ports and shares a border with southern China and is thus close to large metropolitan and economic hubs such as Hong Kong, Shenzhen and Guangzhou. Its geographic position is one of its many assets and has encouraged firms to massively invest in the country.

More importantly, Vietnam has indisputably a strong growth potential. In fact, according to PricewaterhouseCoopers it has a potential growth rate of almost 10% per annum in real dollar terms that could push the country up to around 70% of the size of the UK economy by 2050. Over the last few years, the country has successfully strengthened its global economic positioning and its stock index has performed extremely well. The country has succeeded in curbing inflation and increasing exports which clearly suggests that it is in a strong position to continue its march toward full economic development.

Vietnam has an abundance of low-wage labor and a young and bright population. The median age is just under 28 years and nearly 70% of the population is between the ages of 15 and 64. In recent years, English has become more and more popular as a second language. English study is now mandatory in most schools and is seen by the population as being an important factor to land better jobs. Consequently, many Vietnamese study English at their own initiative in their spare time which stands in stark contrast to places like Thailand and Indonesia.

Locals’ wages typically average less than 100 USD per month which is in part since about half of the country’s labor force still works in agriculture.

Vietnam has been undergoing extensive economic reforms over the past several years, contributing to an increasingly popular destination for foreign direct investment. The financial system and wider economy are maturing rapidly, driven by the rise of private sector banking. In addition, social instability risk is low, and the country has even less of a threat of terrorism than China.

Of course, the picture is not all rosy. Despite its successful recent reforms, Vietnam has still quite high levels of economic, political and financial system risks. As with many countries emerging out of a period of tight economic control by the state, Vietnam suffers from a lack of transparency, slow bureaucracy and corruption. Never forget, however, that risk and return potential go together.

Vietnam offers one of the strongest and most compelling investment cases in the world. Vietnam has a large, young consumer base, an improving per capita income and strong economic growth. The population is young with a high literacy rate and the cost of labor is still low. Compared to its peers in Asia, the Vietnamese stock market is attractive when one compares compound annual growth, price earnings ratio, price to book value and many other technical indicators.

Vietnam has a decade or two of rapid growth and development. There will be periods of volatility, however, geography, economic and demographic trends are undeniably coming together that says – Vietnam is a rapidly developing and long-term growth opportunity!

Source from: 

http://www.worldbank.org/en/country/vietnam/overview