Foreign investors' confidence in Vietnam

Vietnam's economy is expected to grow by 7% in 2011: these are the predictions of Vietnam's Minister of Planning and Investment, Cao Viet Sinh. The Asian country's growth and development will continue in the wake of last year, when GDP growth of 6.7% was recorded. Why is this a figure that foreign investors in Vietnam look upon positively?

The Vietnamese government initially projected an increase in Gross Domestic Product around 7.5%, but the inflation problem has changed the government's plans, so it has decided not to push too hard on growth targets but to focus on containing high inflation. The double-digit rate regarding the rise in prices, which stood at 12.3% last month, worries the government, which has therefore decided to undertake fiscal and monetary measures (including devaluation of the Dong) aimed mainly at not discouraging foreign investors: thanks to the adoption of these policies, according to data from HSBC economists, the consumer price index is expected to fall by 2011 and reach an average level that would be around 9.9%. Hanoi intends to further strengthen the presence of Foreign Direct Investment, whose role proves crucial in the balances and development of the Vietnamese economy, and has assured that the decline in domestic demand will be offset precisely by foreign capital and that investor confidence will not be affected.

The Asian country, according to some economists, in addition to the problem of inflation, in order to continue its extraordinary growth process experienced so far and remain competitive, should in the next five years reform the structure of state-owned enterprises, which have been judged inefficient, modernize the education system, effectively fight corruption, and continue the difficult challenge that must lead to a better redistribution of wealth. To ensure greater equality and further encourage the emergence of the middle class, the government must continue the fight against poverty, the results of which in recent years have been really satisfactory.

Although there is still a lot of work to be done, foreign investors' confidence in Vietnam has not diminished: with a 2010 industrial output growth of +13.8%, an average GDP growth (from 2004 to 2008) of 7.6%, a population of nearly 90 million people, and a strategic geographic location, Vietnam today represents one of the most attractive markets in the international scenario in which to invest. A recent Citigroup analysis identifies Vietnam (along with other countries including Indonesia, China, and India) as one of the countries with the highest potential growth rate in the 21st century.

The country can rely on a young and low-cost labor force, strong political and social stability, a policy of openness to foreign capital, and the consolidation of the formation of a middle class with a strong consumer propensity. Vietnam especially, which has managed to simplify its regulatory framework, needs capital, technology and know-how foreigner.

Rapid processes of internationalization and liberalization of services have enabled gradual and increasing integration into the globalized world. In addition, in 1995 Vietnam joined ASEAN, a Free Trade Area (which also includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore and Thailand) created to increase trade exchange, promote cooperation and mutual assistance among member states and accelerate economic growth and stability in the region. There are several opportunities in the Vietnamese market, from the sourcing, to infrastructure, to mechanics, to the agro-industrial sector: the Italian companies that have invested here are still few in relation to the opportunities offered.

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