Vietnam 2017: Prospects and challenges

By VnExpress   January 2, 2017 | 12:00 am GMT+7

From the macroeconomy to tourism and weather: Experts and officials analyze the outlook for Vietnam this year.

Economy continues to grow, at modest pace

Nguyen Thanh Binh, an expert in public policies at the Academy of Policy and Development in Hanoi, said the bigger economic picture will brighten up, but growth will not be strong.

Binh expects inflation, which stood at 5 percent in 2016, to remain under control this year.

He said, as cited by the Vietnam News Agency, that the government can boost the economy by cutting interest rates, comparing the current 10 percent to the low rates of 5.5-7 percent in 2003 and 2004, which he said had created a strong base for the economy.

Vietnam’s GDP grew 7.8 percent in 2004 and 8.4 percent in 2005.

Pham Tat Thang, a researcher at the trade ministry, said he was not expecting any export breakthroughs in 2017. Export revenue in 2016 grew 9 percent to $176.63 billion and Thang said that number might rise by just 7 percent this year.

Thang urged the government to restructure the export sector, which currently depends largely on foreign-invested businesses.

High-tech agriculture is the new trend

vietnam-2017-prospects-and-challenges

Tuna is unloaded from a fishing boat. Photo by Vietnam News Agency

Nguyen Do Anh Tuan, director of the Institute of Policy and Strategy for Agriculture and Rural Development, said there will be significant investments in high-tech agriculture to develop clean products and in turn global brands this year.

“Businesses will invest in seafood products that can take Vietnamese agriculture to a new level,” Tuan told Vietnam News Agency.

There will also be higher domestic demand, he said. For example, more people with higher incomes will open the market for quality fruits.

The agriculture ministry has set an export target of $32.5-33 billion this year, slightly up from $32.1 billion in 2016.

Tourist visa exemptions will be renewed

vietnam-2017-prospects-and-challenges-1

Foreign tourists in Vietnam. Photo courtesy of the Vietnam National Administration of Tourism

Deputy head of the Vietnam National Administration of Tourism Ngo Hoai Chung said the sector is trying to raise around $15 million for a comprehensive tourism promotion campaign. It already has more than $3 million from the state budget and will seek the remainder from private investments.

Chung said the campaign will focus on European tourists and those from China, Japan and South Korea, which are currently the biggest and fastest-growing markets.

He also confirmed that the government would renew the policy which allows visitors from Denmark, France, Germany, Italy, Norway, Russia, Spain, Sweden and the U.K. to stay in Vietnam for 15 days without a visa, according to a Vietnam News Agency report.

Foreign arrivals to Vietnam increased 26 percent to a record of more than 10 million last year. Tourism authorities are expecting a 15 percent increase this year in both the number of tourists and tourism revenue (VND460 trillion ($20.2 billion)).

Overseas opportunities for highly skilled workers

Vietnam sent a record 126,300 workers overseas in 2016, up 9 percent from the previous year.

With a goal of improving workers’ skills so they can get better-paying jobs, rather than increasing their numbers, the government has set a target of sending 105,000 overseas in 2017.

Pham Viet Huong, deputy director of the central Department of Overseas Labor, told Vietnam News Agency that: “There’s a huge demand in many countries for highly skilled workers.”

“We should be prepared with a good labor pool.”

New regulations in Japan and an agreement with Germany are expected to see more Vietnamese nursery teachers working in these countries, he said.

Urban infrastructure in urgent need

vietnam-2017-prospects-and-challenges-2

A crowded road in Ho Chi Minh City. Photo by VnExpress

Nguyen Xuan Thuy, a transport expert and former director of the transport ministry’s publishing house, said Vietnam needs to get serious about developing urban infrastructure in 2017.

Thuy said that infrastructure in cities, especially public transport, is a pressing matter, while mega-projects such as the $56 billion north-south express railway should wait until 2040.

“It’s a dream that cannot be realized yet. Rushing to build an express railway right now is like installing an air-conditioner in a thatched house.”

He said the country is already well connected by highways, while cargo transport can make use of maritime routes.

He suggested that a more practical option for the railway network is upgrading the current one-track meter-gauge system to a 1.4-meter double track. The work will cost around $12 billion and raise the transport capacity threefold, he said.

Cyber risks are here to stay

Vietnam was subject to 134,375 cyber attacks in 2016, up more than four times from the previous year, according to the national center for computer emergency response VNCERT.

Experts said the situation will remain “complicated” this year.

Nguyen Huy Dung, deputy head of the Information Security Department at the information ministry, said attacks will target important control systems including transport infrastructure, finance and banking.

There will also be an increasing risk of attacks through common household equipment such as televisions and refrigerators connected to wireless internet.

Fraudulent activity on social networks will also be common, Dung said.

It's going to be another soaking year

vietnam-2017-prospects-and-challenges-3

Travelers under heavy rain in Ho Chi Minh City. Photo by VnExpress

Vietnam has experienced a year of extreme weather conditions, from severe drought in the south to constant flooding in the central region. The disasters caused damage worth VND18.3 trillion ($805 million) and left 248 dead or missing, according to the General Statistics Office.

Could it be as bad this year?

Well, the answer is that it could be worse.

Deputy Director of the National Hydro-Meteorological Forecasting Center Le Thanh Hai said there will be more typhoons, thunderstorms and unseasonal rains.

It has already started. A heavy downpour on January 25 took many people in southern Vietnam by surprise. Those rushing home for the Lunar New Year and others selling flowers for the holiday all got caught in the deluge, not to mention the grand street decorations erected for the holiday.

Hai said northern Vietnam may experience more thunderstorms and hailstorms during spring, and a severe cold snap in early February.

Constant rain will pelt the north in July and August, while southern Vietnam should expect wet weather from May to October. The central region is likely to see more rain towards the end of the year, he said.

During the monsoon season between June and November, as many as 10 to 12 typhoons could form in the East Sea, the Vietnamese reference for the South China Sea, half of which could directly affect Vietnam, Hai said.

Related news:

> Vietnam's economy expands 6.2 percent in 2016

World Bank urges Vietnam to overhaul agriculture sector