Opportunities ripe for the taking for investors in Vietnam: report

By Minh Nga   October 18, 2017 | 07:00 pm GMT+7
Opportunities ripe for the taking for investors in Vietnam: report
Farmer harvest paddy in southern Vietnam. Agriculture is one of five promising sectors in Vietnam that investors can cash in on, PricewaterhouseCoopers has said in a new report. Photo by VnExpress/Quynh Tran

There are five promising sectors in the country that investors can cash in on now, according to PricewaterhouseCoopers.

Vietnam holds plenty of opportunities for investors thanks to its key growth drivers and promising investment sectors, consulting firm PricewaterhouseCoopers (PwC) has said in a new report.

With its young and growing workforce, a competitive economy and a stable government committed to growth, Vietnam provides a wealth of opportunities for businesses seeking to enter or expand in the country, PwC said in its “Spotlight on Vietnam" report that was released Wednesday.

Though Vietnam is approaching an aging phase, Dinh Thi Quynh Van, general director of PwC Vietnam, said it is a common problem many countries have faced and got through.

The Vietnamese elderly are expected to make up 18 percent of the country’s population by 2030 and 26 percent by 2050 from the current rate of 11 percent.

“Though the population is aging, the number of people of a working age is still high, not to mention that the birth rate in Vietnam is rising,” Van told VnExpress International.

“Understanding Vietnam, its prospects and opportunities, challenges and complexities, is important for investors who want to succeed here,” she said.

To give investors a better understanding of Vietnam, the report focused on the most five promising sectors for investment: business process outsourcing (BPO), clean energy, luxury hotels, agriculture and retail banking.

The country’s BPO industry has grown 20 to 35 percent annually over the past decade, according to the Vietnam Software and IT Services Association (VINASA).

And there is still room for growth as Vietnam’s BPO industry is far from mature and market revenue stood at only $2 billion in 2015, compared to established markets such as the Philippines with $22 billion and India with $143 billion.

Vietnam is increasingly touted as the next BPO alternative to these two prominent markets. Last year, it overtook China to become Japan’s second largest software outsourcing partner and was recognized as the number one pioneering location for BPO services by American commercial real estate services company Cushman & Wakefield.

In terms of clean energy, Vietnam's government is aiming to produce 10.7 percent of its total power output through renewable sources by 2030, mainly through solar and wind energy, up from 6 percent as previously planned.

The country has repeatedly offered incentives such as preferential land use fees and taxes for investors in clean power projects, and raised buying prices for their products.

Regarding the upscale and luxury hotel segment, Hanoi and Saigon, the nation’s two biggest cities, are still falling behind in the number of new luxury hotel rooms added each year compared to other major tourist destinations in the region.

So far this year, 1,000 rooms have been added in and Hanoi and 800 in Saigon.

Bali and Jakarta in Indonesia and Manila in the Philippines have added more than 3,000 rooms each in the same period.

For a long time, agriculture has driven Vietnam’s economy, but productivity and added value in the sector has remained low, and the government is still looking for businesses to play a role in increasing farmers’ access to modern technology.

opportunities-ripe-for-the-taking-for-investors-in-vietnam-report

Productivity of employed population by industry, preliminary 2015 (USD per person). Labor productivity for agriculture is the lowest among industries in Vietnam, indicating a need to increase yields via modernization. Graphic by PwC

In the retail banking sector, more than 90 percent of payment transactions in Vietnam are made in cash, and only 31 percent of the country's adult population had a bank account in 2014, according to the World Bank.

Yet the growing population and rapidly burgeoning middle class means affluence, consumption and financial transactions will rise.

In addition, the country’s population is relatively young, with 60 percent under the age of 35. This young group of customers is looking for more convenient, consistent and accessible financial services.

In a February report, PwC said Vietnam is on track to become the world's 20th biggest economy in 2050, saying the country could jump from its current position of 32nd when its gross domestic product (based on purchasing power parity) is expected to expand six-fold from now to $3.17 trillion.

 
 
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