Production lines of Young Poong Electronics VINA at Binh Xuyen II industrial park, Vinh Phuc province (Photo: VNA)Hanoi (VNA) – The UK’s MoneyWeek news website hasrun a story highlighting that Vietnam is one of the most promising markets ofAsia in a long time thanks to the country’s success in COVID-19 control.
The article noted that Vietnam’s GDP growth rate of 2.9percent was low by historical standards – it typically manages 6-7 percent –but still put it ahead of every other major economy in Asia and looksremarkable given the damage that the coronavirus pandemic inflicted on theworld.
Even at the peak of the crisis in the second quarter of theyear, Vietnam just about eked out positive growth and has recovered quickly, itsaid.
It held that three things went especially well for Vietnamin 2020. The first will hopefully be irrelevant once the coronavirus pandemicpasses, but is encouraging for the country’s governance. The second isextremely promising for the evolution of the economy – it’s the main reason tobelieve that Vietnam still has superior prospects to any other comparableemerging economy. And the third bodes well for the stockmarket’s long-termprogress – although this remains a high-risk market and investors need toexpect some ups and downs along the way.
Vietnam’s immediate strength is that the impact ofcoronavirus has been fairly small and controlled compared to most of the world.So far, it’s had around 2,500 reported cases and 35 deaths. As in everycountry, there will be some unreported cases, but Vietnam’s statistics lookpretty reliable – if there were large numbers of deaths that had not beenrecorded, it would be obvious.
“This is not down to luck. All the specialist investors inVietnam that I spoke to for this article – Dominic Scriven of Dragon Capital,Andy Ho and Khanh Vu of VinaCapital and Craig Martin of Dynam Capital – give agreat deal of credit to how quickly the government acted once the first signsemerged that Sars-CoV-2 was going to be a threat,” wrote Cris Sholto Heaton,the author of the article.
He held that the ability to keep the pandemic in check andkeep most of the economy open most of the time is a crucial part of why Vietnamdid well in 2020 – but it’s not the whole story. Longer term, the moreimportant factor is the way that the Vietnamese export sector is benefitingfrom companies moving some of their manufacturing and sourcing away from Chinato other destinations.
Relatively good education and skill levels in the workforceand government policies to attract foreign direct investment (FDI) are a keypart of this – but that’s been true for a long time, added the article./.
VNA
