vietnam economic times
TRANSCRIPT
8/11/2019 Vietnam Economic Times
http://slidepdf.com/reader/full/vietnam-economic-times 1/1
C O V E R S T O RY
Mr Damien Duhamcl,Managing Director ofKAK Asia, tellsVKTsThuTrang thatVietnam is less of arisk as a manufacturinglocation than elsewhere
in Asia Pacific butneeds to adoptinnovative policies tocarve out a longtermniche.
Future forte
KA! ha" rek#ased figures showing $lull Victiuifli is fM%Va more Mtractive tnv"&'ti(vtt opportunit) iluui Tluiiland.*hat research methods were used lo reach this conclusion+
Accvrdiritf Co oeir guro, 6J per c\'Ht ulsenior buiiiM» cxccutiv» kibv di!l "ietn!#no$%!ni& !ttr!ctive investirent opportunit( dull )*!il!nd+ - per cent c*%+%%e )ludind !is .t.rf!voured invotiik/iit d+M0nrt ttt !nd -1 pa cviitbdkvtxl di!l du+' t$o iiiu$exl c2u!ip3Hn
)ile re4undi $» 5 +H iixiiHxl on "ietn!#Mid$!s ouiducttxJ repuiuli(+ 7c c%5 r!nted inkrvMii(bits of t*e rtst!rc* on "kttu# !nd )7il!ndinvolving intervie$% $it* C8C 9C*ief :xperkuce ;l ix%r\l !nd $niur level cux#.vc%!cro» t*e rcg Hl+ 5ntervie$%%% $vrv eit*er5vxsod ill Alb or outskk ul Asi! bul H<i&i !
ck#ar inve"n #nc decision#nuking power. There is no specificratio of interviewee" in - luitand or Vfctium. /Ve actuall)fi uscd on companies # in 0hailand oi Vietnam, ni1d across
2ectors to avoid p" cssible bias.
/3hai influence do4 the g5oKd financial crisis have onforeign investment in Vietnam+
The obvious one is access to capital. 6hcse# divs. it will be a lot h78ider foi all fiims co 49:win fin neing Due dueaffi : Vietnam, haitand, ;ingapore and ever) other pccsiblc<D destination t is i " restricted co Vietnam in particular
wre w#ill hc/ b) default, a fall in <D aroui1d the world.
f )ou wane co find a silver l ining ic is char companieswill now need co look even nv:ie carefull) ab":utnunu=cturing cosn. Ac clve moment Vietnam is well placedas a manufacturing hub, with accraaive# nunu=cturingcost"and a stahkgove#rnment. <D will >?? because of thcaiiiencenvironment but will r1:t comptete# l) dwpfvai. f it d4(s itwill onl) k" for a short time and <D to Vietnam sh"ddrebound. n priiKipfcs it could rebound even stn"ngei dunk@"e becau c Vietnam provides a co4 efficientmanufacturing d inwion for companie" selling into the ';and turtle.
There aic 4ill firm" who arc rvt averse# to risks and still
investing, f )ou look Bi"1und )ou0ll find firms investing,opening new plant" or entering 53C mufcee Defuse# of the iiste fiims i e#all) wane co nuke suie that a countrv is stable#has a biig2u Kituieand is nearl) risk#free T)picall), firms aimco minimise risks when tlier invest. ut right now 1 mm totake e#vc#n kss lisks7 absi 5ute minimum or close to Eero risk Vietnam doe4 not offci dofc co Eero, bat in the region interms of manufacturing . :cations ic potentiall) offers alowti risk than F"thei countries. There is general consensusaKnit the sound future prospects of Viet rums econom).Much less can be said 9bout 4:tbe r kcv countries inA;GA%. Hf course, one must balance a:st vernis risk.;in 2pi.re b) dc ult offers even lese risks but the" costs arcnot a:nv p rablc. Iomparing apple to apple, in terms of manufacturing locations we can compare ? 6 '. ndia,Thailand, ndonesia. Vietnam and the Philippines This isalmost mn) to sa), because Vietnam has alwa)s ken seenas a risk) investment # lack of governance, mutk) laws,e cessive c"vrru@1tion and so on. ut when )ou compare ic
co 4 (her cf incrics, Victiwm tsa countr) where the nc# tfive )ears have been well defined, unlike in od rr countries
= *haf are disadvantages within Vietnam0s business environment for attracting foreign investment+
"ietn!# still beks ! speci c countr( br!iid,or >f%cilic i#!ge+ 5f t*ere is no ini?gc++ tin/ cttv CẰĨÍ be interpreted in #!n( $!(s+ 7*en
you $lk !*i @it Bin!, 4v»u $ ill t*ink of it !s nuiv ur!cturing *ub, $bcti (ou t*ink of 5*!il!nd,(ou $ill t*ink of its touris# industr(+ "ietn!#(ou uft dont kno$ )*eft tf no br!nd, tot t*!tre!son, it l!cks !rpc!l+ 5tCMU Ug!in! k% nvxe if tlxcountr( *!d ! glD»b!l br!nd buildii@gE progr!#
)*e countrv ts st 5 suGering fro# ! l!ck<iinfr!structure, i!ck of tr!iixd t!lent, !nd l!ck of ck%!r !nd enforce!bk% b$s 5 *!t sc!resinvestors !$!x lixr do nDx like suc* risks !nduncert!in t(
M!(be !ixxber dis!dv!nt!ge for "ietn!# ist*!t it re2uires ! lDx of diligence+ 5ts not ! pliC$/*c/rc (ou $ill nxJie corpor!te e!rningsovttnidit+ 5t $!s neve/r t*e c!se !nd pr+tb!blv$ill nexe) be tlx% c!se >o it is ! countr( $*ere I%H5 ixxd to invest for c*e k4ng run
lile l!ck of corpor!te rig*ts !nd 5 protectionis !not*er dKidv!nt!gL+ 5 *it re#uns dx% c!se ii#n( Asi!n countries+ "ietnxni could ptcssibl(c!rve ! nic*e/ !s ! dc%vel%ping eouiitrI' $it*stronger respect for 5 !nd copviig*idvinot*ercountries+ 3iglit no$ it is foiloAir g dx% Droute of everv ot*e) Asi!n countr(, vv*ic* lus*!d li#ited respect foi 5 for !bi/ it N/ON (e!<P*!t is! non/ncgi»t$7ei#pedi#ent to nun(industries i+e+ #cdi%,rr, lile sck/nce, etc
)*ese/ ii4dustiks $ont co#e to invest in ! big$!( if t*e core of dvcir business is 57C potected
= Are their advantages+ Qes+ of couise diere !ie plent(+ 5 lx% coun
is dL/ nite*% one of tlve n4»st inckistrion!tions in Asi! %nd is politic!ll( \R)4 s!ble /$*ic* is ! c*!nge foc nBoD of>i8ic*c!st Asi!+ Ak/!st fro# t*it side, "ietiu# $ins t*eco#fRtitiD»n in ter#s of piliti!xl st!bilit( !nd isco#p!r!ble to c iin! !nd >i2gipoic+ Qou k#$$*!t tlx/ gD»v/ ernn$nt $ill be like ve/ (e!r%
o# no$ - , ! id investors SAvviur t*!t+5f do#eTe con» U V nun!ged c!reiul*%+
l!bour» rents, propelt4' prices etc+, "ietnx# $illhxvc ! very signi c!nt cD%t !dv!nt?@E for s*ort to nxdiu# ter#+ Co#bine tl$c $idi @gro$ing o#sunvrr #!rket, ! toirl( Cipen econo/n$, sound le!ders*ip, *ig* lit!!c(, !nd t*e Wder!il cksire of t*e popul!rit( CO do $ell !nd )YHI
luxe f!nt!stic opportunities in ont of (ou+
RAX At/N b N (rovYg c f7fkei#g conht de vers e'odef etosec sQo"sg»E#orktrng odZi9» socoGf8I'[D crd gcverfrn@o!ef ies ;ftdhto0\\<to in c Men+ >rcc 84%e+ ]%crg@c orvd 'Ab? #o.cJ
Damr4n Duhamel% % @ % @5 co/po'ie-N Do7 "ietn!# ̂ ernier ̂ /*o#el is no$ M!n!ging ;trMtorVei w !c :wm1J Toils. Awn 2009 -U
C O V E R S T O RY
Foundations to be laiMr 5ustin *ood, Director # ;outheast Asia
with the !conomist ntelligence 'nits
Iorporate %etwork, told V!T s Ge Iam Ge
that suitable policies are re uired if Vietnam
is to fulfil its potential.
o#( in NN]_ 7*!t !re t*e #!in opportunities !ndc*!llenge%_
5 c*ink% r*c con%%nsus for R8%] in "ietn!# ts cuiriixi%oprin$p+ ^e nitel( t c/ councr( $ill foce tre#endousc*!llenges in ter#s of reduc'd R%pons+ D%rR%s ro loc!l !ndintern!tion!l c!pit!l, likel( gr»»$t* # urx%#pli@'nx%nc,!nd ! 9$ek ;M)MI f!ll in ur*!n propert( prices+ etc+
The impact will he" a fall in LDP growth ro nwrthumnlc levels of B#& per cent at ma imum, a tall in $vci ncunenc) reserves and. of course, a momencaiv painful dropin commodit) e port prices. whiefi will hurt tl " inlandsofVict rum.
The rhallcn2ps arc co remain an attractive <D ncanonwhen pcodc at che moment .ire not locking at spending nutmore ah out cutting okk. r itadouhleccig 0d sword chac can
prevent penok from imcffingr Cowever, if companies doin\vM the) will look for suitable lorarinrts with dements of
political stabilit). Tl # ultimate challenge it to leverage onrhat. not to rest on )nur laurels. as Vietnam his done in tl "
pa4, hut rohave a real long#term polic) tlur attracts <D fromaround the vtvirld.
The challenge it to encourage foreign investors co com4"in now at the) will benefit from $alls in N#ncs, propert)
prices. salaries, ctc. Thanks co falling im mw is the idealtime to inwst in the countr). n terms of sectors. if )ou look at consmiction materials. the) arc 4ill O proving in VietnamThe automotive industr) around the# worid ts aiffering hut isen2o)ing pot# itive growth of C#? per cenr in Vietnam. Cfi5tncare ts also nsuv uickl). at nearl) B per cent 1ear#on#8ear.and e#commerce ts a high double#dig2t growth industr). c isa tough environment, hut the4" ts 4ill a lot of g2r" wih to hecaptured in Vietnam The# onl) uestion for firm" itJ wfl )ouhe# pan of ttat growths To he i in of tlut growth re uires arethink of 1"mr Vietnam strateg). t c.inm he the tame as itwas few Venn ag1v. t will he more difficult, it wfl heroug2 #r, and ir will he mo4" challenging
%ow it the" time to promote Vietnam as an artiaaivedestination for <D . Then"duiuki he a bureau in ke) markers
around the world, like !urope and tl " ';, to promoteinvesting in Vietnam. f there arc .such bureaus alread), the)arc certainl) not ver) effective.= 7*!t s*ould loc!l co#p!nies !nd !ut*orities do to!ttr!ct #ore foreign invest#ent_
The countr) should invest more in national infrastructure bcouse if the pins and airports arc not working then investorsstill mow to nhc(s where the) an" working. Tku is a d("al#
nreakcr" haswall). Iompared co the roods )ou haw inIhina, Vierrom lag" far behind. n terms of nods, power,rdnrnmmun rations" infTascnic# rure etc., Vietnam ts 2ust notthen" )et. Thar r 0tis to he tl " ke) locus to sustairuhl)attractforeign invweme#nt.
AfHxbcr ke( ele#ent is t!lent+ )lx% countr( still suiter !5t R if ir c!nnot e#plo( ixviple to do r*c $ork+ )*e%% iiits*ould go to "ietn!#ese, !nd ir s*ould *e done in !#!rkst eGvicnr $!(+ Mone( c!n `o$ else$*ere, $*eret!lcnr R@ristJv is !ttr!ctive !nd it cftc#e+ 7*!t 4ou $!nt!nd need is to luxe #ore !nd #ote obs t*!t re2uire #ire!nd #ote skills / skills $it*in tlx% pecul!tion+
A countr( t*!t it croc eGective doesn't retruin like t*!tforever/ 7it*in -N $!rs+ -1 (e!n% its Rdp% f!des !$!(+ =
= At t*e glob!l level t*e +a it subst!nti!ll(#ore pessi#istic for NN] t*!n t*e consensus forec!st+7*( it t*!t_
5 t*ink #ost xoplc !re @#eeting t*e% g ob!l econo#(
to perfor# poorl( t*it year. ;ur forec!st for g o*il gro$t* inM5] ts / +6 pe r cent+ 7e !rc co#ing out of t*e gre!totcredit bubble% t*e% vsvIdd *!s Den+ ! ti#e $*en #onc4'$!s pknn d !nd c*!in+ ;n t*e% *!ck of !ll t*!t credit+econo#ics in t*e 7est 9especi!ll( pl!ces like t*e/ > !ndt*e% I took on rccor !#ount% of debt+ Ko$ $e !regpinet*r#@* t*e un$inding of t*u period ofDccst+ !nks!re s*rinking t*eir *il!nce *octt !nd not k%ndingConsu#ert !re !lso reducing debts +ind to not spending3isk !xenion it extre#el( *ig?i !nd r*c n!nci!l #!rketsre#!in *ig**' Dre$ d/ 5n t*is sort U4f envi/ nvnnx/nc,ccono#icts $ill tu`cr+ 7*ik% nun( !rtt %4f t*e e#c2png7iidd+ !nd Ati! in pnk4 iibr, did not cne!gc in t*is dc*t*uild/up+ t*e( !re notxt*dest *it *ird too+ ^e#!nd fort*Rir exports IS f!lling !nd i#tston !rc pulliiig *!de,putting currcnc s !nd scixk #!rkets under pressure !nd#!king ir *!rder to r!ttc c!pit!l+
=7it* t*e glob!l crisis c!tc*ing gro$t* forec!ster% b(surprise, c!n forec!st #odels re!ll( be trusted_
M!croocono#ic #odels !rc neter -N-I percent!ccur!te+ )*e( rc ircsent our best eGort to predict *o$ !necono#( $ill do+ * fcd on t*e% d!t! $E/ l$\e+ 5n c*e c!se of "ietn!#, t*e #odels #!( *e less !ccur!te tlun for oc*ercountries *cc!usc t*ere ts ! l!rge infor#d% scctor t*!t isnoc !l$!(s induded in t*e ohci!l d!t!+ For ex!#ple+ 5t IS
often s!id t*!t "ietn!# *!s l!rgr !#ounts of uniocordcd$e!lt*/ )*is #!( 4sell !ct !s ! socul t!fet % net !s peoplelose t*eir obs t*is (e!r+
= ^o )T)U still subscribe to t*e up*c!t !ssess/#ent given in )*e Fconocnist<s +speci!l report Asi!'s;t*er Mir!cle in April NNj_
;ur vie$ it t*!t, in t*e s*ort/ter#+ "ietn!# $ill fxc !ver( c*!llcne ng econo#ic envi#rv #enr+ !nd gro$t* $illnc lo$+ Ho$ever, in t*e #ediu# ter# !nd *c(ond,"ietn!# presents ! ver( co#pelling c!se for foreigninvestors+ )*e ongoing iixiustri!lit!tion of t*e countr(, t*e%*uld%out of infr!ct n 8ure+ t*e riting $e!lt* !nd $!:tts+t*e continued refor# of t*e% ccono#v, !nd t*e (roingde#i@r!p*ic pro le of t*e $odi/ ibrcc !rc ust to#e of t*ere!sont to *e optv
#ist /+ Ho$ever, ! brig*t funire is not gu!r!nteed / it $illrd( on t*e govc#nx%nc punning c*e rig it policies !l!4ing t*e r@ c found!tions for business tD4 `our$n/A#ong t*e% biggest c*!l/ lei@rs $ill *e i#povi
educ!tion, i#proving infr!itnicture+ tting corruption, !nrefor#ing D!te o$ned enterprises+
= Qour gro$t* forec!st for "ietn!# is N+O pecent NN]+ !l#ost 1 percent!ge points bdo$ t*e lo$est
gure on record, durine t*e :!st Asi!n crisis, $*( do (ouexpect t*e current glob!l slo$do$n to be *!rder on"ietn!# t*!n t*e 3ost Asi!n crisis $!s_
"ietn!# lus incre!singl( integr!ted into t*e g o*ileC; ;C)t" over t*e p!sc dec!de+ >o tod!( "ietn!# it#uc* #ire buGeted b( g o*!l events t*!n it nut ten \e/!rs!go+ For tlx% Asu region !s ! $*ole, during #e G!!nccrisis in -]]_A%8 t*e nDiD4n $!s to ! degree !ble toexport its $!( out of rroubk%+ 5n -]] , for tr!#ple, t*e >gre$ b( U+ per ccnt, $*ic* #e!nt strong de#!nd forAsi!n Dports+ )*is ve!r, t*e > $ill contr!ct b( / +1 pcenr+ $*k #e!ns ver( $e!k de#!nd for AD!n cxpo!s+
= !rticip!nts !t t*e usiness 3oundt!blegener!ll( g!te ! #ore positive vie$ of t*e currentsitu!tion, $it* #ost gro$t* forec!sts for NN] closer to 1per ccnt+ ^id discussions !t t*e 3oundt!ble #!ke pureconsider (our o$n forec!st_
"C'e *!te rxx c*!nged our vie$ on t*e "ietn!#eseecono#( ;ur forec!st is still !t N+O pc/r cent+ 5n #( #ico##ents - #entioned r*!t 5 *oped"ietn!# $»xild dobetter t*!n Dxir forec!st bur 5 fe!red'% our forcc!% $vru# out to be !c!ir!te+ Ag!inst ! terribl( $e!k econo#icb!ckdrop, t*e% expect!tions for "et ru# !re rel!tivel(positive+
= Ho$ !ppropri!te do (ou t*ink t*e polic(response of govern#ent to t*e glob!l slo$do$n is_5 t*ink "ietn!# ts r!king t*e rig*t steps+ 5t is loosenin
#onet!r( polic( !nd providing foc!l sti#ulus+ All of t*!t$ill *elp in t*ese c*!lk/ng/ ing n#cs+ ut it is not gu!r!ntee of success, if (cu look !rtxind t*e $or$+ everI<ot*er govern#ent it doing t*e t!#e !nd yet #ost $ill stilsee t*eir ccono#rt contt!cr in NN]/ )*ese so!s of#e!sures c!n *dp to >Uiften t*e blo$, but t*e( c!nnotstop it co#pictd(+ =
-1 Vkt oi !coMi#AiiJ !"#ts. Ann