Liberation Day thoughts

EuroCham has voiced its position that Vietnam should ensure that the policies that apply to its economic growth and development have the sustainability factor at heart. In addition, a good dialogue between authorities, foreign investors, and particularly organisations like EuroCham that represent them, could come a long way in providing input that decision-makers could find useful in regards to what investors look for in a potential regional economic hub today.

The city’s regional success will surely be linked to a balance between good urban development and infrastructure planning, like connecting existing and future infrastructure in a Smart City-approach; energy, water, and waste management efficiency – betting on creating an environment for renewable energies to flourish and waste management to develop as a service and a business; and livelihood – places where professionals and families can live and work in a healthy and productive environment.

These are but a few factors explained in very general terms, but Ho Chi Minh City needs to be inspired by them and generate success stories that will allow it to market itself as an economic hub for both Vietnam and wider ASEAN.

Tran Quoc Huan  Deputy general director of FrieslandCampina Vietnam said "As a foreign enterprise, we believe it is most relevant to have comments on the development of Ho Chi Minh City since the issuance of the Foreign Investment Law. Over the past 32 years of Doi moi, we have seen the great strides the city has made via three stages of development".

From 1986-1995, Vietnam was converting to a market economy. The focus was to rapidly increase agricultural production and light industry which used agro-based materials. This, on one hand, was to satisfy the basic needs of the people, and on the other hand, to export to strong foreign currencies under the motto of “What’s best is for export”. Ho Chi Minh City was of course the national hub to procure export goods from all over the country, and export to the world. Infrastructure was developed to facilitate exportation.

From 1995-2006, with the full normalisation of the relationship with the US, Vietnam received strong waves of foreign direct investment (FDI) from multinationals including giants such as P&G, Unilever, Coke, Pepsi, Toyota, Honda, Panasonic, Samsung, and Foremost (now FrieslandCampina). This was to increase GDP fast and save the valuable USD which had been painfully spent for imported consumer goods. With its “Red carpet for FDI enterprises” motto, Ho Chi Minh City was again the magnetic pole to attract FDI to Vietnam, and the halo effect benefitted the entire economic development triangle, including Dong Nai and Binh Duong. Industrial parks and high-class accommodation facilities were developed to host the new heroes.

In the final stage, from 2007 on – with the establishment of the Ho Chi Minh City Stock Exchange – the market economy in Vietnam has been operating in full, under a new motto: “What’s best is for the stock exchange”. With foreign indirect investment, the integration of Vietnam’s economy has been accelerating, bringing many changes like administrative reform, e-economy, and startups. The leading role of Ho Chi Minh City is increasingly evident.

And from now on, to remain a regional economic and financial hub, the city needs a mechanism of her own. For example, a favourable corporate income tax which is really competitive with other countries in the region, especially Singapore.

According to Professor Augustine Ha Ton Vinh  Chairman of Stellar Management Corporation, in the past few years, Ho Chi Minh City has improved its investment climate to attract more investors and new projects from the business community. The city has tried to enhance its competitiveness and quality of service. It consistently ranked in the top 10 of the country’s Provincial Competitiveness Index (PCI). The city has an abundant workforce that can satisfy the demands of domestic and international enterprises.

I believe Ho Chi Minh City can become a vital regional socio-economic hub. The city has to play the role of a centre of creativity and innovation and an engine for growth of the country. The “city of tomorrow” has to begin its first step today which will include: being a place for equal opportunity; tolerance, acceptance, and appreciation of cultural and political diversity; and the respect and protection of its environment. The city has to empower its citizens as well as netizens and allow them to participate in the decision-making process as the city’s stakeholders. The government of Ho Chi Minh City has two distinct roles:

First is to create, maintain, and foster the legal and business climate and conditions to allow the ecosystems of innovation to exist and prosper. A healthy and transparent legal system and regulatory framework can help attract investors and strategic partners to projects that are important to the development of the city and its population.

Second is to allow, develop, and support an entrepreneurial spirit and culture in the city and its vicinity. The entrepreneurial talent exists because of that culture and will be crucial to the future success of the city and its neighbouring provinces.

The city has to begin to migrate from building seaports to creating new “brainports”. Universities, undergraduate and graduate training centres have to receive and benefit from government financial support, marching orders, and business, as well as scientific projects.

The global talent pool is vast and very mobile. The city needs to attract talented people, particularly from developing countries where talent can be acquired at lower costs.

Kim Thien Quang CEO of Maybank Kim Eng Vietnam said "First of all, I would like to offer my congratulations to Vietnam on the occasion of its 42nd Liberation Day. After 42 years, Ho Chi Minh City has gone through great economic development to become a vibrant and bustling city, home to nine million hard workers".

The stock market has also grown hand-in-hand with Ho Chi Minh City’s economic advancements, as more and more companies get listed to raise capital on the Ho Chi Minh City Stock Exchange. Foreign ownership limits at some firms have been lifted, standards of business reports and information release have been improved, and exciting financial products are coming.

Maybank Kim Eng strongly values Ho Chi Minh City’s ongoing efforts to attract both foreign direct and indirect investment to the city. Vietnam’s stable macro-economic situation is another bonus. Over the years, this has strengthened the image of Vietnam in the eyes of international investors, from what we’ve observed when working with large overseas funds.

With this in mind, we really hope to see even stronger efforts made by Vietnam’s largest city to lure large institutional investors from overseas, as this will transform the Vietnamese stock market in terms of quantity and quality.

For example, Vietnam should have a higher credit rating by international ratings agencies such as Moody’s and Fitch, as well as reaching the “emerging market” status set by MSCI. We also hope to see more equitised state-owned companies and large private firms listed on the Ho Chi Minh City Stock Exchange to increase market capitalisation and provide more high-quality products to investors.

Overall, as Ho Chi Minh City grows into ASEAN’s new economic and financial hub, Maybank Kim Eng and our investors really hope to see a more competitive, transparent, and stricter stock market here that will be on par with regional exchanges.