Vietnam becomes compelling investment destination

The article points out that the country’s increasing resilience shines as its GDP steadily grows despite facing global challenges. The country is drawing further foreign investment whilst it is making strides in high-tech manufacturing, particularly semiconductors, thereby positioning itself in the global supply chain.

With a booming rare earths industry and strong US ties, the country is set to play a pivotal role in various sectors.

In fact, the Vietnamese economy grew by 8.0% in 2022, benefiting from the export of goods during the COVID-19 pandemic. This year has seen the Vietnamese economy stabilise at a GDP growth of 5.3% year on year in the third quarter.

The country’s economy has been fairly resilient, despite headwinds from higher commodity prices resulting from the Russia-Ukraine conflict and a slowdown in China.

The article outlines that the country’s trade has faced some challenges this year due to reduced demand from major trade partners. Exports fell by 10% year on year in the first eight months before finally turning positive in September.

The Vietnamese manufacturing industry’s contribution to the economy as a whole continues growing, although the value it adds has remained relatively flat due to fragmented supply chains.

The Vietnamese Government is keenly aware of this challenge and is actively trying to lure foreign investments in high-tech manufacturing, particularly in the semiconductor industry.

The country has signed multiple Free Trade Agreements (FTAs) to encourage foreign cooperation with its local industries. Policymakers are also offering supportive measures such as tax incentives, preferential loan rates, waived import duties, and preferential land use fees for high-tech factories.

Strong support from the Government appears to be yielding some early results. The country has achieved impressive growth in electronics exports, notably to the US. From virtually zero, Vietnam now accounts for around 10% of all US electronics imports.

Most notably, the newswire states that despite facing a challenging environment characterised by sluggish growth and lackluster export performance throughout the year, Vietnam has managed to attract US$15.9 billion in Foreign Direct Investment (FDI) since the beginning of the year.

The manufacturing industry maintained its position as the primary attraction for FDI, with investments exceeding US$14 billion, duly reflecting a substantial gain of 15.5% year on year.

This achievement is significant given the prevailing uncertainty, inflationary pressures, and waning confidence occurring in the global economic landscape. Key Apple suppliers such as Foxconn Technology Group, GoerTek Inc., Luxshare Precision Industry Co., and Pegatron Corp. have all set up factories in the nation, bringing the electronics industry’s share of total exports up to 32% in 2022.

Moreover, the Government has been courting key players in internal circuit design and semiconductor industries in order to encourage further investment. These firms include industry leaders such as Nvidia, Synopsys (Qualcomm), Marvell, and Cadence Design Systems. These are all positive developments for the nation and speak to its future technological potential.

The article concludes that the country stands at the threshold of an exciting economic transformation, particularly as it has demonstrated impressive resilience, attracting foreign investments, and fostering growth in high-value industries.

With substantial rare earth reserves and a growing semiconductor industry, Vietnam is poised to become a vital player in global supply chains. The strong partnership that exists with the US further solidifies its position as part of the global economic landscape.