National economy showing gradual signs of recovery
The ailing Vietnamese economy, which has been hit hard by the prolonged impact of COVID-19, is showing positive signs of recovery thanks to impressive levels of exports and FDI attraction making a huge contribution to economic growth.
Business production moving at full steam
Immediately after the country moved into the post-pandemic period in early October, a number of local garment makers have begun to gather momentum to fulfil orders. Since the beginning of October, Viet Thang Jean Co., Ltd. has exported approximately 150,000 products, a threefold increase compared to the entire month of September.
Pham Van Viet, managing director of Viet Thang, states that his company is racing against time in order to meet partners’ orders. Its export turnover is expected to increase by 60% quarter-on-quarter by the end of December, and approximately 8% year-on-year.
According to the executive, Vietnamese garments are enjoying strong sells in the global market, despite the impact of the COVID-19 pandemic. In contrast, China and Bangladesh, both of which are Vietnamese rivals, are encountering several difficulties.
The Vietnam Textile and Apparel Association (VITAS) reports that the country’s total garment and textile export turnover during the opening nine months of the year reached US$29 billion, an annual rise of 13.2%. The industry’s export value for the year is anticipated to rise to US$37.5 - 38 billion providing that the latest COVID-19 outbreak is brought under control in October, and to US$36 - 36.5 billion if the outbreak remains complicated.
Meanwhile, wood processing businesses have enjoyed impressive growth, despite the impact of COVID-19. Indeed, the export turnover of wood and wood products fetched US$11.11 billion during the past nine months, an annual surge of 30.6%.
Since official implementation of the EU-Vietnam Free Trade Agreement (EVFTA) in August 2020, the local wood industry has expanded its market share to many EU member states, therefore fuelling its export growth.
Vu Quang Huy, CEO of TEKCOM Joint Stock Company, says his firm was hit hard by the impact of COVID-19 in the third quarter of the year, although its overall export value for the entire year is poised to leap by 50%. He predicts that the global economic recovery moving into 2022 will certainly offer brilliant prospects for the local wood industry to increase its exports.
According to Nguyen Chanh Phuong, general secretary of the Ho Chi Minh City Handicraft and Wood Processing Association, over 60% of businesses have now returned to work, with the figure set to gradually increase to roughly 75% by the end of the year.
The industry is anticipated to rake in US$14.5 - 15 billion from exports this year, or nearly US$3 billion more than last year’s figure. In addition, the increasing global demand for wood and wood products moving into the post-pandemic period will prompt Vietnamese wood export value to rise to US$18 - 19 billion next year, predicts Phuong.
Bright prospects ahead
The resurgence of the SARS-CoV-2 virus in late April cast a shadow over Vietnamese economic outlook following its successful control of outbreaks in 2020. However, FDI attraction has become a bright spot in the overall gloomy picture for the domestic economy.
The Ministry of Planning and Investment reports that the country attracted US$22.15 billion worth of FDI capital over the opening nine months of the year, an annual increase of 4.4%. Most notably, newly-registered capital surged by 20.6% to US$12.5 billion, while additional registered capital also rose by 25.6% to reach US$6.4 billion.
Dr. Oliver Massmann, general director of Duane Morris LLC, one of the 100 largest law firms globally, notes that the country will soon regain its position as one of the friendliest investment destinations in Asia once the COVID-19 outbreak is fully brought under control over the next six months.
Vietnam is benefitting from bilateral and multilateral free trade agreements, while economic recovery policies introduced by the central government are so far proving to be effective, the expert explains.
During a meeting held among FDI businesses in September, Choi Joo-ho, CEO of Samsung Vietnam, also stated that the country remains an attractive destination for foreign investors over the long run.
Choi stated that Samsung supports the Vietnamese Government’s ongoing policy relating to effective pandemic control and economic growth. He therefore believes that the prolonged outbreak will soon be brought under control nationwide, especially in Ho Chi Minh City and other industrial clusters located in the south.
Experts believe that Vietnam will quickly secure positive economic growth in the fourth quarter of the year after suffering a contraction in the third quarter, helping the economy get back on track moving into 2022.