“Vietnam – Asia’s rising star” was the main theme of a business roundtable held recently in Hanoi with the participation of nearly 130 chief executive officers and more than 600 representatives from leading domestic and international businesses. While attending the event, Prime Minister Nguyen Tan Dung had direct talks with the business community. 

Great advantages

“Vietnam has great advantages.” This view was shared by all investors and businesses at the conference.

Charles Goddard, Editorial Director of the Economist Intelligence Unit’s Asia-Pacific Region, said Vietnam is emerging as a rising star. He said that the Vietnamese economy has developed steadily in recent years to become a phenomenon in Southeast Asia. The country has gradually shifted from an agriculture-based economy into an industry-driven economy. The shifting has created numerous opportunities for the country to seize, such as investment projects, profitable business deals and jobs for the people.

Justin Wood, director of the Corporate Network and Southeast Asia expert for the Economist Intelligence Unit, said “The economic outlook for Vietnam is highly positive, with a growth of over 8 per cent in 2007 and a similar rate forecast for the next couple of years."

In the long term, he said that Vietnam has many positive advantages in maintaining a high growth in the coming years thanks to its young, cheap and rapidly expanding workforce as well as being increasingly technologically savvy. He said that the Government’s commitment to liberalising the economy and introducing more market-based reforms “will underpin this positive outlook."

HSBC Vietnam president Thomas Tobin (left)

Thomas Tobin, President and Chief Executive Officer of the Hong Kong and Shanghai Banking Corporation (HSBC) expressed his optimism about Vietnam’s future prospects and forecast that Vietnam would achieve a GDP growth rate of 8.5 percent in 2008 thanks to increasing consumption and foreign investment inflows. According to him, Vietnam is accelerating financial reforms in 2008 in line with its WTO commitments, which will lead to a vigorous development in the banking sector. 

Stuart Dean, President of General Electric (GE) South East Asia regarded Vietnam as the new tiger in Asia and said that the country is attracting investors thanks to abundant workforce and efficient operations. He said that GE, which came to Vietnam in 1993, will build a plant in Hai Phong port city and increase its employees to 1,000 from 500 at present. Besides power development, the group also plans to lure other investors to pour money into the aviation and oil industries. 

Challenges ahead

However, leading businesses said that it is not easy for Vietnam to become a “rising star” or a “new tiger” in Asia because there are many challenges lying ahead.

Charles Goddard said, “Inflation is worryingly high…. The regulatory environment is still embryonic and can create big headaches. Another problem is a lack of technicians and managers.”

According to him, although the Government is working hard to reduce the prevalence of corruption, investors and businesses in Vietnam express concerns about this negative effect.

Meanwhile, Justin Wood said that Vietnam’s legal system is incomplete, citing the fact that it takes foreign businesses too much time to explore and be integrated into the country’s legal system, particularly in taxation. Administrative procedures remain more cumbersome than in neighbouring countries.

Though Vietnam has a young and abundant workforce, it lacks highly qualified workers with professional skills. In addition, these workers require higher salaries than those in other regional countries.

Thomas Tobin said that the banking sector is in dire need of high-quality personnel and that it takes a lot of time and money to train specialists that are adaptable to rapid development of the sector. He forecast that Vietnam will continue to lack these human resources for several more years. 

Many investors and businesses, however, were interested in the infrastructure development, saying poor infrastructure will hamper the country’s development. They suggested that Vietnam pay more attention to improving the infrastructure, particularly in the transport and power sectors. 

Determination

Prime Minister Nguyen Tan Dung said that despite many achievements over the past few years, Vietnam remains a developing and low-income economy and is coping with big challenges.

To overcome these challenges, he said the Vietnamese Government has worked out several major solutions as follows:

(i) Striving to achieve a GDP growth rate of 9 percent, along with implementing the targets for social progress, poverty reduction, environmental protection and especially efficient price control and the stabilisation of the macro economy;

(ii) Improving the living conditions of the people, especially those living in flood-hit and remote areas and those inhabited by ethnic groups; Reducing the rate of poor households to 11-12 percent;

(iii) Improving the socio-economic infrastructure and personnel training to meet development requirements;

(iv) Accelerating administrative reforms, with a focus on building and perfecting legal institutions and administrative procedures; and  

(v) Continuing the fight against corruption and wastefulness and encouraging the practice of thrift. 

The PM delivered the Government’s strong commitments to equitising State-owned enterprises, combating corruption, reforming administrative procedures and improving the business environment. He assured the business community that corruption will be cleaned up because “for Vietnam, nothing can thwart our determination”.