Three encouraging economic indicators for Vietnam

Our country's economic recovery and expansion have produced very optimistic outcomes. Many FDI projects are "pouring" billions of dollars of money into Vietnam, which is a positive indicator of the present economy's "transformation" phase.

Prof. Dr Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises, made this opinion in an interview with the Government Electronic Newspaper.

Thriving and promising

Prof. Dr Nguyen Mai, in assessing the economy's recovery prospects, stated that the economic picture from the beginning of the year till now has three striking highlights.

To begin, in terms of economic outcomes, the National Assembly agreed that the GDP growth objective for 2022 is 6-6.5 per cent. However, the socio-economic situation improved in most industries and professions in the first six months of the year, with GDP reaching an astounding 7.72 per cent, the highest in more than a decade.

Prime Minister Pham Minh Chinh urged at the most recent monthly Government meeting to aim to exceed the National Assembly's objective of 7% GDP this year.

Singapore-based United Overseas Bank (UOB) increased its 2022 GDP growth prediction for Vietnam from 6.5 per cent to 7.0 per cent in its Global Outlook report for the third quarter of 2022. This prediction assumes that there will be no more disruptions from COVID-19 and that GDP growth in the second half of the year would be around 7.6-7.8 per cent.

VinaCapital increased Vietnam's GDP growth prediction for 2022 from 6.5 per cent to 7.5 per cent based on the robust growth rate in the second quarter. Despite the strong macroeconomic signs, VinaCapital forecasts that Vietnam's GDP would rise by more than 7.5 per cent this year. Furthermore, GDP growth in the third quarter of 2021 is expected to reach 10% year on year.

Mr Michael Kokalari, VinaCapital's Chief Economist, also voiced his conviction that GDP growth of 10% in the third quarter compared to the same period last year will be a key impetus for investors to pour money into Vietnam's stock market.

According to Prof. Dr Nguyen Mai, the implementation of new free trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), began at the beginning of this year. will establish critical conditions for attracting higher-quality investment and improving efficiency.

A slew of "billion-dollar projects" are providing a "rebound" for the economy. Ho Chi Minh City, for example, proposed a "mega project" of a 6 billion USD international transhipment port at Can Gio, co-operated by Vietnam Maritime Corporation (VIMC) and Mediterranean Shipping Firm (MSC), a container shipping company.

World-class research and development. The Can Gio international container transhipment port project, according to the investor's plan, has a designed capacity of 10-15 million TEUs and is capable of handling the world's largest container ship of 24,000 TEUs, with a total dimension of 24,000 TEUs. The main wharf is approximately 7.2 kilometres long.

Moreover, at the Danang Investment Forum 2022, held at the end of June, Adani Group's Port Development Corporation (India's largest infrastructure group) pledged to support and invest USD 2 billion in the development of Lien Chieu port, as well as the entire logistics area and industrial park in Da Nang, transforming this area into an economic gateway of the Central region.

Along with that, there are several big investment projects in the field of clean energy in the United States and Germany, as well as the Liquefied Natural Gas Power Plant Project Delta Offshore Energy Pte. Ltd (Singapore) with a total investment of over USD 4 billion.

"As a result, several large projects will be completed shortly. Vietnam is expected to attract around 40 billion USD in registered FDI capital and 21-22 billion USD in realized capital by 2022 "Prof. Dr Nguyen Mai predicts.

Need to optimize the investment system quickly

The Chairman of the Association of Foreign Investment Enterprises stated that excellent improvements and big project agreements are the bright spots of the economy and that through these bright spots, we perceive the policy and spirit of reform and strong administration of Vietnam. However, in some areas, the processing of license and registration, as well as post-registration work such as site clearance and investor assistance for project execution, remains delayed.

"Not only foreign firms but also a few local enterprises and investors," he added, "reflect on the fact that there are projects that take 2-3 years to accomplish because they have an investment concept." Dr Nguyen Mai said.

In the present and future contexts, competition to attract foreign investment is severe, particularly in several growing ASEAN nations such as Indonesia, Malaysia, and Thailand. These three nations implemented significant improvements in institutions, investment procedures, and preferential policies for investors, yielding quick benefits.

As a result, Prof. Dr Nguyen Mai stated that if Vietnam does not strengthen its investment institutions fast, particularly in attracting investment in the green economy, digital industry, and the problem of the global minimum tax of 15%, it is apparent that they would fail. It is tough for us to compete with growing countries on the region's "FDI map." Simultaneously, it is vital to change, particularly the organizational structure, and to strengthen the competence of government officials and domestic firms.

In truth, if you want to attract investment from huge organizations and firms in Europe and the United States, you must match their terms and conditions. Otherwise, we are mostly focused on luring small and medium-sized businesses in Asia.

"The final major problem is administrative reform. The Prime Minister said "hot and cold locations, hot and cold regions." How should ministries, branches, local People's Committees, and management boards of industrial parks reform in tandem to create an open investment environment across the country, rather than just emerging some good jobs and some sluggish places? "apart from emphasis, said Chairman of the Association of Foreign Investment Enterprises.

Minh Ngoc (Government Newspaper)