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Economic Sector

Last updated: Friday, October 19, 2018


Vietnam Economy to Develop Sustainably in 2018

Posted: Wednesday, December 06, 2017

CEL Consulting, a supply chain management consulting company, forecast that Vietnam’s economy will continue the trend of sustainable development in the medium term, while GDP growth is expected to reach 6.3 per cent in 2017 and will grow 6.4 - 6.8 per cent in 2018.

Vietnam’s economy in the first 10 months of 2017 grew in various areas. High demands for domestic consumption and export expansion are driving production, retail and consumer services. Although exports still contribute significantly to the economy, Vietnam’s domestic market is becoming more attractive when the middle class is forecast to grow at 32-35 per cent by 2020.

Mr Julien Brun, CEO of CEL Consulting, said, the business environment, low interest rate and credit growth of 22 per cent are favourable conditions for enterprises to borrow loans from commercial banks. In the first 10 months of 2017, up to 105,125 enterprises were established with a total capital of more than VND1,022 trillion, up 14.6 per cent in enterprises and 43.8 per cent in value over the same period of 2016. Despite getting loan from commercial banks, not all companies make a profit. Up to 52,782 companies declared bankruptcy in the first 10 months.

In the latest Doing Business Report issued by the World Bank, the ease of doing business of Vietnam was ranked 68th out of 190 economies, an increase of nine places compared to the last year. Vietnam’s rankings are higher than that of many countries in the region such as China, Indonesia, the Philippines, Cambodia, Myanmar, Brunei and Laos. However, Vietnam is still far away from Thailand (26th), Malaysia (24th), and Singapore (2nd).

With positive economic performances, foreign direct investment (FDI) to Vietnam significantly increased to US$23.5 billion in the first 10 months, up 33.8 per cent over the same period of last year. Notable projects in 2017 included Samsung Display with a US$2.5 billion project, US$2.8 billion Nghi Son 2 Thermal Power Plant, US$2.07 billion Nam Dinh 1 Thermal Power Plant, US$1.77 billion B-O Mon Block in Kien Giang, US$886 million Thu Thiem Smart Complex in Ho Chi Minh City, US$486 million Polytex Far Eastern project, Coca Cola with US$320 million; VSIP 3 with US$285 million and Tole Panel with US$$ 270 million.
In addition, industrial manufacturing in the first 10 months of 2017 up 8.7 per cent from a year earlier. Total retail sales of consumer goods and services rose 10.7 per cent year on year. Retail sales in Ho Chi Minh City and Hanoi increased 9.1 per cent and 5.6 per cent respectively. Goods transport also grew 10 per cent year on year.

Besides, Vietnam ran a trade surplus of US$1.23 billion in the first 10 months of the year. Commodity exports jumped 20.7 per cent year on year in the first 10 months of this year. Most major export sectors advanced, except for agricultural products. Imports surged 22 per cent over the same period of last year. Vietnam mainly imported inputs for production and processing. Import and export structures did not change much from last year, with the United States, the European Union (EU), China, Japan and South Korea being major export markets and China, South Korea and ASEAN being supply partners. Vietnam’s exports are forecast to rise 9 - 10 per cent in 2018 and trade deficit will be kept below 3 per cent of total exports as aimed by the Government.

Although the economy is on the rise, Vietnam still needs to pay more attention to its sustainable development goals, which are a general trend of the world in the face of climate change.

Some foreign companies have introduced waste-to-energy technology to Vietnam. Doranova, a Finnish energy group, invested in Vietnam to help convert waste into energy Ho Chi Minh City. Watrec Group is also discussing investment options to help Vietnam produce energy from organic waste.

Thu Ha

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