The International Conference on “Vietnam macroeconomic policy forecast & CEOs’ strategic thinking in the context of 2013-2015" recently took place in Hanoi. The event is aimed to forecast macroeconomic policies, and propose recommendations to the State and the Party about economic policy decisions in the 2013 – 2015 period, thus effecting the strategies of corporate managers to help the Vietnam economy face and overcome the instability of the global economy for sustainable development.
On the sidelines of the conference, the Vietnam Business Forum interviewed Dr Patrick Dixon, one of the most influential business thinkers of the world and Chairman of the trends forecasting company Global Change Ltd.Thu Ha-Le Hien report.
According to the International Monetary Fund and the World Bank, the global economic outlook will remain bleak for a few years. How do you assess the signs of economic recovery? Which sector will be show signs to recognize this recovery?
The truth is that we have not forecast the recession of the world economy. While still continuing to make macro adjustments, Asian economies will continue good growth, especially in developing countries. This growth rate is reached due to lower labour costs than in developed countries. As a result, countries in Asia will serve as the primary productive forces, and by 2015 they will account for 40 percent of global production in terms of purchasing power parity (PPP).
A recent forecast of the economic recovery in the United States and the United Kingdom shows growth in the market for mortgage and corporate lending. Let's look at the balance sheet of the companies in the Fortune 1000. Multinational companies have stagnant money of US$ 2 trillion because of the lack of confidence. When confidence is back, we can see that a lot of money will flow into investment, and this will be a prerequisite to promote recovery.
In addition, important indices to predict early changes in the economic activity of a country, for example in China, are the increase in power consumption or more tons of goods being transported by rail. But the numbers are not always clear.
In your opinion, how does the banking sector affect developing countries like Vietnam?
Promoting lending of banks will be a top priority for many governments, with many policies to support asset balance sheets and refinancing and thus, banks can provide low-cost credit and solve the large-scale bad debts issue.
There are many developing countries facing the problem of inefficient state owned enterprises and falling into debt. It is a problem to be solved, however if they are too impatient to take action, there will probably be dire consequences.
What are Vietnam’s advantages and disadvantages in the development and economic recovery compared to other countries in the region and the world?
Economic growth will be closely related to domestic investment, especially in the areas of high value production. Vietnam is in the global race to attract investment capital. The competition is harsh. The country is ranked by investors based on factors such as political and economic stability, the effect of law, tax, government incentives for investors, the abolition of regulations limiting the ownership of foreign investors in the business sector, the protection of intellectual property, etc. Vietnam's performance in many of these factors is highly appreciated.
So what are the business trends in the near future? In your opinion, how do the trends affect Vietnam?
In addition to some visible changes and trends such as: demographics, the process of urbanization, the increase in domestic consumption, and portable electronic devices, there are some notable trends in the future in the area of service and retail.
In addition, there will be fundamental changes in the banking sector, with many non-traditional competitors, and growth in the field of insurance, savings and retirement funds in the emerging markets. This is a great opportunity for investors in the financial sector over the next 20 years.
Vietnam will become a country known for its low production costs and high efficiency; it will attract workshops for clothes, footwear, seafood, oil, rubber, steel and high-tech products. Vietnam has received more than US$ 200 billion from foreign investors over the last 25 years and is expected to have huge capital flowing the next decade in all areas.
In particular, investment in the low-carbon energy industry will increase dramatically in the near future. Vietnamese companies will find a lot of opportunities in the development of green products and services, meeting the essential needs of the world's energy problems in the future.
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