Double-digit inflation that has been blunting Vietnam's low-cost competitive edge and scaring away investors is showing signs of receding, said the Business Times, a prestigious newspaper of Singapore.
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Vietnam is expected by many market watchers to perform even better in 2010
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The Business Times last week published an article entitled “Time to do business in Vietnam" calling Singaporean players to tap Vietnam’s huge potential.
According to the news, at 6.9% last year, the rise in inflation rate in Vietnam was still high by most Asian standards - but it was down from 23% in 2008. And last year's inflation was Vietnam's lowest in six years.
The government projects the inflation rate this year to stay about the same as last year, at 7%. So it looks like the inflation tiger is being tamed, given Vietnam's huge potential.
The Business Times cited a comment of the International Enterprise (IE) Singapore, a trade promotion agency, to suggest Singapore investors see this as a signal to step up their presence in Vietnam and build on the investments that they have already made there.
As one of the few countries that kept growing during the global downturn, Vietnam is expected by many market watchers to perform even better in 2010, especially with the gradual recovery of the world economy.
The official economic growth forecast for Vietnam this year is 6.5%. On the ground, business sentiment about Vietnam is improving.
Notably, the upbeat results of a November 2009 poll of 200 investors in Vietnam by consulting firm Grant Thornton showed that 59% were 'positive' on Vietnam’s economic performance, up sharply from 36% in a poll in April last year.
Investors are returning to Vietnam after foreign direct investment (FDI) there plunged 70% last year. However, FDI is tipped to bounce back 10% between US $22 billion and US $25 billion this year.
It is reported that Singapore companies are involved in building and running industrial parks; doing logistics business; launching retail operations and schools in Vietnam. Singapore had US $17.3 billion tied up in 792 projects at end-2009, making it the fifth-biggest foreign investor in Vietnam.
The Business Times said that Vietnam offers Singapore businesses not just cheaper labor but a sizable market with a growing middle class - and the country is not far from Singapore.
Vietnam’s geographic proximity to Singapore and availability of labor makes it an attractive business and investment destination.
In particular, Vietnam is a viable offshore manufacturing site. The Vietnamese Government welcomes and encourages multinational companies to invest and base their manufacturing activities here./.