Great 5-year outlook for Vietnam

I think the outlook for Vietnam in the next 5 years is outstanding. It's amazing what the country has accomplished in the last 5 years. There are still many challenges ahead but I believe Vietnam is going to be a great emerging market.

Below are my top 5 reasons as to why Vietnam is a great place to invest and to do business in the next 5 years.

1. An Attractive FDI Destination. Some manufacturing companies are beginning to diversify away from China and India by looking into Vietnam. Others like Intel have already made Vietnam their main destination. In the last 10 months alone, Intel had committed as much money to Vietnam as it had to China in the last ten years.

Vietnam has done a great job of attracting foreign direct investment (FDI). Recently, the United Nations Conference on Trade and Development (UNCTAD) ranked Vietnam 6th among the 10 most attractive FDI destinations in the world for 2007-2009.

In the manufacturing space, The PricewaterhouseCoopers EM20 Index, which ranks top emerging markets and recently ranked Vietnam as the number one manufacturing destination beating out China.

2. A booming stock market and an attractive FII destination. The Vietnam stock market is in its early stage, commodities trading are limited, the debt market is not in place, and derivatives are not available, which means the potential for growth is HUGE. At the moment Vietnam listed shares can only be purchased on a handful of exchanges. I am expecting as shares begin to trade on more overseas exchanges, especially in the U.S., we'll see money from retail investors to pour in and move the market much higher. The Ho Chi Minh City Securities Center and the Hanoi Securities Trading Center have about 200 listed companies. The combined market capitalization of $26 billion represents 39 percent of gross domestic product.

Currently, there is an estimated 4-5 billion USD in foreign indirect investment sitting on the sideline waiting to invest in IPOs and listed shares. This number is expected to growth drastically in the next 5 years.

3. Access to Cheap Financing. Vietnam has recently became eligible to access the International Bank for Reconstruction and Development. The International Bank for Reconstruction and Development is a branch of the World Bank set up to assist middle-income and creditworthy developing countries by promoting development through loans, guarantees, and advisory services. Loans through the International Bank for Reconstruction and Development is one of the cheapest types of loans on international financial market that developing countries can access.

4. A Talented and Willing Work Force. With half its population under 25 years old, well-educated, and growing at an annual rate of 1.5%, Vietnam has a very attractive work force--young, talented, and willing. Currently, Vietnam also has one of the lowest unemployment rate in the world at 2%.

5. Privatization. Privatization of major state-owned firms is an important contribution factor to its success in the next 2-5 years and Vietnam is planning to accelerate the privatization of hundreds of state-run firms. The government is pushing for the full or partial privatization of state-run firms, including major banks, telecom firms, Vietnam Airlines, oil and gas industries, and infrastructure companies.


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