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  • Writer's picturePaul T. Rubens

Vietnam - A Confluence of Positive Markers is Taking Shape

Updated: Sep 29, 2019

When our former firm, Blackhorse, launched a Vietnam Fund in 2006, we saw a number of parallels to Taiwan, through our shared experience there in the late 1980s. Martial law had just been lifted and Taiwan, though already a great trading economy, was just re-introducing itself to the world. This led us to invest in the Vietnamese American Vocational Training College (VATC), now the Institute for American Education in Vietnam and the largest accredited International Center of Florida's Broward College.

Serving as Interim Chairman of the College over 15 months provided me an opportunity to tour Vietnam extensively, from Hai Phong to Ca Mau. The potential we saw at that time has since been nurtured and as we approach 2020, we see a confluence of positive economic and geopolitical markers taking shape in Vietnam.

Other countries may have high growth rates, young, educated populations and some of Vietnam's other positive attributes, but very few fulfill all of these below:


For the past five years, Vietnam has experienced steady GDP growth of between 6% to 7% annually. Demographics have been supportive; around 70% of Vietnam’s population is of working age. The average age of the population is just 30.5 years old (compared to 37.4 in China and 37.7 in Thailand). There is no shortage of workers in Vietnam.

Workers are also qualified, with a high literacy rate standing at 95%. Incomes have risen significantly over the past ten years by 123.2% (GDP Per Capita: USD1,149 in 2008 >> USD 2,564 in 2018). Vietnamese are gaining disposable income and purchasing new goods and services, which is contributing to improving investment returns.


Political stability

Vietnam’s single party ruling system has proven to be stable and has been spared large scale protests against the party-ruled government, as has been the case in other party-ruled countries. While a Communist government, it’s important to note the Vietnamese did not employ purging and re-educational programs such during the Cultural Revolution in China.

Economic Stability

Foreign exchange reserves in Vietnam have steadily increased to $55 billion, which is more than double the level of five years ago. The Refinancing Rate (national interest rate) has seen a decline from 15% to 6%. The inflation rate has gone from 18.7% in 2011 to 2.26% in August 2019. The FX rate is stable, with the Dong effectively pegged to the USD with controlled adjustments.


Social and legal infrastructure

Private sector commercial banks are now available to provide loans and services. Many international law firms and local law firms can provide legal services to international clients. Contracts are commonly written in dual language (English and Vietnamese). Courts and Arbitration Centers are available for dispute settlement.

Public infrastructure

USD 51 billion of Overseas Direct Aid (ODA) over the past 20 years has enabled construction of roads, bridges, ports, airports, power plants and other public assets to elevate the efficiency of economic activity in Vietnam.

Demand For Capital

One of the appeals of emerging and frontier economies is the lower saturation rate compared with developed economies. In Vietnam’s case, it is also less saturated than many developing economies in the region, such as Thailand, Malaysia, Indonesia and the Philippines. Domestic players are in their nascent stages and international investors are in the process of increasing commitments. FDI has increased by 127% over the last 5 years.

Geopolitical Positioning

In 2018, Vietnam ratified the TPP, joining the agreement as a founding signatory alongside Australia, Canada, Japan, Mexico, New Zealand and Singapore. The TPP elevates Vietnam’s relationship with Japan in particular and is accelerating movement of goods, services, as well as people. Changes in Japan's labor laws have allowed for the rapid growth of trainee workers from Vietnam, who later return to Vietnam to relatively high wage, export-driven jobs.

The re-alignment of trade between China, the US and its other trading partners is leading international corporations to shift production out of China and into other locations to avoid punitive tariffs. By all accounts, Vietnam is one of the most favored destinations for such relocation or as a base for new investments and the country is expected to enjoy increased investments from this trend in the years ahead. However, it's important to note the wheels of Vietnam’s ascendance were set in motion years ago, as increases in production costs and perceived risk of doing business in China began a trend of diversifying into Vietnam.

Further integration with leading regional players, particularly from Singapore and Thailand, but including Japan, Korea and other North Asian economies, combined with Vietnam's leadership position within the Greater Mekong sub-region should further solidify Vietnam's growth trajectory in the years ahead.

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