VGP – The future is looking brighter for Viet Nam as the country begins the Year of the Horse, economists say.
New investment in manufacturing coupled with improved E.U. and U.S. demand will lift exports 2014. HSBC / Trinh D Nguyen
“With global conditions improving and trade negotiations in the works, export-oriented firms will enjoy another year of robust growth,” said Trinh D Nguyen, an economist at HSBC, in a note. “Exports, especially foreign-invested manufacturing firms, will provide a boost to Viet Nam’s growth [in 2014].”
Nguyen expects exports to rise 20% this year from 15.4% in 2013, which will help gross domestic product expand 5.6% in 2014, up from 5.4% in 2013. Foreign direct investment (FDI) is likely to grow strongly in 2014, outpacing overall growth and resulting in a “two-speed” economy, Standard Chartered’s Betty Rui Wang predicted.
“International manufacturers and investors are attracted to Viet Nam’s low-cost labor pool and large domestic market. They are showing sustained investment interest in the country, despite structural challenges to the economy,” Wang said.
Registered FDI rose 95.8% to $13.1 billion in the first 10 months of 2013, and disbursed FDI rose 6.4% year-over-year to $9.6 billion over the same period.
While foreign-invested sectors accounted for only about 18% of 2012 GDP, they accounted for 63% of Viet Nam’s exports and 53% of its imports.
Electronics exports have also significantly increased in importance over the past few years — they now make up 24.5% of total exports, compared with 4.4% in 2008, according to Prakriti Sofat, an economist at Barclays Capital. The main impetus has come from mobile phone exports — with shipments accelerating sharply since late 2011.
In 2009 Samsung Electronics Co., Ltd. (KRX:005930) opened its first handset plant in Viet Nam, (total investment of US$1.5 billion), which is also its second-largest factory worldwide. The company, which surged past Apple Inc. (NASDAQ:AAPL) to the top of the mobile-phone industry, built the business by tapping China’s cheap and abundant labor force. But not for much longer. Samsung is shifting its output to Viet Nam to take advantage of even lower wages.
The South Korean company recently signed a contract to build its second factory (US$2 billion), which will make 100 million phones a year. Other mobile phone companies such as LG Electronics Inc. (KRX:066570) and Nokia Corporation (NYSE:NOK) are also investing. Nokia opened its first factory in Viet Nam in October 2013. The US $300 million plant is expected to create 10,000 jobs and produce 45 million handsets per quarter, Thanh Nien News reports.
Viet Nam’s wage levels are a lot lower than elsewhere in Asia. According to a JETRO report, monthly pay for general workers in Viet Nam is roughly 32% of levels in China, 43% in Malaysia and Thailand and 62% in Indonesia.
“Looking into 2014, we expect further price hikes for energy commodities such as electricity and fuel. While inflation will accelerate in 2014 to 7.9% (average), the State Bank of Viet Nam has scope to keep rates on hold in the first quarter of 2014,” Nguyen said.
(International Business Times)
Đăng ký: VietNam News
