Update: 09:19 | 01/01/2022
Foreign investors maintain an optimistic outlook for Vietnam’s economic growth next year though the country suffered a challenging 2021 as it was hit hard by the pandemic, according to an article posted on the website Vietnam Briefing of Dezan Shira & Associates.
The writing considered Vietnam’s free trade agreements (FTAs) as a pull factor that investors can bank on, noting that the country has used its participation in FTAs as an instrument to ensure increased economic power and financial security.
Workers put final touches on garment for export to the EU at a factory in Thai Nguyen province.
This will ensure that Vietnam’s economic development will continue to shift away from exporting low-tech manufacturing products and primary goods to more complex hi-tech goods like electronics, machinery, vehicles, and medical devices. The implementation of the EU - Vietnam Free Trade Agreement (EVFTA) last year is an example of this.
Besides, the Regional Comprehensive Economic Partnership (RCEP), which will officially come into force on January 1, 2022, can help local firms increase exports and attract high-quality goods for its consumers. In addition, the country is set to benefit from the demand for its exports like agriculture and fisheries products.
Mergers and acquisitions (M&A) are likely to continue to play a key role in Vietnam’s economy in 2022. While in 2020, M&A activities were disrupted due to the pandemic, in the first nine months of 2021, M&A deals with total disclosed value have already totalled 3 billion USD.
As Vietnam hopes to recover its economy, further robust M&A activity can be expected in 2022, especially when the government has also eased some requirements in the investment and enterprise laws to facilitate M&A deals, according to the article.
Due to the pandemic, the government unveiled several support packages for businesses and individuals to help spur the economy, the writing said, suggesting businesses should prepare for 2022, using these government measures to improve cash flow.
In addition, the easing of entry procedures and work permit requirements should help businesses and employees enter Vietnam for job opportunities.
Regarding tourism - a major contributor to the economy, from 2022, the government plans to allow international arrivals that are fully vaccinated to self-quarantine at home or their places of accommodation as long as they test negative. The Ministry of Culture, Sports, and Tourism has proposed that the Prime Minister consider restoring visa exemption for tourists who stay in Vietnam for less than 15 days. In addition, nine international flight routes have been given the green light to resume commercial flights.
In its conclusion, the article said 2021 brought significant challenges for many businesses in Vietnam who had to deal with local market developments along with concerns plaguing global supply chains exacerbated by the pandemic. Several issues that the country faced in 2021 are likely to continue into 2022.
Nevertheless, it added, a more targeted and focused development in key areas of the economy will present more opportunities for growth, particularly, in areas that help prop up Vietnam’s bottom line of economic stability and people’s livelihoods.
While Vietnam has suffered, its economy is on course to record positive growth in 2022. For the next year, it remains a strong candidate for investment from ASEAN and beyond. Given its investor-friendly policies, relative economic and political stability, cost efficiency, and consumer demand prospects, the country is likely to continue gaining from supply chains restructuring in Asia in addition to attracting a new range of investors in terms of geography and sectors, according to the writing.