Business

Three factors keep Vietnam’s economy humming along

Infrastructure investment, trade environment and competitive wages are three factors that keep Vietnam’s economy humming along and its growth numbers positive, according to an article published on the vietnam-briefing.com.
Three factors keep Vietnam’s economy humming along ảnh 1Illustrative image (Photo: VNA)

Hanoi (VNA) – Infrastructure investment, trade environmentand competitive wages are three factors that keep Vietnam’s economy hummingalong and its growth numbers positive, according to an article publishedon the vietnam-briefing.com.

Specifically,Vietnam spent around 6% of its GDP on infrastructure, which is among the highestin the ASEAN region.

Among that spending were somebig ticket items such as the ambitious 1,800 km HCM City–Hanoi highway; the LongThanh International Airport, which will eventually replace HCM City’s overlycongested Tan Son Nhat; metro projects in Hanoi and HCM City; as well asthermal and waste-to-energy power plants.

Over the past few years, Vietnam has been active in signingbilateral trade agreements with countries around the world. Its membership inthe Association of Southeast Asian Nations (ASEAN) also makes it a party toseveral FTAs that the regional bloc has inked.

The standard of product quality, manufacturing, and employeerights guaranteed in these agreements will allow Vietnam to become amanufacturing hub and expand its export base.

The EU-Vietnam Free TradeAgreement (EVFTA), for example, has boosted Vietnam’s exports despite thepandemic. In 2021, the UK-Vietnam FTA helped expand trade between Vietnam andthe UK to nearly 6.6 billion USD. Similar increases were also notedwith the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)with exports to Canada and Mexico.

Moreover, Vietnam’s business environment isopen, and the Government has provided investor-friendly policies aimed atattracting investment and socio-economic development. These are important pullfactors for investors looking to invest in Vietnam. This has been made easierthrough Vietnam’s increasing number of FTAs.

Three factors keep Vietnam’s economy humming along ảnh 2Illustrative image (Source: VNA)

One of Vietnam’s biggest advantages is its competitive wage. It hasa young, dynamic workforce that is ready to fill the gap. Its young labor forcealso comes at a relatively lower cost. More than 40% of Vietnamese universitygraduates major in science and engineering. As Vietnam sees its economy grow,its wages will rise. It will thus have to maintain a balance between inflation,wage levels, and productivity to avoid disrupting the overall labour market.

In conclusion, the article wrote that evenwhile geopolitical tensions persist, Vietnam’s economic prospects are promising. In the short term, costs are likely to increase, but investors that play thelong game stand to reap big rewards./.

VNA
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