Vietnam’s economy races ahead and there are no signs of stopping
Vietnam may not be the last virgin territory in Southeast Asia. We can all agree that accolade probably belongs to Myanmar. So what is really going on in Vietnam and why is there such an attraction for business and the boom in the economy?
The zany pace of Vietnam can be seen by anyone walking around the streets. The buzz of scooters flashing by and the bustle of the crowds with heads down rushing to get to their place of work are also reflected in the pace that new businesses are entering Vietnam.
In just three decades, Vietnam has successfully gone from one of the poorest countries in the world to one of the fastest growing economies. With a population of around 95 million and rising by about one million every year, more and more people are finding themselves with disposable income and entering into the middle class.
Evidence of this can be seen by considering the large amount of new domestic and corporate accounts that were opened in March to trade on the VN Index—21,265 in total. Vietnam is also fortunate to currently have a very healthy GDP rate and foreign investment is stable.
Deregulation and the lowering of business costs in Vietnam have helped this boom with new trade agreements being arranged with many countries. It doesn’t hurt that the ongoing trade war between Trump and China is forcing Chinese companies to look towards their neighboring country to set up satellite businesses in order to avoid tariffs that are being imposed by the US.
In fact, Vietnam currently rivals China in terms of economic growth and it is suggested that Vietnam will become the 20th strongest economy in the world by 2050. Truly making it a rising star in emerging markets and on the global stage.
The gender pay gap between men and woman has gradually changed in Vietnam. Unfortunately, it is still not equal for men and women but at a 10 percent difference it is comparatively almost the same as the UK, which is currently at just under a 10 percent disparity. It is slightly behind the US, which is running at 6 percent, but better than Australia, which is around 15 percent.
The workforce, as a whole, are slowly generating more and more disposable income and are finding themselves increasingly able to consider the idea of investing. But invest in what? For the local Vietnamese population, the options for investments are limited when compared perhaps to that of the expat community. The common choices in Vietnam are real estate, which is easily understood by any investor. Everyone relates well to a tangible item such as “bricks and mortar”. Other options would include term deposits within the banking sector or trading on the Vietnam Index. But the increase in new accounts opened to trade this year suggests that investors are chasing the markets when they have already peaked. This race to get into the Vietnam markets was repeated exactly one year ago when a record amount of accounts were opened in March 2018 and the market plummeted the following month. The exact same has happened again in the same period this year only perhaps not so severely.
For expats, the situation is much more advantageous. As a general rule of thumb, if an expat has spent more than 183 days outside of their country of domicile, they have tax advantages that can work in their favor. Certain countries do not allow for these tax breaks such as the US, and South Africa will also be following suit on worldwide taxation from March 2020. South African citizens will then have to pay tax on their worldwide income. However, there are solutions available that South African citizens should consider and seek advice on, including financial emigration, which can be reversed if a South African expat returns home again.
Lifestyle habits in Vietnam are also slowly changing to accommodate more expensive tastes: More cars can be seen on the already bustling roads and a stratospheric change in the Vietnam skyline with new condo-style apartment buildings. It can be seen in the dizzying amount of young entrepreneurs enjoying a cocktail or two in one of the many fashionable rooftop sky bars.
Old ways are gradually being replaced by a vibrant new mindset that will only continue to grow and manifest itself in so many different ways, while continuing to maintain its traditional values.
Having engrossed myself in all that Vietnam has to offer, I will continue to enjoy witnessing this monumental “Rookie to Rocky” rise in growth and stability. Vietnam has definitely put on its boxing gloves and came out swinging. We may still only be in the early rounds, but the global audience has sat up and started paying attention.
One thing is for certain. This Lotus Land offers way more now than just tourist photo opportunities and stories that students regale to each other in the common room after returning to university from a gap year.