Will Vietnam become “the world’s factory”?
Will Vietnam become “the world’s factory”?
According to the Asian Development Bank’s report on Asia’s development prospects in 2015, Vietnam’s GDP growth will reach 6.1% this year and will be 6.2% in 2016, the second highest growth rate in Asia after India.
Vietnam is considered a country with the brightest future among the VISTA economies India, South Africa, Turkey and Argentina.
Although Vietnam’s annual growth rate in 1998-2008 was 7.5%, it was still in crisis due to inflation, slowing growth and labor competition.
According to Bloomberg, Vietnam still has a chance to become a strong emerging economy in Asia thanks to its favorable geographical location, abundant young labor force and its large investments from foreign companies such as Samsung and Intel.
PricewaterhouseCoopers also said that Vietnam could become the country with the fastest economic growth rate of the world in 2050, because the local production units are prepared to compete and to be more competitive than Chinese enterprises in the future.
The favorable political environment of Vietnam is also an appropriate choice for Japanese firms seeking to promote regional investment.
Vietnam can also hold the position as a global manufacturer to replace China as the latter’s labor costs are rising, undermining its competitiveness.
Meanwhile, 40% of Vietnam's population aged 15-49 will ensure an abundant workforce with better investment rates, said the leading researcher of the HSBC Asia Institute for Economic Research, Mr. Frederic Neumann.
However, Mr. Karel Eloot, the head of McKinsey & Co.'s Asia Operations Practice, said the expansion of the market economy of Vietnam could be hampered by low labor productivity of manufacturing units.
Many experts have expressed doubts whether Vietnam can multiply the overall growth potential of the economy.
