Vietnam primed for high growth status
Vietnam primed for high growth status
Despite tough global headwinds, Vietnam's economic performance is holding strong. Hong Dung speaks with CEO of Standard Chartered Vietnam Michele Wee about the country's future growth prospects.
What are your views on global and Vietnam’s economic outlook, particularly the banking sector?
We expect the global economy to slow next year as central banks worldwide keep monetary policy restrictive. We forecast modest global GDP growth of 2.5 per cent in 2023, slowing from an expected 3.4 per cent in 2022.
The many headwinds facing most economies in 2022 will likely persist in the months ahead. However, we expect a recovery to take hold in H2-2023.
Our recent global research report on “Vietnam – Still enjoying high-growth status” indicates that Vietnam’s GDP growth will likely remain strong in 2023.
We still have a conviction about Vietnam’s high growth potential over the medium term. We expect the growth rate to be 7.2 per cent in 2023 and 6.7 per cent in 2024.
While macro indicators moderated somewhat in Q4 2022, they remain largely robust. Retail sales posted solid growth in the second half of 2022, implying improved domestic activity.
The trade balance has tentatively improved; exports may face global headwinds; imports are at risk of reversal. FDI disbursements have continued to increase, but the outlook hinges on the global economy.
Inflation may pose a threat to Vietnam’s continued recovery. Inflation is anticipated to rise throughout 2023, potentially reaching 6 per cent in the final months of the year and averaging 5.5 per cent in both 2023 and 2024 (from 3.2 per cent in 2022).
Vietnam’s fiscal deficit may persist and be a source of inflation. We expect the State Bank of Vietnam to stay vigilant against inflation, a weakening Vietnamese dong, and financial instability arising from risky loans in the real-estate sector. They have done a good job of maintaining the stability of macroeconomic conditions and the banking sector.
What was your impression when attending the roundtable organised by GFANZ at COP27, which discussed ways to mobilise finance for Vietnam to realise its climate change commitments?
It was an insightful and effective discussion with Vietnam’s Minister of Natural Resources and Environment, GFANZ, representatives of multilateral development banks and the world’s leading commercial banks. Vietnam, at that time, was making steady progress toward formalising a Just Energy Partnership with the International Partners Group, including the United States, European Union, Japan, Germany, and the United Kingdom to mobilise global climate finance ambition and build prosperous, low-carbon, resilient communities in Vietnam.
Good news has come just recently on December 14, 2022, as leaders from Viet Nam and the International Partners Group agreed on a bold Just Energy Transition Partnership (JETP) in Brussels. The Partnership will support Vietnam in delivering on its ambitious Net Zero 2050 goal, accelerate the peaking of its greenhouse gas emissions and transition away from fossil fuels to clean energy. The JETP will mobilise an initial $15.5 billion of public and private finance over the next 3 to 5 years to support Vietnam’s green transition.
We were honoured to sit alongside the Vietnamese government, business leaders, and civil society in this process to deliver climate action and create new jobs. Standard Chartered Bank Vietnam will continue to support and build on the Vietnamese government’s ambition and success from COP27.
It will be a very exciting journey for all of us in Vietnam as we work together, government and private sector, to execute the different verticals of work under the JETP to deliver our collective ambitions to be a net-zero country by 2050.
Why is sustainability receiving much attention amid the challenging economic situation, and what is your view on its importance?
The government has shown its determination to create a sustainable future, which will bring tremendous benefits for Vietnam as an emerging economy that plays an increasingly important role in the global economy and supply chains. Fundamentally, accelerating economic restructuring and revising the growth model towards sustainability will enhance Vietnam’s competitiveness and fortify it against external shocks.
The world was increasingly demanding more green elements in products and services, which creates the chance for Vietnam to increase its competitiveness over the long run, especially in exports to more developed economies where laws and regulations are more stringent on the product origin and environmental footprint.
Green growth will help Vietnam improve its attractiveness to foreign investors and draw quality and environmentally responsible investments into the country. It will also encourage investors already onshore to increase their investments, helping Vietnam on the sustainable growth trajectory. So, the benefits will last for a very long time.
Vietnam sets objectives to become a high-income economy by 2045 and a carbon-neutral economy by 2050. Financing is a key enabler to achieving these ambitious plans, and the role of financial institutions as financing parties is critically important. This is where financial institutions like Standard Chartered can offer support under clear and global policy guidelines facilitating sustainable financing to flow in Vietnam.
We have supported Vietnam’s sustainable development through various initiatives, including sharing thought leadership on sustainable development, green growth and sustainable finance with the government, ministries and relevant stakeholders and providing finance to where it matters most.
To give some highlights, in September 2022, we signed an MoU on cooperation in response to climate change with the Ministry of Natural Resources and Environment and Minutes of Cooperation on gender equity with the State Bank of Vietnam.
In April 2022, we extended a $13.5 million sustainability-linked USD trade finance credit facility to Leo Paper Products (Vietnam) Limited (“Leo Vietnam”) to finance the client’s working capital needs. In 2021, on the occasion of COP26, the Bank exchanged MoUs worth US$8.5 billion with three Vietnamese businesses on projects to support their sustainability goals. We continue to work with these local corporates to deliver the commitments.
As an international bank with 119 years of history in Việtnam, we have been a consistent and reliable institution committed to supporting Vietnam in its endeavours to forge a sustainable green future. We continue to accelerate our impact and make a difference in Vietnam. With the recent signing of the JETP in November 2022 in Brussels, I see Standard Chartered Bank Vietnam being even more impactful in working with the Vietnamese government to deliver net-zero ambitions.
When it comes to leading a bank, many people think about men in suits. As the first female CEO of Standard Chartered Bank Vietnam, you brought a new look and feel to the bank and look so elegant in the traditional Ao Dai. What have been some of our best memories after two years of working in Vietnam?
My team members come to me and tell me they are happy to have a woman CEO. It is still so nice to hear this after two years in the role. For many reasons, I am proud to be working in this organisation which is so supportive of gender equity and equality and that I have this opportunity. I also feel fortunate to have come into this work family that has embraced my femininity and allowed me to learn and work alongside all of them.
Thank you for mentioning that I look good in the traditional Ao Dai because I love the traditional dress a lot, as it makes every woman look so elegant. To ask me to choose my best memories of the last two years is very difficult as every experience I am going through now is exciting and fresh.
I am enthralled by the passion and energy of Vietnam, the friendliness and drive of the Vietnamese people to want to grow and make money, the vast array of cuisines available in the city that caters to every appetite and the progressiveness of the Vietnamese government to want to better the country and the lives of its citizens.
What stands out for me is personally coming from Singapore, which is small geographically, in Vietnam, we get the mountains, sea and land all in one country, and the scenery is truly beautiful. The banking I want to do in Vietnam is to invest in the businesses and people that will add to and preserve the uniqueness of this amazing country and also invest in the communities so that our bank can be the bank of choice to work for clients and always invest in the community to help with the progression of Vietnam.
The Lunar New Year or TET in Vietnam is just around the corner. How is your experience and impression with this special occasion of the year?
My favourite holiday of the year is the Lunar New Year. This has not changed since my childhood. We all live in a big global world and with busy schedules with work and children, Lunar New Year has become even more meaningful as it is a time for the bigger family to gather, reconnect with lots of joy and laughter. In my mind, it is a time to set aside the past year and look forward to a new year of possibilities. I have experienced two TET season now with the third this year in Vietnam. Coming from Singapore, I see a lot of similarities in the two countries. There is a lot of energy and excitement as everyone starts to tidy up the houses, buy new things, prepare the “lucky money”. In my office, we have decorated the office to have the TET atmosphere and have team lunches or dinners to celebrate the old year and welcome the New Year. It is all very exciting. My own habit over the eve of the New Year is to do a big clean-up of the house after the traditional “reunion dinner” and leave all the lights on overnight to attract the luck. On the first day, we do not sweep the house to ensure that we do not “sweep” the luck out of the house. It’s really little habits like that that adds to the joy of the new year. I am looking forward to the long holiday as I will be able to travel back to Singapore to spend time with family and I want to take this opportunity to wish all the readers a safe and joyous celebration with their loved ones, friends and family.
