While the world has had a trying 2016, the Vietnamese economy fared pretty well this year, with a record 110,000 new business opened in 2016.
According to a year-end report by the Industry of Planning and Investment, this figure is a 16.2% increase from last year, reports VnExpress. Over 36,000 of those new businesses were registered in Saigon, while nearly 23,000 were opened in Hanoi.
Combined with the 26,700 companies which had previously suspended operations but resumed this year, the country’s new ventures have the potential to create up to 1.3 million jobs.
The news outlet also reported that registered capital was up a staggering 48%, now reaching over VND189 trillion (US$39.1 billion).
New real estate, education and healthcare ventures were popular, while the number of new businesses in the arts and entertainment and agriculture sectors declined. In fact, bankruptcies in the agriculture and real estate industries grew 32% to 12,578 claims.
Still, the future looks bright for Vietnam’s economy, which grew 6.2% this year, according to official government statistics released earlier this week. This was no easy feat, reports Bloomberg, as the region faced some economic woes this year which saw a trade slowdown impact Singapore and China, however Vietnam seems so far to be resistant to this phenomenon.
Of course, natural and environmental disasters like the Mekong Delta’s drought and the Formosa pollution scandal negatively impacted the national economy, however some experts remain optimistic. The Asian Development Bank, for instance, forecasts a growth of 6.3% in 2017, according to Bloomberg.
“Vietnam is in a sweet spot right now,” Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong, told the news outlet. “Strong growth will persist in the next several years. It is continuing to gain market share in exports and even giving China a run for competitiveness. Foreign companies continue to invest in Vietnam to take advantage of its highly competitive labor and low cost. The outlook is bright and it is one of the standout economies in Asia.”
Add to this Vietnam’s plan to adopt the International Financial Reporting Standards (IFRS) by 2025, and the country is in a good position to attract foreign investors, reports VnExpress. According to the news outlet, the new move, announced in Hanoi last week, will “improve transparency and boost investment”.
Over 90% of nations worldwide have either confirmed their adoption of the IFRS or already have the system in place. For Vietnam’s part, this step toward IFRS will eliminate some logistical hurdles for foreign investors in the country.
While all of this spells good news for Vietnam in the year ahead, Deepali Bhargava, an Asia economist at Credit Suisse, still cautioned against too much optimism, reports Business Insider, predicting the global investment slowdown would catch up with Vietnam in 2017 and the Vietnam dong would depreciate by 4-5%. Bhargava also warned that the Vietnamese economy could suffer in the aftermath of the seemingly doomed Trans-Pacific Partnership (TPP), as reforms linked to the TPP would be delayed in the likely event the trade agreement doesn’t go through.
[Photo via Ship Management International]
