Vietnam's economic outlook in 2023 is promising, and technology, energy, goods processing, pharmaceuticals and manufacturing are among key sectors that will greatly attract FDI, say some corporate leaders when talking to The Investor.
Alain Cany, chairman of EuroCham Vietnam
Despite rising global development risks, Vietnam's prospects for 2023 and beyond are promising.
No one can deny that the European business community feels less optimistic now compared to the start of 2022. Vietnam's economy faces numerous challenges, including higher commodity prices, supply chain disruptions, and a decline in manufacturing. Meanwhile, even though export-oriented manufacturing is expected to fuel the economy in 2023, weak export demand from advanced economies will limit growth and cause short-term hardships.
Still, Vietnam has proven to be resilient and better positioned than many of its peers. As a result of its low inflation, improving credit rating, impressive FDI performance, growing consumer demand and high GDP growth, Vietnam's economy will likely remain the best performing in Southeast Asia. With all these factors in mind, 2023 is expected to be another exciting year for investors in Vietnam.
Trade ties between the EU and Vietnam are also expected to grow in 2023 as the EU-Vietnam Free Trade Agreement reduces and eliminates tariffs further. This will have a positive impact on Vietnam’s green transformation, particularly in offshore wind and solar development, where investors from Europe are showing a great deal of interest.
To help our members maximize investment in these fields and others, we continue to encourage the Vietnamese government to remove administrative obstacles for foreign companies and work permit hurdles for foreign experts. By resolving these issues, Vietnam will stand stronger and be recognized as a leading global business and investment destination.
Adam Sitkoff, executive director of AmCham Hanoi
Vietnam has managed various global challenges effectively, including the continuing pandemic, a downturn in global consumer demand, and unusually high inflation among many key trading partners. Despite global headwinds, I am optimistic about Vietnam’s prospects for continued growth in 2023. There are great opportunities to attract new investment as multinational companies seek to diversify global supply chains. This often requires companies to send foreigners here to meet with partners and make investment decisions.
Unfortunately, there is still uncertainty over visas and the conditions and applications for work permits for foreigners coming to work here. In addition, flawed visa policies have prevented many foreign tourists from contributing to Vietnam’s economic recovery.
These types of administrative burdens can be solved by good policy and effective decision-making. As we start the new year with uncertainties in the economy, there are actions the government can implement right now to help increase productivity and reduce the costs, complications, and risks of doing business here.
One of the most important factors for American investors is to see a fair, transparent, predictable, and streamlined regulatory environment that values innovation - not only to attract new investment, but also to maintain and grow the investment already present.
As major investors here, American companies have an interest in Vietnam’s continued success. High-quality foreign investment not only helps grow Vietnam’s economy, but also helps grow the entire ecosystem of local companies and entrepreneurs.
I will work hard in 2023 to lower barriers to trade, to help the Vietnamese government make it easier to do business, and to create a high-standard and stable business environment so that all investors have access to the great opportunities coming this year.
Oliver Massmann, managing partner of Duane Morris LLP
Vietnam will continue its growth in 2023 but this growth will slow down compared with 2022. This is partly because lifting of restrictions has gradually ceased and trade has gradually returned to the state before Covid-19.
However, emerging factors might negatively affect the growth of Vietnam’s economy, especially external factors. These include: (1) unexpected economic recession among major Vietnam’s trading partners like the United States, EU (Germany, Italy, etc.); (2) China’s zero-Covid policy; and (3) rising inflation and interest rates.
Regarding (1), economic downturn will lead to lower consumer demand in the markets, which in turn will lower demand for Vietnam’s exported goods. We note that export value to the United States and EU accounts for almost 50% of Vietnam’s total export value.
Regarding (2), China’s zero-Covid policy has led to closure of a number of factories and power cuts. This will definitely influence Vietnam’s manufacturing sector as most of its input materials (textiles, chemicals, electronics parts and components, etc.) are sourced from China. Vietnam has to find other more costly material sources and manufacturing costs will increase.
Regarding (3), public confidence in the banking and finance sector has decreased, especially after recent SCB turmoil. Rising interest rates are one of the measures to mobilize capital from the population to meet lending demand and ensure capital reserve criteria by the SBV. Rising interest rates increase costs and affect business expansion plans, which is also a negative factor for Vietnam’s economy.
Despite the above factors, abundant public investment capital as well as a strong recovery in international tourist arrivals will continue to contribute to Vietnam’s economic growth in 2023
Technology, energy, goods processing, pharmaceuticals and manufacturing sector are among key sectors that will greatly attract foreign investment in 2023.