Up to 58% of business leaders in a Standard Chartered survey have existing and future plans to expand sales presence in Vietnam, the global bank said Thursday.
Standard Chartered’s “Winning in ASEAN” report launched Thursday shows what business sentiments, opportunities, and strategies corporates could undertake to navigate the global shifts and drive growth in the region. The findings underscore the impetus for greater effective public-private partnerships to accelerate recovery and resilience in ASEAN and beyond.
Vietnam is cementing its manufacturing hub status, the sector report shows. The high ratio of 58% for expansion in Vietnam indicates companies surveyed are optimistic about their businesses in Vietnam.
The country has made significant progress in becoming a dynamic, cost-competitive nation, Standard Chartered said. It has received greater attention as an alternative manufacturing hub as businesses increasingly adopt a ‘China plus one’ diversification strategy.
Anchoring on three strategic national plans, namely the new national industrial policy, the digital transformation plan, and the national strategy on green growth, Vietnam has a long-term plan to digitize production and supply chains. For instance, it is developing smart factories to improve efficiency and competitiveness, as well as foster priority industries and green growth, the Standard Chartered study says.
“Vietnam’s medium to long-term prospects remain bright, supported by its favorable demographics, improving domestic fundamentals and strong commitment to regional and global integration,” said Standard Chartered Vietnam CEO Michele Wee.
“As an increasingly important player in international trade and global supply chains, and with its role as an alternative manufacturing hub, Vietnam continues to present appealing opportunities for businesses looking to expand in the region,” she added.
According to the report, the growth potential of ASEAN is undisputed. The region in 2021 was the third highest recipient of foreign direct investment (FDI) globally, with inflows of $174 billion, returning to pre-pandemic levels. About half of ASEAN’s FDI inflows originated from the U.S., EU, and China. Intra-ASEAN FDI contributed about 12% of the region’s FDI inflows last year.
Trade agreements, like the Regional Comprehensive Economic Partnership (RCEP), are expected to further accelerate ASEAN growth, the study says. With RCEP in place, 81% of business leaders surveyed plan to increase investments in the region over the next three to five years. Overall, 93% of them expect positive revenue growth from their ASEAN businesses.
Benjamin Hung, CEO for Asia at Standard Chartered, said: “ASEAN is an oasis of growth, with its GDP forecast to grow about 4% annually to $4.5 trillion by 2030.”
For ASEAN to overcome the aftermath of the pandemic, resulting shifts from rising geopolitical tensions, and the intensified competition for talent, the study’s findings highlight the top two focus areas, where each sector is prioritizing their investments in the next three years.
In construction and infrastructure, the top two areas are value chain and talent; for consumer products, they are value chain and infrastructure. Meanwhile, those for pharmaceuticals and healthcare are value chain and regulatory shifts.