Vietnam a ‘bright spot’ in Southeast Asia: BofA economist

Vietnam remains a bright star in Southeast Asia despite power shortages seen last year and the weakened real estate sector, said Kai Wei Ang, ASEAN economist at BofA Securities Inc., formerly Bank of America Merrill Lynch.

During a Friday talk on CNBC’s Squawk Box program, Kai Wei Ang highlighted that Vietnam and a broader ASEAN are clearly the biggest beneficiaries of the "China+1" strategy, and Southeast Asia is a natural choice given its close proximity to China.

He noted Vietnam’s advantages of a competitive labor market and a series of FTAs that make it a lot easier to export to other markets like the EU. “These offer fundamental support that’s helping Vietnam to draw investments,” he said.

Regarding power shortages in early summer 2023, Kai Wei Ang said this time last year there was a whole supply-demand imbalance in the power sector where there was high demand due to scorching weather and dried up reservoirs, leading to shrinking supply.

Given the experience of last year, Vietnam’s authorities are a lot more prepared and have taken a lot more pre-emptive approaches. “Hopefully we won’t see a repeat of what we saw last year in terms of the whole power sector.”

Discussing the impact of the recent collapse of Van Thinh Phat Group and the conviction of its chairwoman, the economist said that over the last decade, Vietnam has continued to attract an influx of FDI, despite domestic issues regarding property and politics.

“Vietnam remains a bright star, a bright spot across this region,” he stressed.

According to government data, registered FDI topped $11 billion in the year to May 20, up 2% year-on-year. Manufacturing and real estate were the two most attractive sectors, accounting for 67.1% and 17.9% of the total registered capital, respectively.

Disbursed FDI in the five-month period reached $8.25 billion, up 7.8% year-on-year.