Vietnam investment environment favorable for strategic M&A opportunities: KPMG

With inflation under control, projected growth of 5.8% and public debt kept manageable this year, Vietnam’s investment environment offers strategic opportunities, especially in M&A, says audit and consulting firm KPMG.

A KPMG report says Vietnam has successfully met global economic challenges to achieve robust post Covid-19 growth. Amidst global turmoil, the country's economy is rebounding and poised for substantial growth, says the report titled “Vietnam 2024 outlook: The investor’s guide to growth.”

It predicts Vietnam to experience rapid economic expansion in the 2024-2028 five-year period, driven by surging external demand. Stable growth in 2024-2028 presents attractive prospect for investors, it says,

Competitive wages, foreign direct investment (FDI) incentives and strong trade relationships are among factors that will further drive sectoral growth.

The report adds that Vietnam’s burgeoning middle class is driving domestic demand and will be significant driver of the nation’s economic growth in the coming decades.

By 2030, Vietnam is projected to have an additional 23.2 million people joining the middle class, ranking among the nations with the highest middle class population growth.

KPMG analysts also expect foreign investment to surge in 2024, especially in the technology, electronics and semiconductor sectors.

Vietnam’s abundant and affordable labor, strong growth potential and plans for infrastructure development have motivated many large international corporations to increase their production and business activities in the country, the report says.

It also notes that despite subdued investor sentiment and global economic uncertainties, the healthcare sector maintained its status as one of the most active dealmaking industries in Vietnam in 2023, indicating a positive outlook for the near future.

The report adds that to attract more FDI, the Vietnamese government is actively enhancing incentive policies related to corporate income tax, import-export tax, land-use and preferential credit, signaling positive foreign investment capital inflow in the coming years.

Standard Chartered Bank on April 24 lowered Vietnam's 2024 GDP growth forecast to 6% from 6.7% in January due to lower-than-expected Q1 growth and global trade headwinds.

In early April, Maybank Securities Limited (MSVN) predicted that the country's economy is expected to expand 5.8% in 2024 from 5.05% last year, driven by exports and domestic consumption.

The subsidiary of Malaysia-headquartered Maybank – among the top five banks in Southeast Asia said it expected a robust revival in the second half of 2024 and attributed the first-quarter GDP growth rate of 5.7% to significant demand overseas and recovering local demand.

The Asian Development Bank (ADB) has retained Vietnam's economic growth forecast this year at 6%, above developing Asia's average of 4.9% and developing Asia (excluding China)'s average of 5%.

Earlier, the ASEAN+3 Macroeconomic Research Office (AMRO) said Vietnam’s GDP growth could reach 6% in 2024 and 6.5% in 2025. Vietnam’s 6% figure for 2024 is the third highest in the region, only behind the Philippines with 6.3% and Cambodia with 6.2%.

In a report released in early April, HSBC said that given a weaker-than-expected Q1 GDP growth, it had kept its Vietnam economic expansion forecast unchanged at 6% for 2024. Singapore-based UOB bank predicted that Vietnam would grow 6% this year, compared to the official 6-6.5% growth target.