The acceleration of Vietnam’s economic recovery in the last six months in resonance with reaching the new milestone of peaked GDP growth rate in Southeast Asia this year does reinforce the strong image as an “Ascending economic dragon” in the region.
Determinants driving Vietnam’s economic growth
Resilient manufacturing outlook makes a great contribution to the overall GDP growth rate surge to reach 7.5 percent this year mainly driven by foreign-invested enterprises, per World Bank. Vietnam hits a new record as the country having the highest GDP growth rate in 2022.
The statistics have revealed the fact that Vietnam’s FDI influx in the past decade is more substantial than any other Southeast Asian country, spreading across various manufacturing areas, and exceptionally significant in LEGO sector.
With respect to LEGO’s investment project into new-launching factory in Vietnam, on November 3rd, the world’s biggest toy company has broken ground to commence constructing over $1.3 billion USD factory located in Binh Duong Province — Southern Vietnam, per NIKKEI Asia. This 44-hectare project sets a state-of-the-art milestone for Vietnam to join global supply chain network, opening more opportunities as well as growth prospects when attaining high-quality investment and sustainable solutions for long-term advantage.
On top of that, floating both domestic and external demand, growing skilled labors, streamlined by export-oriented manufacturing and ease of doing business in Vietnam does enrich the potential of such manufacturing hub in the region.
Prospective benefits for North American investors
For years, Vietnam has exhibited several incentives to welcome FDI with regard to business regulation renewals in terms of lower corporate income tax rate, tax exemption, land rental or land-use tax policies in particular circumstances, especially in high-tech industries. Overseas investors could leverage strong investment climate by strategically tapping into the key areas that help grow business amidst the context of open-door policy along with robust international integration in a dynamic economy with the facilitation of beneficial free trade agreements.
From both short-term and long-run standpoint, the investment projects with adaptation of advanced and environmentally friendly technologies, protecting natural resources in a sustainable manner are of significance to ensure desired healthy FDI inflows.
Foreseeing a bright outlook about robust performance in the manufacturing sector
In the view of manufacturing outlook, there are three major strategic breakthrough areas comprising human capital skills advancement, industry innovation, and infrastructure upgradation. With the leverage of climbing up to become the fastest-growing economy in Southeast Asia, Vietnam has foreseen to elevate the rate of technological change leading to acceleration in manufacturing output and productivity.
Over and above that, there is still room for further expansion concerning infrastructure advancement in alignment with the national high-tech facility development program with the objective to produce higher value-added products, boost their production and enhance capacity to join global production chains. Aside from world-class infrastructure and well-quipped workforce, digital transformation process plays a crucial role in driving the industry to reach the ultimate goal of a balanced and resilient regional supply chains.
Emerging economic affluence may hamper certain strengths of some growth and development catalysts. Contemporary challenges of global economic downturn facing amid a turbulent world involving mounting inflation rates, financial and fiscal matters, supply chain disruptions, or bad debts might bring about major concerns for foreign investors. Yet, there have not been any threats or warning signs in Vietnam in terms of macroeconomic management which reveals economic resilience and stability despite external shocks.
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