DOUBLE-DIGIT inflation that has been blunting Vietnam’s low-cost competitive edge and scaring away investors is showing signs of receding.
At 6.9 per cent last year, the rise in general prices in Vietnam was still high by most Asian standards – but it was down from 23 per cent in 2008. And last year’s inflation was Vietnam’s lowest in six years.
Singapore investors should see this as a signal to step up their presence in Vietnam, building on the investments that they have already made there, says International Enterprise (IE) Singapore, the trade promotion agency that is also pushing Singapore companies to expand abroad.
Lower inflation in Vietnam is expected to be matched by higher economic growth.
The official economic growth forecast for Vietnam for this year is 6.5 per cent. ‘On the ground, business sentiment about Vietnam is improving,’ says Ms Chiong, citing the upbeat results of a November 2009 poll of 200 investors in Vietnam by consulting firm Grant Thornton.
Fifty-nine per cent of those polled were ‘positive’ on Vietnam’s economic performance, up sharply from 36 per cent in a poll in April last year. Two out of three respondents said that Vietnam was more attractive than other investment destinations, with 63 per cent ready to pump money into the country.
Singapore companies are building and running industrial parks in Vietnam. They are involved in the logistics business and they have set up retail operations and schools there.
Among Singapore companies that have a presence in Vietnam are CapitaLand, Keppel Corporation, Ascendas, Mapletree Investments, YCH Group, Charles & Keith and The Little Skool-House.
Vietnam offers Singapore businesses not just cheaper labour but a sizable market with a growing middle class – and the country is not far from Singapore.
“Industrial parks by Singapore companies such as Ascendas, Mapletree Investments and Sembcorp can provide integrated and dedicated infrastructure for Singapore investors and businesses and offer ready space for efficient, hassle-free start-ups,” she says.