The Economist Intelligence Unit1 believes that Vietnam’s economy will remain strong over the next few decades, supported by an expanding private sector, which will contribute to greater competition and more efficient allocation of resources. Although wide-ranging economic reforms could prove painful initially as Vietnam becomes increasingly open to international trade, these changes will bolster foreign investors’ confidence and will pave the way for a sustained pick-up in foreign direct investment. This will contribute to the upgrading of the technology and greater competitiveness.
Vietnam is now committed to a comprehensive reform schedule following its accession to the World Trade Organisation (WTO) in early 2007. In addition to the liberalization of the foreign trade and exchange regime, there will be positive changes in taxation, while an expansion of the banking sector and the development of capital markets will ensure that businesses enjoy greater financing options.
The country is viewed by manufacturers as a low-cost alternative to China. With Vietnam’s continuing production and operation cost advantage being a strong pull factor, this has attracted a steady flow of foreign direct investment. This has been channeled into a variety of infrastructure projects as well as into a number of joint ventures by logistics, freight forwarding, shipping and port companies.
Government initiatives to improve rail, road, airport and seaport infrastructure, and increasing private sector and foreign participation are expected to transform the logistics landscape in Vietnam. Increasing deployment of IT and the strengthening of the communications network are also expected to shape the future of this industry. The Government aims to invest as much as 10 % of its GDP on infrastructure including the transport, energy and telecommunications sectors2. The private sector is expected to play an expanded role in financing the highway, seaport and airport projects. Improved infrastructure developments and ancillary services such as warehousing, depots and distribution centers will further boost the demand for logistics services and create huge business opportunities for the existing logistics service providers.
1 Economist Intelligence Unit, Country Forecast, Vietnam
2 Vietnam Logistics Digest