The autumn edition of our quarterly update on the business climate in Vietnam finds the country attracting more attention from global investors as CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa) replaces BRIC (Brazil, Russia, India and China) as the promising new frontier.
Five 3rd Quarter Developments in Vietnam
- Commodities Exports. Vietnam continues growing as a dominant global trader of commodities – especially coffee, rice, and cashews. Nestle plans a $270 million coffee factory near Ho Chi Minh City, and intends to purchase 30,000 tons of coffee annually from 16,000 farmers. Later this fall, Vietnamese farmers are expected to harvest a record 1.3 million tons of coffee (worth $3 billion) – enough to lower prices of Robusta beans on the global market. Also, Vietnam is positioned to overtake Thailand as top exporter of rice, the staple that feeds almost half the world. Vietnam may exceed 8 million tons of rice exports in the coming year.
- Green Technology Leadership. Vietnam is positioning itself as a destination for clean energy and biotechnology investors. Among them: US-based First Solar investing $1 billion, IC Energy $390 million, and German Roth & Rau $14 million in solar factories; GE and Germany’s EAB investing in wind power; Germany committing one-third of its official development assistance in Vietnam’s energy sector; Indochina Capital planning to mobilize $200 million for wind, solar, and energy projects; and Dragon Capital committing $45 million to recycling and clean water. Also, Vietnam committed $17 million to build the country’s largest biotech complex to focus on agribusiness R&D — such as high-quality mushrooms and genetically modified plants.
- Architectural Achievements. Vietnam is experiencing a spectacular physical remake. CapitaLand, Southeast Asia’s largest property developer, is completing its first project in Vietnam: The Vista, 750 luxury apartments in five 28-story towers across the Saigon River from Ho Chi Minh City’s downtown. And the American Institute of Architects highlighted Vietnam as a new frontier — showing projects of more than 20 firms, including: Chicago-based Carlos Zapata Studio’s 68-story Bitexco Financial Tower, and the 450-room waterfront Marriott under construction in Hanoi. Planned projects include cities within cities and conversion of Phu Quoc Island into Vietnam’s Macau.
- Online Commerce Growth. E-commerce is projected to reach $6 billion over the next three years as 30 million internet users get comfortable with online purchasing. And Vietnam’s trade ministry is planning an import-export website starting next year to support the country’s textile, seafood, agriculture, wood, rubber, footwear, leather, steel, fertilizer, plastic and handicrafts industries that together have 9,300 websites that produce $2 billion in revenue annually.
- Overseas investment. Another sign of Vietnam’s emergence on the global stage is its investment abroad. Vietnamese businesses registered to invest $25 billion in 600 foreign projects this year – primarily mining, energy, water, and agriculture – mostly in Laos, Cambodia, Venezuela and Russia.