March 30, 2021
Vietnam: Key Sectoral Opportunities and Risks
Vietnam’s robust economy and fast-growing private sector is rapidly attracting foreign direct investment (FDI). With Vietnam effectively containing COVID-19 outbreaks through 2020, the stage is set for a dynamic period of growth as the global economy rebounds from the pandemic.
Several demographic and economic factors position Vietnam as a key destination for further investment in the years ahead:
- Vietnam’s young population of 97 million people is benefiting from better standards of education and increased workforce participation: the number of Vietnamese active in the workforce has grown by 40% in 20 years.
- This growth is fueled by urbanization, which is driving disposable incomes higher and creating enterprise clusters centered on Hanoi and Ho Chi Minh City.
- Vietnam is increasingly seen as a viable alternative to China as a manufacturing destination. Manufacturing accounted for around 25% of total investment in 2019, and further growth will require significant focus on electricity and renewable energy capacity.
- New trade deals like the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) promise to increase Vietnam’s regional and global competitiveness.
Our new report breaks down opportunities and risks in three sectors: retail, textiles and garments (T&G) and education.
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