Dragon Capital: Major Vietnamese government reforms will unleash growth
A combination of government reforms, global trade risk mitigation and aggressive growth targets make Vietnam an exciting investment proposition that investors can access at an attractive valuation.
Fund manager Dragon Capital says the Vietnamese government will reinvigorate the country’s economy by streamlining administration and reducing bureaucracy through a series of reforms known as Doi Moi 2.0 (please see the attached press release). Growth ambitions are set at 8% by 2025, with double digit increases in the ensuing years.
Plans include reducing government headcount by 20% over two years, streamlining the investment approval process; and introducing greater government efficiency. Infrastructure improvements will form the backbone of Vietnam’s expansion plans with major investment in transport, energy and digital projects. These include the Long Thanh International Airport construction, a $60 billion high-speed railway connecting Hanoi and Ho Chi Minh City, the Quang Trach 1 Power Plant project and fibre optic and 5G deployment across Vietnam.
Risk mitigation
Dragon Capital says Vietnam is implementing a wide range of measures to mitigate trade risks, including those from US tariffs. Half of exports to US from Vietnam come from FDI enterprises primarily from Japan and South Korea, and Apple suppliers.
Further, Vietnam is ready to import more farm products, more imports of American liquefied natural gas, and commit to purchasing more airplanes from the US, as well as changing the FX intervention regime from “fixed price” to “floating price” which mitigates the risk of huge and sudden currency intervention.
And, as of 2024, Vietnam has overtaken Japan and South Korea as China’s third largest export destination.
