Viet Nam is still seen as an attractive destination and the problems of 2021 do not mean that foreign investors will turnaway, according to a recent report by Singapore Institute of International Affairs (SIIA).

Illustrative image (Source: Vingroup)

Entitled “From Crisis to Endemic: Stumbling or Pressing Ahead?” the report examined the economies of Indonesia, Viet Nam, Malaysia, and Thailand, which together account for over 70 percent of overall ASEAN gross domestic product (GDP).

In 2020, Viet Nam was held up as a model for its ability to curb the initial COVID-19 outbreak, with discipline and social support for strong measures, resulting in low, near-zero numbers, it said. However, this has changed in 2021, when the country has experienced a surge of cases since 27 April, driven by the Delta variant, and the situation could not return to the previous low levels of infection.

The extensive lockdowns to prevent the spread of the coronavirus have disrupted not only local consumption but also impacting the manufacturing and supply chain activities to export markets. The pandemic impacts were especially felt by manufacturers of garments and electronics, noted the report.

At the macro-level, however, the Vietnamese economy showed considerable resilience. Even amidst the 2021 pandemic situation, trade numbers have remained strong with Viet Nam’s total trade value of goods up 33.5 percent year-on-year in the first five months of 2021. This is supported by strong economic recoveries in major markets, especially the US and China, according to the report.

The report said challenges and impacts experienced by businesses operations and supply chains in 2021 could impact the future. Nevertheless, economists forecast Vietnam should still attract some 30 billion USD in foreign direct investment (FDI) this year, or a 2 percent rise, year on year.

At a conference to announce the reports, experts held that the investment environment of Viet Nam in the long term is prominent compared to other ASEAN major economies thanks to the political stability. Vietnamese attraction also comes from the country’s special policies to facilitate production and technology development, they said.