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Vietnamese economy still thriving

The Vietnamese economy is growing at impressive annual rates of above 6%. The construction sector is booming in particular. The growth rate for the first nine months of 2016 alone was 9.1%. Swiss businesses are positioned to benefit as suppliers of construction equipment and building materials. Other industries are benefiting as well.
Asian workers constructing a new building.
The construction industry is thriving in Hanoi and Ho Chi Minh City, Vietnam.

Investment in the construction sector and Vietnam's gross domestic product (GDP) continued growing robustly in 2016, and are likely to rise substantially again in 2017. For the current year the major bank HSBC is projecting real GDP growth of 6.2% and 6.5% for 2017. Native private enterprises and government entities account for well above 90% of gross production value, which is equivalent to 45 billion US dollars, but foreign firms have chances to participate in this growth. Many possibilities exist for suppliers of building materials and construction equipment, for design and planning firms and for specialized service providers.

The ongoing boom is most evident in urban centers. Additional living and working space is continuously needed in Hanoi and Ho Chi Minh City. Both cities have plans to create huge modern districts, and growth is evident in both the premium and luxury segments. Exports continue to explode, led by the light industry. Newly signed free trade agreements have made the location even more attractive.

"Vietnam is a highly stable market and the country's population is young. There are good opportunities for Swiss SMEs, and some are already active in the IT sector, like Magnolia and Axon Active," comments Angela Di Rosa, Southeast Asia Advisor for Switzerland Global Enterprise.

Investment in infrastructure

To keep pace with the growth, the government is planning a major expansion of transport infrastructure, despite strained public finances. The Ministry of Planning presented a list of 68 priority projects in October 2016. Their completion is to be accelerated through public-private partnerships (PPPs). The government only intends to fund one third of the estimated total of 15 billion US dollars required.

The primary project types are intercity road building, water supply and waste disposal, along with numerous airport construction and expansion projects including the Long Thanh International mega-airport. Vietnam is looking to greatly expand its energy sector by the year 2030, which will require new coal power plants. Experts now also anticipate a boom in renewable energies.

"Vietnam is certainly not the easiest country to start doing business in. The bureaucracy and language barrier necessitate finding a good partner for an export project. In general in Asia it is true that having a good network of contacts is key for successful market entry," says Di Rosa.

Additional information:

Vietnam Ministry of Construction

Vietnam Ministry of Transport

Construction umbrella organization

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