Maybank Upbeat on Vietnam as Next "Global Factory"
Ho Chi Minh City, 25 May 2015 - Maybank, ASEAN’s fourth largest bank by assets, said at its inaugural Invest ASEAN Vietnam conference today, that Vietnam has great potential to be the next “Global Factory”.
John Chong, CEO of the Maybank Kim Eng Group said in his opening speech that Vietnam presents immense opportunities given economic stability and structural reforms initiated by the Government. “We are very positive on the Vietnamese economy which we are expecting to grow at over 6% this year. And we think the development of the ASEAN Economic Community (AEC) as a single marketplace will further solidify Vietnam’s position as the region’s manufacturing hub.” The country is competitive, connected to the global supply chain and has a growing, young educated workforce.
A key driver of the economy has been Foreign Direct Investment (FDI). Vietnam’s FDI inflow is now over 5% of its GDP, the highest in the region. With FDI helping stronger exports, particularly in the higher value added technology sector, what was a current account deficit is now a surplus. Maybank Kim Eng’s economics team expects this surplus in current account to continue. In the last 5 years, export from electronics sectors (e.g. computers & telephones) jumped 5 times, overtaking textile as the largest export. Vietnam’s manufacturing sector has grown to approximately USD170 billion as at end 2014, and is now exporting to over 80 major countries.
With per capita GDP crossing the US$2,000 level, there is greater discussion of Vietnam transitioning from a factor-driven to an efficiency-driven economy. In this new stage, companies and production processes need to get more efficient and product quality needs to improve to keep up with rising wages. In this exciting phase, there needs to be continued investment in education, technology and infrastructure. The financial and capital markets need to develop and deepen in order to facilitate this growth.
To uncover investment opportunities in ASEAN, Maybank is holding a series of Invest ASEAN conferences across the region this year. The series kicked off with the Cap 10: ASEAN CEO Summit in Kuala Lumpur in February, followed by Singapore in March and today in Vietnam.
Themed ‘Vietnam: The Next Global Factory’, the inaugural Invest ASEAN Vietnam conference at the Sheraton Saigon Hotel in Ho Chi Minh City was highly successful, attracting over 200 attendees. There were representatives from 10 countries including 15 corporates (12 from Vietnam, 3 from Malaysia, Singapore and Thailand) with total market capitalisation close to USD22.2bn as well as about 100 investors with funds totaling about USD5 trillion in Assets Under Management.
The next Invest ASEAN conferences will be held in Thailand, the Philippines, Malaysia, and finally in Indonesia. All the conferences will focus on ASEAN opportunities, with a different theme in each country.