Vietnam’s FTA Network Key Driver In Overtaking Singapore’s Economy

Vietnam has grown so much after the World War and has proven to be resilient through multiple threats to its economy. Analysts noted that the country's multiple networks of free trade agreements (FTAs) will help in pushing the economy towards overtaking Singapore in 10 years or so.

According to Vietnam Plus, the country has an extensive FTA network despite global trade disputes that could hamper the economy's growth. Due to its multiple trade agreements with other countries, it remains strong amid external headwinds brought about by trade issues.

In fact, Vietnam posted a significantly strong foreign direct investment (FDI) record with China during the first quarter of this year. Vietnamese exports to the United States also soared as companies have started relocating to the country amid tariff spats.

Economic experts pointed out that Vietnam is slowly becoming an archrival for Singapore in terms of economic expansion. So far, the country posted a growth rate of 7.1 percent in 2018.

The last three decades proved to be a win for Vietnam despite financial crises in Asia. The country has not experienced a recession over the last thirty years, making it a suitable business destination for many foreign entrepreneurs.

On Monday, a DBS Bank report took the attention of economic analysts around the world. The report suggested that if Vietnam continues to expand by 6.5 percent each year for an entire decade, it could overtake the massive Singaporean economy sometime 2030.

Even before the DBS Bank report emerged, many economic analysts have noted that Vietnam could be the next Asian tiger due to its seeming resilience against external issues such as global trade disputes.

One of the main attractions in Vietnam is low wages. Many companies have moved operations to the country due to its low wage rates that help firms reduce labor costs. The country also offers many job seekers who are eager to develop new skills.

The electronics sector has also paved the way for Vietnam to become the second-largest electronics exporter in the ASEAN region. Investments in this particular industry have grown and continues to balloon as Microsoft, LG, and Samsung have established plants in the country.

In the last decade, the country managed to grow its investments from foreign investors to around 12 percent year-on-year. These investments helped drive the economy to hit the much-desired seven percent growth rate that other Asian nations have yet to attain.

Meanwhile, the Vietnamese economy is expected to grow by 6.81 percent this year, a report by the Vietnam Institute for Economic and Policy Research (VEPR) revealed on Tuesday.

Economists said the forecast still meets the National Assembly's target and is still within the bounds of the government's efforts in boosting production and competitiveness.

Source: Business Times