Outlook for Vietnam still bright
OH BOON PING finds out why Singapore businessmen continue to see good opportunities in the country

Despite the growing economic gloom and possible slowdown in Vietnam, a number of Singapore businessmen continue to see emerging opportunities in that market.

Said VietnamWorks' director for operations Lim Wee Tee: 'I believe that once Vietnam rides out this correction, the medium to long-term outlook is still excellent. While the current global financial crisis will bring about more uncertainties, certain fundamentals don't change.'

VietnamWorks is a venture cap-funded company that specialises in recruitment and online branding, as well as online services such as job advertisements, banners and a resume database through an HR portal that now has more than one million registered users.

At Singapore-listed Best World International, which specialises in the creation of health and wellness products, executive director Huang Ban Chin told BT that Vietnam is poised to be the second-fastest growing economy in Asia after China. 'We expect demand from Vietnam to stay strong,' he added.

In fact, George Tan, managing director of Asiatic Group, believes that it is timely to expand on its marketing and development work. 'In good times, people are too busy and hardly willing to open doors to alternative solutions. Buying power equals population; the potential is always there.'

Similarly, Stanchart's Ray Ferguson, who heads its South-east Asian operations, said that 'Vietnam is an attractive market as it has a sizeable young population and local demand is therefore likely to be strong. This is seen by the number of multinational consumer goods companies like Unilever, Coke, Colgate, Nestle having made or announced investments in Vietnam'.

The local demand will be accentuated by the shift of the rural population (75 per cent currently) to the cities and children reaching their 'consumer years', he added.

VietnamWorks' Mr Lim agrees, pointing out that Vietnam's 86.5 million population makes it a big market, while the working population - mostly under 30 years of age - will be the engine behind the growth of this economy. 'People are key assets in any economy. Just as Singapore became a success through the sheer determination of its people, I believe that the same thing will happen here in Vietnam.'

According to Bipin Jha, managing director of Motley Resources, some sectors have begun leveraging on the availability of excess capacities. For example 'two large processing companies of cashew from India have started extensive processing facilities in Vietnam due to the easy availability of processing units, lower costs and extensive marketing advantages that they have', he said.

Indeed, he pointed out that although Vietnam is not immune to the deepening global economic crisis, 'the effect is smaller than it is in some of the other countries in the region'. He noted: 'The economic slowdown is there, but there is no recession at least. Also, agri-commodities are doing reasonably well.'

Stanchart's Mr Ferguson thinks that foreign direct investment flows, which stood at more than US $10 billion in 2008, will drop, but added that the people of Vietnam have 'shown nimbleness and a swift reaction to change things as they go along'. For this reason, the bank forecasts that Vietnam will likely grow at 5 per cent in 2009 - below the government's target of 6.5 per cent. The government's stimulus package, Mr Ferguson added, will help cushion the impact of any downturn, even though this is unlikely to prevent a fall in economic growth.

In terms of industry prospects, Mr Tan continues to see opportunities in infrastructure projects such as energy, water and waste treatment. 'The nature of the work is such that it never ends, whether in good times or bad,' he said.

VietnamWorks' Mr Lim thinks fundamentals remain healthy, pointing to the rising number of factories being set up. 'It helps that labour costs in China have begun to rise, with multinationals now increasingly looking to Vietnam as an alternative base. These customers will still demand talent.'

Accordingly, VietnamWorks invests heavily in marketing to create a premium image that attracts job-seekers to its website. 'Outstripping our competitors in traffic and brand image means we generate more and higher-quality job-seeker applications, which in turn means we can successfully charge a premium and avoid falling into the trap of price competition. To date, this strategy has been successful and we believe it will continue to be successful,' said Mr Lim.

However, there are also challenges as some of the businessmen interviewed pointed out that meeting the infrastructure needs of new investors will be a problem, and road, rail, maritime and air travel facilities will have to be expanded in line with incremental trade flows.

Although Asiatic's Mr Tan said that there is always the concern of political instability, he added that 'looking at the current situation in Vietnam, the political system seems strong and I expect it is just a matter of time for an upswing in the economy to occur'.