A recent article posted on portfolio-adviser.com, a news website based in the UK, has pointed out the frequent hope that Vietnam will be upgraded from its frontier-market status to the emerging market status.

Many years of consistently high GDP growth have been due to a highly attractive combination of political stability with sound pro-market execution from the government which has managed to slash poverty from 17% to less than 5% in a decade, the article wrote.

“Perhaps the best-known growth driver for Vietnam is its step-change in foreign direct investment (FDI), benefiting from an increase in exports due to what is widely known as China Plus One,” it said.

The country continued to sign more than a dozen key trade agreements during the pandemic-triggered lockdown. These partnerships will make it easier for companies to do business in Vietnam, positioning itself ever more as a manufacturing expert with ease of access to broad, international markets and benefitting from 3,000 kilometres of coastline and the close connections to China.

According to the writing, Vietnam is now moving more towards manufacturing higher-value products, more in electronics rather than textiles.

One of Vietnam’s most critical FDI sources is Samsung Electronics. The technology giant employs tens of thousands of people in Vietnam and is the largest investor in the country, with 50% of its handsets being produced there.

There is frequent hope that Vietnam will be upgraded from its current, off-benchmark, frontier market status to emerging market status by MSCI. The Vietnam stock market overall now meets the size and liquidity requirements to be included, with a four-fold surge in retail participation during the past 2 - 3 years, driven by digital account technology, the article added.

Vietnam Investment Review