The S-shaped country is projected to grow its assets by 125% in the next 10 years, according to Andrew Amoils, an analyst at New World Wealth, who shared with CNBC. This will be the fastest asset growth rate in the world in terms of per capita GDP and the number of millionaires, according to New World Wealth analysis.
“Vietnam is increasingly consolidating its position as a manufacturing center with global technology companies, automobiles, electronic equipment, clothing, and textiles,” Amoils said. India ranks second in terms of asset growth rate, with an expected growth rate of 110%.
Vietnam is home to 19,400 millionaires and 58 individuals with assets exceeding100 million USD. According to Amoils, Vietnam is considered relatively safe compared to other countries in the Asia-Pacific region and also offers many incentives for companies to establish manufacturing plants in Vietnam.
McKinsey assesses Vietnam as a “top destination” for international capital flows, thanks to its strategic location (close to China and close to important transportation routes), low labor costs, and supportive infrastructure for exports.
In 2023, the GDP growth of this emerging country reached 5.05%, lower than the previous year, amid weak global demand and stagnant public investment. Manufacturing accounted for 25% of Vietnam’s GDP.
10 years ago, Vietnam’s per capita GDP was around 2,190 USD, and now it has increased to 4,100 USD, according to data from the World Bank.
“Vietnam is developing rapidly and the majority of people are benefiting,” said Andy Ho, CEO of VinaCapital Investment Fund, sharing with CNBC via email.
A magnet for FDI?
Vietnam also benefits from US-China trade tensions, as many multinational companies diversify their production to Vietnam as part of their “China Plus One” strategy. Andy Ho said that capital inflows from multinational companies are pouring into the S-shaped country.
In 2023, FDI inflows into Vietnam increased by 32% compared to the same period, reaching36.6 billion USD.
“Foreign direct investment often stays for a long time, creating high-paying jobs and allowing millions of people to improve their quality of life,” he said.
Vietnam’s growth story comes from the industrialization process oriented towards exports. In the past three decades, the country has received three waves of FDI and is now preparing for the fourth wave, according to Brian Lee Shun Rong, an economist in the macroeconomic research department of Maybank.
Risk factors
However, there are still some headwinds that could slow down Vietnam’s rapid growth.
Lee believes that Vietnam’s workforce needs to be further trained to meet the demand for highly skilled labor for complex production activities.
“Vietnam can still improve productivity through closer cooperation between domestic and foreign companies,” he added.
The prolonged global recession can also affect consumer demand in developed markets, thereby affecting Vietnam’s manufacturing and export sectors, according to Andy Ho. In addition, if Vietnam’s currency depreciates sharply, it will have a negative impact on FDI inflows.
Nevertheless, Ho believes that Vietnam can overcome challenges in the future. “There must be something tremendous that can make Vietnam deviate from the current growth trajectory.”
