Why Vietnam is the next frontier market in Asia

The Southeast Asian nation of Vietnam has recently seen a significant increase in its economic output. With a recent Gross Domestic Product (GDP) growth rate of above 7%, Vietnam actually has one of the fastest-growing economies in the entire globe. Vietnam's economy has grown as a result of a number of important causes.

Vietnam's economic growth prediction for 2022 was recently revised by the International Monetary Fund, moving it up from 6 to 7 percent. Vietnam's economic growth was formerly projected to increase at a rate of 5.3 percent by the World Bank, but that estimate was later raised to 7.2 percent, the highest rate of any country in East and Southeast Asia.

Vietnam's industrial industry, which is focused on exports, has been one of the main forces behind the country's economic progress. A big and young population makes Vietnam a desirable location for foreign businesses wishing to establish manufacturing facilities. The growth of this industry has been aided by Vietnam's low labor costs as well as its robust export markets to the US and EU.

Vietnam's increased integration into the world economy has been a contributing factor to the country's economic growth. Vietnam has a number of free trade agreements (FTAs) in place with nations all over the world, such as the US, Japan, and the EU. Vietnam's access to international markets has improved thanks to these FTAs, which has benefited the country's export industry and supported economic growth.

Vietnam's economic growth has been powered by its expanding middle class in addition to its manufacturing sector's export focus and rising integration into the global economy. Domestic consumption has increased as more and more middle-class Vietnamese people have emerged, contributing to the country's economic expansion.

The organisers of the Vietnam Venture Summit 2022 recently revealed that venture capital firms have pledged to investing $1.5 billion in Vietnam over the course of the next three years.

The 41 investors that have committed to the effort include VC funds from various stages, regions, and corporate profiles.

With Vietnamese startups financing a record $1.4 billion across 165 deals in 2021 and the momentum projected to continue into 2023 with a predicted GDP growth of 6.7% in 2023, Vietnam stands out against the region's optimistic outlook particularly brightly.

The rise in the number of relatively new, domestic venture capital firms is another indication of the booming investor interest in Vietnam. After successfully obtaining institutional funding for Vietnam-focused investment strategies over the past two years, businesses like Do Ventures and Ascend Vietnam Ventures all started during that time.

Do Ventures, a $50 million early-stage venture capital fund, was established in 2020 and is supported by some of Asia's most illustrious institutional investors, including the Singaporean digital conglomerate Sea and South Korean internet behemoth Naver.

Ascend Vietnam Ventures recently closed its flagship VC fund at US$64 million. The company stated that it would use this money to invest in more than 20 startups by the end of the following year. International Finance Corp., Emerging Markets Impact Investment Fund, Capria, Blue Future Partners, and Orient Growth are a few of the sponsors.

By 2030, Vietnam hopes to have ten tech unicorns and for the digital economy to account for 20% of the nation's GDP, up from 8.2% in 2021.

The political stability and excellent business environment of Vietnam have also contributed to the country's economic progress. Over the past few decades, the Vietnamese government has implemented a variety of economic changes, including liberalising its economy and enhancing the business environment. Foreign investment has been attracted by these reforms, which has fueled economic expansion.

Overall, a number of reasons have contributed to Vietnam's economic success, including its industrial sector's export orientation, the country's developing economic integration with the rest of the world, the country's expanding middle class, and a hospitable business environment. As a result, Vietnam's economy has become one of the fastest-growing in the world, and it will probably continue to expand rapidly in the future.