Vietnam, a dynamic player in Southeast Asia, is rapidly carving its niche in the global economy through a diverse array of industries. From the robust growth of information technology to the strategic importance of tourism and logistics, Vietnam’s top 5 industries make its economic landscape vibrant and multifaceted. This article delves into five major industries shaping Vietnam’s economic trajectory, examining their contributions, challenges, and pivotal roles in the country’s journey toward prosperity.
Vietnam’s Top 5 Industries
In the last ten years, Vietnam has witnessed robust growth in the information technology industry, yet the overall development of this sector remains constrained. According to data from the Institute of Information and Communication Strategy, a mere 15% of graduate students possess the skills required by businesses. Projections indicate a significant shortage of 300,000 IT professionals in Vietnam in the coming years, while the annual graduation rate stands at only 32,000 students. This highlights a considerable gap between industry demand and the current supply of qualified IT professionals, posing a challenge to the sustained development of the sector in the country.
Manufacturing and Service Industry
Industries such as manufacturing and services, catering to consumer goods, retail, entertainment, and education, are strategically focused on serving the mass population in Vietnam.
Vietnam ranked as the 15th most populous country globally, maintains above-average economic growth compared to other developing nations. Despite the challenges posed by the Covid-19 pandemic, the country achieved positive economic growth in 2020. Notably, the retail sales index consistently outpaces GDP growth, indicating a substantial purchasing power within the Vietnamese market, particularly for mass-oriented products. The rapid growth of Vietnamese enterprises in sectors like food processing, beverages, retail, and education, along with a notable influx of foreign investment through mergers and acquisitions in retail and consumer goods, underscores the immense potential in this market.
While the market and business opportunities are substantial, foreign investors need to conduct thorough market research to tailor their business models appropriately. The low barriers to this market result in intense competition and potential market saturation, emphasizing the importance of strategic planning for sustained success.
Vietnam, situated at the center of East Asia, is accessible to over half of the global population within a five-hour flight.
The tourism sector in Vietnam, recognized as a crucial economic industry, is anticipated to further expand, creating opportunities not only for accommodation, food, and entertainment but also for various other sectors including transportation, handicrafts, and retail.
Despite a global economic downturn impacting world trade, Vietnam’s logistics sector has shown consistent growth. The transportation and warehousing industry, which experienced slightly over 5% growth in 2015, saw an impressive increase of nearly 8% in 2019. Projections for 2021 anticipate further growth in the wake of global trade improvement due to widespread vaccination efforts. The logistics industry’s key drivers stem from the expanding commodity production in two pivotal economic sectors – Foreign Direct Investment (FDI) and private enterprises. The continuous growth in investment capital from these sectors, coupled with the flourishing e-commerce landscape, not only presents opportunities for the transport and logistics industries but also for related technology sectors.
Being a developing nation, Vietnam exhibits a substantial demand for construction investment, leading to a growth rate in the construction industry often surpassing overall economic growth. The sector experienced an estimated growth of 8.3% in 2019. Despite a quieter real estate market in 2020 due to the COVID-19 pandemic, the construction and construction materials industries are expected to remain positive in both the short and long term.
Anticipated acceleration in public investment disbursement is attributed to efforts in overcoming obstacles within investment procedures for projects funded by the budget and government bonds. The significant accumulation of state budget funds in the banking system is expected to be swiftly directed toward infrastructure projects, creating a demand surge for various essential construction materials, including sand, stone, and gravel, as well as industrial products such as steel and cement.