Ho Chi Minh City: The private sector should take the lead in pursuing an Asean growth strategy to become true Asean multinationals, said Maybank Kim Eng Group chief executive officer John Chong.
“The policy makers have put the building blocks and framework in place. The call goes out now to companies to make the region a focal point of their growth plan and pursue an Asean-centric strategy,” Chong said at Maybank’s inaugural Invest Asean Vietnam conference.
He added: “Asean’s time has come. Doing business in this region is no longer about biding your time until suitable opportunities come along, but about being a frontrunner and making your mark on the young, impressionable, up-and-coming Asean consumer.”
Data released by Maybank in February at their Cap 10: Asean CEO Summit in Kuala Lumpur showed that Asean companies were not yet taking Asean as seriously as the rest of the world. A survey was quoted whereby 80.9% of non-Asean companies polled had a strategy oriented around the Asean region, while the figure among Asean-based companies was lesser at 55%.
Speaking about Vietnam, Chong said the country had the potential to be the next “global factory”, given its economic stability and structural reforms initiated by the Vietnamese government. “We are very positive on the Vietnamese economy, which we are expecting to grow at over 6% this year. And we think the development of the Asean Economic Community (AEC) as a single marketplace will further solidify Vietnam’s position as the region’s manufacturing hub.”
He said the country is competitive, connected to the global supply chain and has a growing, young educated workforce.
Vietnam’s foreign direct investment (FDI) inflow is now over 5% of its gross domestic product (GDP), the highest in the region.
Chong said with FDI helping stronger exports, particularly in the higher value-added technology sector, what was a current account deficit was now a surplus.
He said Maybank Kim Eng’s economics team expected this surplus in current account to continue, noting that in the last five years, export from Vietnam’s electronics sector had jumped five times, overtaking textiles as the largest export segment.
He added that Vietnam’s manufacturing sector had grown to about US$170bil in annual turnover as at end-2014, and was now exporting to over 80 major countries.
“With per capita GDP crossing the US$2,000 level, there is greater discussion of Vietnam transitioning from a factor-driven economy to an efficiency-driven one. In this new stage, companies and production processes need to get more efficient and product quality needs to improve to keep up with rising wages. In this exciting phase, there needs to be continued investment in education, technology and infrastructure. The financial and capital markets need to develop and deepen in order to facilitate this growth,” he said.
Chong said Maybank Kim Eng had been in Vietnam for the last seven years, with eight branches and a staff strength of over 250 and is the top foreign-owned stockbroking house and investment bank there. It is planning to raise its capital invested in its Vietnam business to US$50mil in the next two years, from US$40mil at present.