Vietnam and the US upgraded relations last year to a comprehensive strategic partnership. How will this facilitate US investment in Vietnam during 2024 and in the future?

I think more US companies will be attracted to Vietnam because of the friendly relationship between the two countries, and that will benefit Vietnam not just this year but also in the years to come. Industries that I think will benefit include tech-related sectors. For example, in Vietnam’s semiconductor market, there will be interest in investing and taking advantage of its location and its position in supply chains.

There have been a lot of changes or shifts in supply chains to Vietnam over the year. And that is where Vietnam can capitalize on the strengths the country possesses, in workforce, land, and location within supply chains.

You mentioned that the semiconductor market will be attractive for US investors. How can these investors fully benefit?

Vietnam is already part of tech supply chains. US companies in the semiconductor industry, for example, want to be in different parts of supply chains, and many others upstream may also want to think about locating in Vietnam to be part of entire supply chains. So, that will be one area where some companies will be thinking about how they can capitalize on existing and developing supply chains. They want to be part of it, and their production will be more efficient, saving on transportation and having faster speed to market.

You believe that manufacturing activities in Vietnam improved a great deal last year, but were still constrained by weak external demand. What should Vietnam do to address this problem?

Vietnam’s manufacturing sector suffered in the first part of last year because of lower demand for exports and trade. The situation improved in the second half, and the semiconductor cycle began to turn, and that helped Vietnam. So, this is a direct relationship between trade and manufacturing. One of the ways to overcome this problem is to diversify markets. This is because if anything happens to demand in a market Vietnam is exporting to, there will be a direct impact on the country as well as its manufacturing industry.

If Vietnam can diversify its markets instead of focusing on one single market, this would reduce the risk or vulnerability. Therefore, if Vietnam can diversify into other markets such as those in Southeast Asia, Europe, and Latin America, it would minimize the risk compared to just focusing on a single market.

The other thing is to diversify products. Right now, tech products represent a large proportion of Vietnam’s exports, at about 30-40 per cent. So, if anything happens to the tech cycle, negative things happen. To reduce vulnerabilities or mitigate vulnerabilities and risks, Vietnam needs to diversify its products. And one area that it can take advantage of is agriculture. Vietnam already has many different products in this sector that can be exported. For example, it is already a large rice exporter. So, that’s another area we can look into, by improving the type of rice and the yield to cut costs, and make exports more attractive, but all of this requires investment

In particular, we should not underestimate the power of agricultural products, because people think of these as being at a very low level but they actually are not. If you think about the US, it is a large agricultural producer, such as corn, oranges and beef and pork, so it is a very important sector we should also look at.

You have said that digitalization is a promising sector that Vietnam is promoting. How do you view foreign investment into the sector in 2024?

I think existing trends will continue to develop, because one of the things that digitalization will do is help companies improve sales and cut costs. For example, the Internet of Things (IoT) or production automation will help companies reduce costs and improve sales. Therefore, companies will continue to invest, and with government support, there will be more companies looking into this and also doing so their own survival. How can companies improve costs? It’s not just about cutting people, but also about improving productivity. Digitalization will therefore help them. For example, QR codes are becoming popular in Vietnam and elsewhere. These are actually important productivity tools. You don’t have to deal with cash. You don’t have to worry about cash being lost. So it is a key improvement as well as an important tool to improve productivity and costs.

What do you forecast for Vietnam’s economy in 2024?

2023 was very challenging and difficult, but with support from the Vietnamese Government as well as the State Bank of Vietnam (SBV) and together with the private sector, we got through the challenges. For 2024, I think that we expect trade to improve, and the semiconductor cycle is turning and is a sign that it will be better this year. And with interest rates expected to be cut in the US, this will improve demand and boost many activities in Vietnam. That will also be very helpful for Vietnam in terms of exports and its manufacturing industry. I also think that tourist arrivals will improve. All of these areas will be better in 2024.