You know when people ask if you had chemistry with someone or even a group of people? I believe it applies to cities as well. For me I felt an instant chemistry with Ho Chi Minh upon arrival. The city is buzzing, chaotic, and infested with motorbikes that may even graze your arms on a sidewalk. There is this infectious energy so strong you can feel the pulse of the city. It gave me a sense that Ho Chi Minh and Vietnam as a whole has great potential. This was before I even looked at any research on the country, it was purely superficial and based on the vibe I felt. I also found the food and bar scene buzzing. The city is home to several speakeasy bars and great food at exceptionally reasonable prices. When I say ‘speakeasy’ I mean really speakeasy because for some of the establishments you have to enter an actual dodgy-looking building through a narrow side entrance with no signs, and climb up a few flights before opening the door to a pulsating place with just the right ambiance. A far cry from the ‘trying too hard’ kind of speakeasy’s we sometimes see in the West.
Ho Chi Minh must love its coffee! The city is packed with boutique coffee shops in practically every neighborhood you go. My favorite was Workshop Coffee which is kind of a speakeasy coffee shop where you also climb up a flight of stairs in a not-so-pretty building and arrive at this airy, rustic, and well run coffee shop. In terms of food, there are a diversity of options and I particularly found the French-Vietnamese cuisine style delicious (more on Ho Chi Minh in my city snapshots). My short trip to Ho Chi Minh had me on my feet with little sleep as I went out exploring and didn’t fear the traffic or the motorbikes on the sidewalk – you’ve just got to go with the flow. As I scanned the neighborhoods I found traces of French-colonial architecture blended with modern buildings which adds to the charm of the city. I’m excited writing this entry because Ho Chi Minh was a spontaneous trip in large part due to a layover en-route to Dubai which I extended to a two-night stay. Cheers to Emirates for the delightful experience!
In this briefing I will aim to provide you with some context on Vietnam, its current economy, demographics, and opportunities from various noteworthy sources.
Highlights:
- FDI in Vietnam reached a 10-year high at circa $38 billion for 2019.
- South Korea is the biggest investor in Vietnam.
- Christmas lights production shifted from China to Vietnam due to the trade war.
- Americans are moving to Vietnam for a Florida-like lifestyle at a fraction of the price.
- Vietnamese local coffee chains are thriving and giving Starbucks a rough time in the country.
- Ho Chi Minh is one of the fastest growing cities in the world and the city’s population is expected to surpass 14 million by 2025.
Vietnam’s FDI capital reached a new record in 2019. The FDI figure reported by Vietnam’s Ministry of Planning and Investment surpassed $38 billion, representing a 7.2% year-on-year increase and a 10-year high. More than 3,800 new projects received investment licenses in 2019 – a 27.5% increase from 2018 and responsible for bringing close to $17 billion in new capital. Capital contributions and share purchases by foreign investors surged by 56.4%, representing 41% of total FDI. 65% of the capital was directed to the manufacturing and processing sector, 10% to real estate, and the rest to wholesale, retail, science, and technology. South Korea maintained its position as the leading source of FDI for Vietnam with $7.92 billion in investment – representing a substantial 21% of total FDI. Hong Kong and Singapore came in second and third with their percentage total of FDI in Vietnam. Ho Chi Minh city saw $8.3 billion in investment in 2019. Do Nhat Hoang who leads the Foreign Investment Department for the government expects multi-billion dollar projects to arrive in Vietnam in the future with South Korean and Taiwanese firms leading the way; Vietnam serves as a strategic investment destination for the two countries. In terms of capital outflows, Vietnamese firms invested just over half a billion dollars into overseas markets in 2019, with $93 million invested in the United States (VietNam News).
Vietnam recorded gains from the US-China trade war. ‘Christmas lights’ exports to the United States from Vietnam doubled and those from China tanked in 2019. For years China dominated the ‘Christmas lights’ market as the sole producer and benefited from economies of scale, but that changed after the imposition of tariffs. However, there is complexity to this story since Chinese producers are dropping “Made in China” label and detouring the shipments via Vietnam by relabeling products. In May, Donald Trump’s government slapped 25% tariffs on Christmas lights from China up from 10% from the year before. Vietnamese authorities are clamping down on illegal trafficking of goods by checking whether the planned products are subject to US tariffs. Chinese foreign direct investment (FDI) into Vietnam grew by triple digits in 2019. Nintendo and Sharp are among companies that have invested in Vietnam since the start of the trade war. However not all news has been positive – Donald Trump has called Vietnam a “trade abuser” due to the rise in Vietnamese good’s surplus to the USA and Trump’s government subsequently imposed tariffs of more than 400% on Vietnamese steel products on charges of ‘illegal trans-shipment’ (Aljazeera by Michelle Nguyen and Dien Tu Uyen | Bloomberg).
More Americans are moving to Vietnam. Cheap healthcare and descent standard of living are reasons behind this trend. Growth in South East Asia is delivering a promise of Florida lifestyle for American retirees at a fraction of the cost – monthly expenses “rarely exceed $2,000” and that may include help from a cook and a cleaner. Furthermore, a majority of Vietnam’s young population was born after the end of the war in 1975 and as such Americans residing in Vietnam report an absence of resentment and a friendly atmosphere. A recent survey of expatriates revealed Vietnam to be friendlier than China. Cambodia is another country in the region that is attempting to attract American retirees (Los Angeles Times by Ralph Jennings).
Why is Starbucks not so popular in Vietnam. As mentioned in my introduction I noticed a number of boutique coffee shops in Ho Chi Minh city and was impressed with the design, service, selection, and quality of the coffee shops. This CNBC report highlights how Starbucks, a global chain, only accounts for a small percentage of the multi-billion dollar coffee market in Vietnam. “The country is famous for a thick, heavy brew sweetened with condensed milk”. In Vietnam, coffee drinks are made with robusta beans which are high in caffeine content, bitter, and sharper compared to the arabica beans. Arabica beans are the go-to ingredient in western coffee shops. Local coffee shops in Vietnam are known for better adaptability, reasonable prices, and pace for keeping up with trends that are subscribed to by the country’s growing middle class (CNBC by Marilyn Haigh). As mentioned, my personal favorite in Ho Chi Minh was ‘The Workshop Coffee’ which is a local institution, highly rated, ambient, and served by far the best Latte I had in my South East Asia trip.
Forbes provides a comprehensive list of the best things to do in the bustling city. Ho Chi Minh was referred to as the “Pearl of the Far East” by the French and is Vietnam’s largest city and cultural hub. The city’s population is expected to reach 14 million by 2025 making it one of the fastest growing cities in the world. Key things to note: its best to visit the city between December and May, and to avoid the Vietnamese new year (late-Jan / early Feb) when the city practically shuts down. I made that mistake on my first visit to Shanghai couple of years ago during Chinese New Year. Independence Palace, Ben Thanh Market, Nguyen Hue Street, and Chi Chi Tunnels are among some of the best sights and places to see in the city (Forbes by Dan Q. Dao).
References: VietNam News, Aljazeera, Bloomberg, Forbes, and Los Angeles Times. Please note that this briefing contains paraphrased summaries and attributes the original content to the news sources. We encourage readers to visit the links to access the full article in its original form for a thorough and complete view. You may need to subscribe to the news agency and source for access.