What is fueling the Vietnamese economic boom.
(DONG CURRENCY SECURITY FEATURES BELOW)
A shift from agriculture to manufacturing.
[So many companies like Intel and Canon are investing in the Vietnamese manufacturing industry and this is making the industry to grow on a large scale. The world’s largest laser printer factory had been built by Canon in northern Vietnam.]
Between the years 2001 and 2005, the economic contribution through agriculture decreased by 25 percent. In contrast, products such as pepper, coffee and tea have seen higher export during the same time. Export of fish products have increased too.
And while Vietnam produces and exports clothes and footwear, it is increasingly moving towards higher industrialization. Indeed, large electronic companies have made big investment in the Asian country. This has increased the production of high end goods in Vietnam.
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Foreign direct investment (FDI)
The government of Vietnam in a bid to attract foreign investments in the country has made several allowances for them, such as, a decrease in the limit of the foreign ownership of business in the country.
Also, the wages of the workers in Vietnam is quite cheap. It is even less than China. This, along with the low rates of land available in Vietnam has made it suitable for foreign companies to invest there. An increase in foreign direct investment is inversely proportional to the number of state owned enterprises operating in Vietnam. And Vietnam’s FDI has seen a tremendous increase to $5.8 billion as of 2005. The US contributed more than half of that amount.
A record number of three million Vietnamese people leave live in different parts of the world. A yearly amount of nearly $4 million dollars is sent by them to their homes in Vietnam. The last few years have been very good for Vietnam. It achieved a record high position as the second highest growth in GDP, behind only China.
Economy has also increased the living standards of the indigenous Vietnamese people. Vietnam has also normalized its relation with US and is a member of ASEAN since 1995.
Vietnam is still under the rule of the Communist Party but despite that it has adopted an economic system that is market based and there has been a decline in the number of state owned enterprises.
The best time you can ever get to invest in the Vietnamese dong is now. Despite the fact that the dong had been facing some not too pleasant situation recently, it is still able to weather the weather and stay on top.
With the youthful age of the Vietnamese population, the very much cheaply available labor, which is far cheaper than what is available in china and the variety of raw materials that are available in the country; you will find the Vietnamese market a very good one for your investment effort; as long as you are ready to deal with some measure of volatility.
One of the factors that had brightened the economic possibilities of Vietnam is the acceptance of the country by the World Trade Organization.
Vietnam Dong Exchange-Why Invest In the VND?
There is a great possibility of investors flooding the Vietnamese market by investing in the shares offered by the country’s commercial banks. There is great prediction that the investment in Vietnam will be 2-3 times higher than what it presently is; this is due to the fact that the Vietnamese stock exchange is now applying international practice.
This international practice is what is obtainable in other security markets of countries like Japan, Hong Kong, Singapore, and even the US. It is like the members of the Vietnam association of foreign investors too desire for a higher ownership in Vietnamese commercial banks.
The Vietnamese dong appreciated earlier this year in response to the announcement of the deputy governor of the Vietnamese central bank. He announced that the government had no reason to further devaluate the Dong.
One other boost that investment possibilities in the Vietnamese economy received is the recent investment summit. This summit helped to provide an opportunity for potential investors; it also makes it possible for growth in the possibilities of investment.
Vietnam can be said to be one of the most successful economies in the whole of Asia. While dealing with Vietnam dong, you may have to cope with some volatility; but as long as you don’t mind much, you can go ahead and invest in the Vietnam dong.
Why the Vietnamese dong has become what the whole world of investors are interested in?
1. Availability of cheap labor, limitation on foreign ownership in the Vietnamese commercial banks and the improvement in the FDI.
2. The Vietnamese economy had been changed to a manufacturing economy from an agricultural economy. So many companies like Intel and Canon are investing in the Vietnamese manufacturing industry and this is making the industry to grow on a large scale. The world’s largest laser printer factory had been built by Canon in northern Vietnam.
3. The large numbers of Vietnamese that are living outside the country are making an increasing amount of remittance.
Vietnam Dong Revaluation
Revaluation indicates the change in value of the currency of a country when compared with other countries’ currencies. This is normally done in a fixed exchange rate system. Within three months, the dong was devalued twice; the last time was earlier this year.
The purpose of the devaluation was to reduce a widening trade deficit, which brought down confidence in the currency of the country some years ago. Because of this devaluation, so many companies hoarded the dollars.
The revaluation of the dong leads to a negative effect on the profits of exporters, while importers are on the benefiting side due to the revaluation. The export rate became cheaper and there is a reduction in the gap between the black market exchange rate and the bank exchange rate.
Devaluation for Balanced Demand and Supply of Foreign Exchange
It is believed by the state bank of Vietnam that balances in foreign exchange demand and supply will be effectively handled by the devaluation. The economy is expected to be stabilized and the deficit is expected to be controlled.
Vietnamese Dong- An Option for Investment
The export sector had been helped greatly by the devaluation of the dong. The dong is not allowed to be purchased by the Vietnamese government, safe for the purpose of investment.
As the market for currency derivative grows, investors are making more moves to bank on the economy with the hope that the dong will be taken to the next level. Several companies like Citigroup, Barclays Capital and Deutsche bank are planning to conduct transaction for the purpose of raising US$1 billion in 2010 by selling a ten year term bond. You can agree with me that this is the best time to invest in the Vietnamese dong.