Vietnam Outlook

May 06, 2022

Vietnam’s economic growth has been a success story, even during
unprecedented challenges from Covid-19 pandemic

Key development milestones

“Doi Moi” program stimulated market reforms Accession to global trade Increasing role as manufacturing hub

1986 1987 1988 1990 1990 1994 1995 2001 2007 2017 2018 2020

Adoption of Adoption of Law on export Law on Removal of Member of 10-year plan Member of Private sector Ratificatio Ratification
Restructuring Foreign Investment /import duties, private US Trade ASEAN1 enhancing role WTO2 regarded as key n of of EVFTA3
program Law and Land Law exchange rate business Embargo of private sector economic engine CPTPP4

Vietnam with sustainable and increasing GDP growth over the years Vietnam generated GDP growth during COVID. Now poised for new normal.

%, Constant 2010 prices

8% Vietnam
Vietnam is
6% one of only
markets
that did
4% not contact
GDP during
pandemic
2%

Asia-Pacific
-2%
Global
ASEAN
-4%
2012 14 16 18 2020

1. Association of Southeast Asian Nations 2. World Trade Organization 3. The European Union − Vietnam Free Trade Agreement 4. Comprehensive and
Progressive Agreement for Trans-Pacific Partnership

Source: GSO 2
Investor confidence (both foreign and domestic) stays resilient

Steady FDI implementation throughout pandemic Credit Growth Highest in 5 years

US$ Billion Credit growth in Vietnam Banking sector, YoY

Implementation Registration

4.37%
39
37 4.03%
36

3.53%
31
29 3.13%
2.95%

20 20 20
19
18

1.31%

2017 2018 2019 2020 2021 1Q17 1Q18 1Q19 1Q20 1Q21 1Q22

Source: Bloomberg 3
Consumer confidence is returning thanks to high vaccination rate

Vietnam is among countries with highest Domestic flights already exceed pre-COVID level,
double Covid-19 vaccination rate International flights accelerating
% of population fully vaccinated Flights scheduling index

130
Singapore 87% Domestic
120
Cambodia 81%
110
Vietnam 79%
100 100 = 2019
Japan 79% average level
90
Australia 78% 80
Malaysia 78% 70
France 75% 60

Germany 72% 50

70% 40
UK International
30
Thailand 68%
20
Isarel 65%
10
USA 63%
0
India 47% Jul- Sep- Nov- Jan- Mar- May-
21 21 21 22 22 22

Source: Bloomberg 4
Medium-term GDP risk . . . China lockdowns, Russia–Ukraine conflict

China lockdowns: Direct impact of supply chain disruption Russia-Ukraine conflict: Indirect impact of
Russia–Ukraine conflict: Limited direct impact rising inflation from oil price hikes

Contribution to Vietnam’s total trade, 2021

Inflation Potential change
rate in in inflation from
China 25% 2021 46% oil price hike

U.S 17% Vietnam

trade flow Philippines 4.5% 1.2% 5.7%
S. Korea 12% with China
directly
Japan 7% impacted by Singapore 2.3% 3.1% 5.4%
supply chain
Taiwan-China 4% disruptions
Thailand 3% Thailand 1.2% 3.2% 4.4%

Hong Kong-China 2% Potential increase

Vietnam
India 2% Vietnam 1.8% 1.7% 3.5% inflation
pressurized
Malaysia 2% by oil hikes
Malaysia 2.5% 0.4% 2.9% from Russia-
Australia 2% Ukraine
conflict
Indonesia 2%
Vietnam trade flow with Indonesia 1.6% 1.6%
Russia 1% Russia marginal, with
limited direct impact to
Vietnam growth
Source: Bloomberg 5
Strong market sentiment points to Vietnam full recovery in 2022

Stable and positive

sovereign ratings Market consensus points to strong recovery for 2022 and 2023

2022F GDP Growth 2023F GDP Growth

2022
Fitch Affirm Positive India 8.9% India 7.7%

Vietnam 6.8% Vietnam 6.7%

S&P Revise to Positive 6.6% 6.2%
Philippines Philippines
2021
Fitch Revise to Positive Malaysia 6.0% China 5.2%

Moody Revise to Positive Indonesia 5.2% Indonesia 5.2%

China 5.0% Malaysia 5.0%

2020
Fitch Revise Stable Singapore 4.0% Thailand 4.2%

Thailand 3.7% Singapore 3.0%

S&P Affirm Stable U.S 3.4% S. Korea 2.6%

2019
Fitch Revise to Positive EU 3.4% EU 2.5%

S. Korea 3.0% U.S 2.3%

Moody Revise to Negative
Japan 2.3% Japan 1.7%

Source: Bloomberg 6
Fundamentals such as quality human capital and increasing income
levels continue to drive Vietnam’s long-term growth
QUALITY HUMAN CAPITAL MIDDLE CLASS FORMATION
World Bank Human Capital Index, 2018 % Vietnam’s population in middle class
90%
Singapore 0.88

80% Thailand
Vietnam 0.67
Indonesia
China 0.67
70% China

Malaysia 0.62

60%
Thailand 0.60
Philippines
Philippines 0.55
50%
Vietnam
Indonesia 0.54
40% Vietnam has fastest
Cambodia 0.49 formation of middle class
compared to its peers
over next 10 years,
Myanmar 0.47 30% underpinning robust and
long-term growth

Laos 0.45
20%
2018 2030

Source: Bloomberg 7
Infrastructure spending and diversification from China to Vietnam . . .
both in unprecedented acceleration

Vietnam infrastructure investments increasing Diversification of global value chains accelerating

Infrastructure investment growth GDP growth Major companies which have moved or are planning to
move production facilities to Vietnam since 2019

9.0% Prior up-cycle of Hanwa Aero TCL Pegatron

8.5% high infra spending
8.0% coupled with high Yokowo Foxconn FoxLink
GDP growth
7.5%
7.0% Huafu Fashion Lenovo AstraZeneca
6.5%
6.0% Goertek Nintendo Lego Group
5.5%
5.0% Luxshare Sharp Skoda
Projected up-cycle of
4.5%
higher infra spending Foster Kyocera Cevo
4.0% anticipated to be
3.5% coupled with higher
GDP growth Wistron Asiscs Am kor
0.0%

-4.5% • Vietnam . . . explosive growth, lower cost of labor,

2011 2013 2015 2017 2019 2021F 2023F 2025F
quality infrastructure, dynamic workforce, FTAs
• Historically, higher infrastructure spending drives • Business-friendly policies and improved market access
higher GDP growth
• Manufacturers get . . . a lower-cost, reliable and
• New infrastructure to be climate-smart, sustainable quality source of parts, materials and components

Source: IFC
IFC Vietnam has scaled up its program in line with the country’s
increasing private sector investments across all sectors
Increasing role of private sector in ….created favorable environment for IFC
country-wide investment… to scale up program in Vietnam
Contribution to total investment IFC committed portfolio outstanding in Vietnam, $m
FIG, STF MAS CDF
FIG, LTF INR

25% 2,672
33% 31% 34%
State 38% 36%

+25%
1,874

1,556
1,427
41% 43% 46% 60%
Private 39% 45% 1,263

888

FDI 24% 24% 23% 23% 21%

16%

2016 2017 2018 2019 2020 2021 FY17 18 19 20 21 FY22

-YTD

Source: IFC 9
Thank You!

10