The Vietnamese economy is commonly associated with manufacturing that is affordable compared to other countries. But beyond these traditional growth drivers, there is a vibrant local technology ecosystem.
“Vietnam offers real potential in the Fintech space,” said Mr. Evans. “You have low levels of financial inclusion with high smartphone penetration. The population is young and tech savvy.”
There are 113 Fintechs operating in Vietnam, compared with just 44 in 20176. Around two thirds of the start-ups in this space specialise in digital wallets and payment services. The pandemic has accelerated adoption rates, as the lockdown made people rely more on online financial services rather than bricks and mortar banks. It is also putting pressure on traditional lenders.
“The big banks, and I include ourselves in this, are starting to revamp themselves by investing in mobile apps and introducing e-wallets into the market,” he said.
Sustainable finance is another area where the pandemic has increased momentum. There is growing recognition in Vietnam that the quality of future growth will matter just as much as the quantity. The challenges are especially evident in the power sector; as rapid development requires the supply of electricity to grow at the same pace.
Renewable alternatives to fossils fuels are viable: “The country is in an ideal spot to develop wind power,” said Mr. Evans. “It has a long coastline and strong winds, making wind power a real option.”
Vietnam’s corporates are starting to integrate green frameworks into their strategies. An example of this trend is when one of the country’s largest conglomerates raised $500 million in an April international bond sale. Arranged by HSBC, the issuance was the world’s first-ever exchangeable sustainable bond, as well as a sign that the national champions support the green agenda.
The push towards sustainability has official backing. The State Bank of Vietnam is encouraging local banks to develop ESG-linked lending policies, though the industry standards are still being made7. For financial markets, regulators now require listed companies to disclose data detailing their environmental impact8.
Looking to the future
With Vietnam emerging from lockdown, attention can return to the long-term growth drivers that make the market attractive to international capital. Not only will manufacturing bounce back, new capabilities, such as technology and sustainability, will contribute to future development. Taken together, it is hard not to be optimistic on the country’s development.
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