"It’s clear that Vietnam remains an attractive destination for global companies in spite of the recent global crisis," said Jose Isidro N Camacho, vice chairman for Credit Suisse Asia - Pacific and country CEO of Credit Suisse Singapore.

"Foreign direct investment commitments amounted to a cumulative $11.8 billion in the first eight months, double that of the same period in 2009, although not as much as the extraordinary level of 2008," he added. Speaking at the "Gateway to Vietnam – Driving Growth through the Private Sector" seminar organised by Saigon Securities Inc, in co-operation with McKinsey&Company, he cited several positive signs, which include Vietnam’s relatively young population and workforce, good level of basic education, stable political stability, rich natural resources, transition to market economy and modernisation as well as urbanisation. "During 1992-98 the number of working-age people grew by an average of 2.6 per cent a year, similar to the Philippines, but higher than Thailand or Malaysia, not to mention China, where the rate was only 1.25 per cent," he said. "If long-term productivity gains can be captured through investment and education, then we believe Vietnam can still continue to benefit from its demographic fundamentals, and that it can achieve a long-term growth path that is above average for non-Japan Asia," he added.

Vietnam maintains a high rate of fixed asset investment, more than 30 per cent of its GDP, which is a critical driver of GDP growth for any emerging economy. The government’s continued commitment to investing in infrastructure and industry was another reason for optimism, he said. Consumption growth rates, another key driver of economic development, also remain high, at above 7 per cent, according to the Credit Suisse Asia Pacific vice chairman. "The average urban incomes are more than double the rural ones; thus, the country’s urbanisation has had a profound effect on domestic consumption," he said, adding that without urbanisation, the urban consumer market would be 26 per cent smaller. Jose said that his company was convinced that "a larger, stronger private sector will be a tremendous source of momentum for the economy.

" Thomas Tobin, CEO for HSBC Vietnam, also has a positive view about Vietnam despite the current inflation and trade-deficit challenges. He noted that increasing retail turnover resulted from a younger, better-off population. Additionally, the construction industry had resumed its growth, which had helped to promote GDP. Thomas, however, said that GDP growth, along with inflation and the trade deficit, would create pressure on the economy. The governing issues of monetary policies as well as interest and exchange rates also posed difficulties, but he noted that the recent interest rate hike had helped reduce investment in gold and US dollars.

Marco Breu, managing partner of Mckinsey&Company Singapore in Hanoi, also agreed on the long-term investment prospects and stressed the need to increase productivity to ensure high GDP growth. He noted that the young-workforce rate might slow down from the 3 per cent rate recorded in the last 10 years, which would required more investment in human resources and skill improvement. According to Pham Viet Muon, deputy head of the Government Office, Vietnam’s private sector grew strongly in recent years, representing most of the 240,000 newly established companies. The figure is expected to rise to 540,000 by the year-end. The government anticipates that by 2015 there will be an additional 650,000 new businesses.

By that time, the number of wholly state-owned enterprises will fall to between 500 and 600. Last year the sector accounted for 31 per cent of the total investment in Vietnam, according to Muon. It is expected to contribute up to 48 per cent of the country’s GDP this year. Also yesterday, representatives of more than 200 domestic and foreign investment institutions had business-to-business meetings to explore cooperation opportunities with Viet Nam’s 17 leading private companies, including Novaland Group, Kinh Do, Hung Vuong Seafood and Phu Nhuan Jewelry Company.