Vietnam revs up economy to race ahead of rivals

Vietnam revs up economy to race ahead of rivals
A farmer stands amidst lettuce crops at the Cat Lai Co-op fresh vegetable farm near Hanoi. Vietnam has a growth target of 6 percent for this year. (AFP file photo)
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Updated 08 January 2021

Vietnam revs up economy to race ahead of rivals

Vietnam revs up economy to race ahead of rivals
  • Vietnam was one of the world’s few countries to record growth last year

HANOI: Vietnam’s success in curbing the coronavirus so far, while its Southeast Asia neighbors struggle, is helping the country power ahead in economic growth and attracting funds, foreign investors, experts and analysts say.

Its strength in containing the pandemic saw it build on the foundations of two free trade agreements signed in 2020, also outpacing peers in luring manufacturers moving production out of China because of the Beijing-Washington trade war.

Vietnam was one of the world’s few countries to record growth last year — well down on 2019, but still a 2.9 percent expansion.

Vietnam watchers expect the country to ride high as long as it keeps the virus — resurgent in many countries — at bay. Thanks to rigorously targeted testing, a centralized quarantine program and early border closures, Vietnam’s coronavirus tally stands at just over 1,500 cases and 35 deaths to date — far fewer than any comparable country given its population of nearly 98 million.

“The successful management of the pandemic to date has already enabled the country to capture a larger share of global trade and FDI (foreign direct investment) during 2020,” said Carolyn Turk, the World Bank’s country director in Vietnam.

Parliament has set an economic growth target of 6 percent for this year, but Prime Minister Nguyen Xuan Phuc, looking to extend his term or rise up the Communist Party of Vietnam’s ranks, said last month that Vietnam would target 6.5 percent.

At WHA Group, a Thai logistics firm which has expanded its industrial estate business in Vietnam, chairwoman Jareeporn Jarukornsakul said investors who had wanted to relocate operations to Thailand from China had not been able to do so because the coronavirus had spread in Thailand.

While infrastructure and regulatory issues are worse in Vietnam than in Thailand, she said: “Costs are cheap in Vietnam and its government is very quick with investment, allowing provinces to issue their own regulations and investment incentives.”

Still, there is much work to be done, even if the country does retain its prowess in handling the coronavirus: Vietnam suffers from a lack of highly-skilled labor, its dated bureaucracy is in need of digitization and there is an over-reliance on polluting coal imports to fuel development.

But the cocktail of positives flowing through the economy currently has left foreign-invested asset managers in Vietnam able to raise significant amounts, for example, with some reporting oversubscribed funds.

On Monday, Ho Chi Minh City-based Mekong Capital said it had raised $246 million for its largest-ever fund — nearly 25 percent more than the original target of $200 million.

Dominic Scriven, chairman of Vietnamese asset manager Dragon Capital said a combination of the country’s trade deals, more cash in the economy and political stability had underpinned better-than-expected interest across three new funds launched by his firm.

“We were very pleasantly surprised by the market uptake,” said Scriven.

That extra cash, along with savings accounts offering declining interest rates after three cuts in the central bank’s policy rate since March, has created a surge in local stock market investors.

The number of new investors has increased so much that the benchmark Ho Chi Minh City Stock Exchange has been forced to halt afternoon trading in order to process the surge.

Development was also boosted by the two free trade deals signed last year: the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trading block, and an agreement with Britain modeled on the EU-Vietnam Free Trade Agreement (EVFTA), which Vietnam ratified in June.

Hanoi also has bilateral trade deals with both South Korea and Japan, its largest sources of foreign direct investment, and is a signatory to the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The trade deal push has given it an advantage over some of its regional competitors. The EVFTA in particular has “put Vietnam clearly on the map,” said Sven Schneider, CEO of the EU-Malaysian Chamber of Commerce.

“Malaysia, on the other hand, is only waking up to this missed opportunity now,” said Schneider.

WHA Group’s Jareeporn also said the EVFTA had given Vietnam an advantage. “If an industry needs cheap labor, it’s definitely going to Vietnam,” Jareeporn said.

In the short term, Vietnam is well placed to pull ahead of its regional rivals in 2021, just as it holds a massive Communist Party meeting to select a new leadership later this month.

“It’s safe, the government functions smoothly, and in face of impediments like COVID the country rises to the challenge without hesitation and wins,” Chad Ovel, partner at Mekong Capital, said.

“Vietnam has clearly earned its position as the most attractive investment destination in Southeast Asia.”


Saudi Arabia meeting water scarcity challenge with innovation

Saudi Arabia meeting water scarcity challenge with innovation
Updated 25 January 2021

Saudi Arabia meeting water scarcity challenge with innovation

Saudi Arabia meeting water scarcity challenge with innovation
  • Kingdom is third biggest consumer per capita in the world, after US and Canada

RIYADH: Saudi Arabia’s National Water Co. (NWC) this month signed a $5.36 million two-year contract with a French utilities company to reduce the amount of water lost during the Kingdom’s water production process, known as non-revenue water in the industry.

This is a positive step forward, as a report released late last year by global consultancy firm Oliver Wyman found that while water usage is rising, supply is diminishing. The study estimated that 25 percent of the world’s population lives in areas that suffer extremely high water stress, and by 2050 that portion of the population will more than double.

“With water resources becoming increasingly scarce globally, the Middle East region is addressing the critical issues, with governments increasingly adopting new strategies for balancing their scarce water resources and growing demand for fresh water,” said Bruno Sousa, a partner in the Energy Practice at Oliver Wyman. “This has led some countries in the Middle East to turn to options such as desalination and
treatment, and reuse of wast water,” he added.

Saudi Arabia is the third biggest consumer of water per capita in the world, after the US and Canada. The Kingdom has implemented a series of measures to rationalize water consumption as part of its Vision 2030 program, with the aim of reducing consumption by 24 percent in 2021 and by up to 43 percent by the end of the decade.

The Saudi Ministry of Environment, Water and Agriculture has developed a unified water sector reference framework that includes a comprehensive water strategy, which integrates national water sector trends, policies, legislation and practices with the main objective of addressing these key challenges and restructuring the sector. Dr. Ibrahim Aref, director of the rehabilitation of agricultural terraces initiative at the ministry, told Arab News that most of the Arabian Peninsula’s water resources comes from rainfall. Yet, rainfall in the Kingdom, especially in the center of the Arabian Peninsula, is very weak compared to any other place in the world, thus causing water scarcity.

New technology has been developed over the years to minimize the environmental impact of desalination.

Bruno Sousa

Aref pointed out that even though the Arabian Peninsula, in general, experiences dry seasons that last for two, four or up to seven years, the Kingdom has been blessed with a strong economy and therefore has been able to work on many solutions that might be unusual elsewhere in the world, such as desalination.

According to Oliver Wyman’s Sousa, desalination can be achieved through two main technologies: Thermal and electric.

He told Arab News that thermal technology consists of heating water and collecting the resulting evaporated pure water. “This is a very energy-intensive process, requiring both electricity and thermal energy to heat the water. As part of the process, electricity is also generated that can be injected into the electric grid.

“Electric consists mainly in reverse osmosis, where water is forced through membranes that remove salt ... it is also an energy-intensive process, but only requires electricity to run,” he said.

“Although thermal desalination is still used, reverse osmosis is the mainstream technology, adopted mainly because of lower costs (including with energy) and a higher rate of potable water conversion from seawater,” he added. Sousa said that new technology has been developed over the years to minimize the environmental impact of desalination. Spanish firm Acciona last year completed the construction of the Al-Khobar I desalination plant in Saudi Arabia, and since Dec. 26, it has produced 210,000 cubic meters of drinking water per day, which will supply a population of 350,000. It is one of the biggest desalination plants in Saudi Arabia in terms of capacity.

Desalination is not the only way the Kingdom is looking to address the issue of water shortages. One of the largest programs being undertaken by the Ministry of Environment, Water and Agriculture is the rehabilitation of agricultural terraces in the southwest of the Kingdom.

The project aims to increase the efficiency of water use for agricultural purposes and to rely on renewable sources that contribute to food security, rural development and increased productivity of strategic crops.