Saturday, February 23, 2008
Profits with Vietnam's Privatizations
Vietnam has witnessed tremendous growth driven by accession to the World Trade Organization (WTO) and market-orientated economic reforms launched by the Vietnamese government. Coupled with the rising costs in China, investors are turning their attention to Southeast Asia's newest miracle economy.
According to the the Institute of Developing Economies (IDE), the Vietnamese economy will continue to thrive, attaining a high growth rate of 8.7% in 2008.
The labour cost differentials between China and Vietnam are significant. Today it costs about $125 a month to hire a moderately skilled factory worker in China but in Ho Chi Minh City the monthly wage for factory workers is $65. The US giant Intel recently passed up the opportunity to expand the two factories it has in Chengdu and Pudong in China and has instead set-up a $600 million chipset factory near Ho Chi Minh City. A sign of growing confidence in the economic reforms.
As the pace of reform continues, many of Vietnam's SOEs (State Owned Enterprises) are being privatized. Most of these SOEs are actually small or medium sized companies that are seeking outside investors. In most cases the new owners are insiders of the firm and aquired their equity stake in a process resembling a management-employee buyout, with favourable conditions for the employees. Many of these SOEs are in the export orientated sectors including such as agriculture and food processing. These companies are actively seeking outside investors to further develop the business in Vietnam's new economic boom.
At AsiaBusinessInvestor.com we have listed a few of the current opportunities for investors.
Labels: investment, reforms, vietnam, vietnam privatizations
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