20 Oct 2023
Asia’s next growth journey
Richard Yetsenga |
China was once the only story in town, but growth in the nation of 1.4 billion people is slowing. For capital, the rest of Asia beckons.
5 Dec 2023
A strong legacy and bright future in Vietnam
Like many countries across the Asia Pacific region, ANZ has a long and enduring relationship with Vietnam.
ANZ was one of the first western banks, and the first Australian Bank, to establish a presence in Vietnam – which is now one of the fastest-growing economies in Asia.
"Vietnam is known as the land of the ‘Ascending Dragon’ - symbolizing growth and opportunity, as well as the power and resilience of its people. That metaphor feels truer today than at any time in its history."
Vietnam today is vastly different to when we opened our first outpost – the “Lake Branch” – on Hoàn Kiem in Hanoi 30 years ago. But in some ways, so is ANZ.
While we have always been intensely focused on engaging with the region, that engagement has understandably shifted amid economic and geopolitical transformations.
Over the last seven years as a bank our strategy has shifted. We have simplified our business to build a better bank for our customers, shareholders and people.
We have also spent the past few years investing in our technology platforms and honing our international business.
ANZ is the most outward-looking Australian Bank and has the largest on-the-ground presence in 13 Asian markets, as well as the UK, Europe, US, Pacific and the Middle East.
It provides crucial diversification to our domestic business, alongside our growing New Zealand division. The Institutional division has diversified its revenue streams and now focuses on fewer but deeper customer relationships.
This financial year profit from the Institutional division was up 53 per cent on the previous financial year and it contributed about 40 per cent of group profit.
What does this mean for an incredible country like Vietnam?
In Asia, we refocused on what we do best – that is supporting the movement of goods and capital around the region. Trade has been in our DNA since the very beginning of ANZ.
While we were focusing on helping trade in the region, the many businesses that drive Vietnamese trade were focused on the same thing.
Returning to our roots has only better positioned us to support our customers and increase our appetite to grow and invest in line with our strategy.
Why Vietnam?
Vietnam is thriving. The growth is happening before our eyes, and I truly believe it’s on the precipice of its global economic moment.
Vietnam is known as the land of the “Ascending Dragon” - symbolizing growth and opportunity, as well as the power and resilience of its people. That metaphor feels truer today than at any time in its history.
After decades of promise, the excitement about Vietnam’s next chapter is justified. This is not just sentiment, it is tangible and the world needs to pay attention.
Vietnam is well positioned after striking free trade agreements at the right time and is very focused on benefiting from global capital flows.
On top of this strong base, geopolitical shifts are causing global supply chains to shift in Vietnam’s favor. It has been a major beneficiary of the so-called ‘China +1’ strategy as countries look to create flexibility and resilience in production lines outside China.
Technology is also leading the way as global giants including Samsung, Apple and Google invest significant capital into Vietnam. Last year more than $20 billion in foreign direct investment flowed into the country from Japan, Singapore and China.
What’s the end result of all of this?
Just last year, Vietnam had the fastest growing economy in the world and was one of only of a few to have consecutive years of growth since the pandemic.
This year ANZ Research predicts Vietnam’s 2023 gross domestic product to be 4.7 per cent, with a growth rate of 4.2 per cent year to date in the third quarter. Vietnam’s GDP growth accelerated at a faster than expected pace in that third quarter at 5.3 per cent year-on-year from 4.1 per cent in the second quarter.
Helping Vietnam is the fact global semiconductor sales have continued to recover and exports are starting to look up. Signs of an export recovery should lead to further improvement in the final quarter of this year.
The Vietnamese government has done well to provide incentives to attract investment, these include tax incentives for hi-tech projects and investment in industrial zones.
It also made regulatory changes to address concerns raised by multinationals regarding the global minimum tax due to take effect in 2024.
Most notably, Vietnam has a young, vibrant and well-educated population ready to grasp and drive this incredible opportunity. That’s a competitive advantage.
At ANZ, we feel great optimism about Vietnam.
While we have been in Vietnam for 30 years we believe we have a clear strategy to support this nation’s growth well into the future.
Shayne Elliott is Chief Executive Officer at ANZ.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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