The retail industry is considered to be one of the biggest industries in Vietnam. It is estimated that the entire retail market is worth 142 billion USD, contributing 59% to the country's GDP.
It is believed that investing in retail is to invest in the future of the Vietnamese economy. Why? Because the growth rate of this sector is always from one and a half to two times higher than the national GDP growth, and it accounts for a large proportion of Vietnam’s GDP.
In addition, Vietnam also benefits from advantageous factors such as golden population structure, fast-growing middle class, high GDP growth rate, stable inflation and high urbanization rate.
Vietnam's retail market has the participation of both domestic and foreign players. Domestic and foreign enterprises will not compete but cooperate with each other. This will be a perfect cooperation when domestic enterprises have a thorough understanding of local consumers and licenses while foreign enterprises have advantages in technology and capital.
E-commerce also has a big impact on people's consumption behavior. The proportion of e-commerce revenue in total retail sales increased sharply from 2.9% in 2015 to 4.4% in 2018 with a growth rate of more than 24%/year thanks to the boom of the Internet and mobile phones. However, consumers only buy low-to-medium value items while high-value items are still purchased directly.
Two decades ago, the electronics and telecommunications industry contributed only about 0.5% to Vietnam’s GDP with a turnover of 300 million USD. The number of employees in this field also accounted for only about 0.11% of the total labor force and was considered as a small tier-2 economic sector, inferior to other industries such as agriculture, oil and gas, trade, construction.
However, things have changed. This industry has grown by leaps and bounds with revenue reaching 120 billion USD and an average growth rate of 37% per year over the past 20 years.
Although the number of employees in this industry is only 1.03 million people, accounting for 1.88% of the labor force, thanks to the labor productivity that is 7.6 times higher than the average labor productivity, it contributes 14.3% to Vietnam’s GDP. The export value of the industry reaches 89.2 billion USD, accounting for 33.7% of the total export turnover.
With such impressive figures, from being a small industry, now the electronics and telecommunications industry has become the largest tier-2 economic sector of Vietnam, with the highest growth rate, highest labor productivity and largest export value.
In the development of Vietnam’s economy, the agri-food sector plays an important role. According to a report published by Oxford Economics entitled The Economic Impact of the Agro-Food Industry in Vietnam, the agri-food industry contributed 86.4 billion USD to GDP in 2019, equivalent to 26%. This industry also creates 27.5 million jobs, accounting for half of the labor force in Vietnam. The agri-food industry also contributes a total of 13.2 billion USD to Vietnam's tax revenue.
Notably, the agri-food industry is highly resilient even during the COVID-19 pandemic. It achieved a growth rate of 4% in 2020, equivalent to an addtional contribution of 3.7 billion USD to the national GDP. Vietnam's agri-food industry is currently ranked 2nd out of 10 countries in the region, just behind Singapore.
That continues to affirm that agri-food sector is an economic spearhead and an important pillar of Vietnam's economy. However, studies also warn that, as Vietnam's agri-food industry remains highly resilient to the challenges of the pandemic, new virus variants, disruption in supply and demand, and fiscal risks are still threats to disrupt the growth momentum of the industry in particular and of Vietnam in general.
The above industries are, according to VietnamCredit, are the biggest industries in Vietnam and have potential for investment and development in the near future.
For a more detailed look at a particular economic sector in Vietnam, please refer to our industry report product.
Compiled by VietnamCredit