Vietnam ranked prime global destination for third year running

Vietnam has once again been selected as the number one investment destination, outside of Brazil, Russia, India and China (BRIC), according to a report published by the UK Trade & Investment and Economist Intelligence Unit.

This is the third consecutive year that Vietnam has enjoyed the designation from the British agency.

The ‘Great Expectations: Doing business in emerging markets’ report offers new insights from international investors about which markets they see as being the global growth engines of the future.

The report is based on a survey of more than 520 global executives from every sector. All respondents are already doing business in emerging markets or plan to do so in the next two years.

The UK Business Secretary Vince Cable said: “The balance of global economic power is shifting toward emerging markets and this is recognized in UK Trade & Investment’s report. UK firms are using their expertise to help promote growth and prosperity in these markets.”

The report’s authors found that the top three markets for investment, in the next two years, are China, Vietnam, and India.

Emerging markets are viewed as sources of new consumer demand. Seventy-six percent of investors see emerging markets as a source of new business growth.

By 2030, 93 percent of the world’s middle class will live in what we now consider “emerging markets,” the report said.

Companies are now shifting their priorities toward a range of other developing countries outside their well-established operations in the BRIC countries.

For many firms, emerging markets are increasingly familiar places. Nearly half of the respondents reported having operations in one or more emerging markets over the course of the last decade and two thirds said they had been working in the areas for six or more years.

Institutional knowledge of these countries is far higher than it was at the turn of the century, the report found.

More executives than ever believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. Fifty-two percent expect growth prospects in their once-risky emerging market businesses to be "significantly better" over the next two years.

Local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong, the report found.

Emerging markets are not just for big business. One in three small- and medium-sized enterprises polled by the authors planned to expand into a new emerging market in the next two years through joint ventures or partnerships with local companies.

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Vietnam ranked prime global destination for third year running

Vietnam has once again been selected as the number one investment destination, outside of Brazil, Russia, India and China (BRIC), according to a report published by the UK Trade & Investment and Economist Intelligence Unit.

This is the third consecutive year that Vietnam has enjoyed the designation from the British agency.

The ‘Great Expectations: Doing business in emerging markets’ report offers new insights from international investors about which markets they see as being the global growth engines of the future.

The report is based on a survey of more than 520 global executives from every sector. All respondents are already doing business in emerging markets or plan to do so in the next two years.

The UK Business Secretary Vince Cable said: “The balance of global economic power is shifting toward emerging markets and this is recognized in UK Trade & Investment’s report. UK firms are using their expertise to help promote growth and prosperity in these markets.”

The report’s authors found that the top three markets for investment, in the next two years, are China, Vietnam, and India.

Emerging markets are viewed as sources of new consumer demand. Seventy-six percent of investors see emerging markets as a source of new business growth.

By 2030, 93 percent of the world’s middle class will live in what we now consider “emerging markets,” the report said.

Companies are now shifting their priorities toward a range of other developing countries outside their well-established operations in the BRIC countries.

For many firms, emerging markets are increasingly familiar places. Nearly half of the respondents reported having operations in one or more emerging markets over the course of the last decade and two thirds said they had been working in the areas for six or more years.

Institutional knowledge of these countries is far higher than it was at the turn of the century, the report found.

More executives than ever believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. Fifty-two percent expect growth prospects in their once-risky emerging market businesses to be "significantly better" over the next two years.

Local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong, the report found.

Emerging markets are not just for big business. One in three small- and medium-sized enterprises polled by the authors planned to expand into a new emerging market in the next two years through joint ventures or partnerships with local companies.

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Global investors still prefer Vietnam

HCMC - Global investors have again picked Vietnam as the number one emerging investment destination beyond Brazil, Russia, India and China (BRIC) for the third year in a row since 2008 as indicated in a recent report by the UK Trade and Investment (UKTI) and the Economist Intelligence Unit.

More than 520 global executives representing all major industries participated in a survey conducted from July to August this year to explore the changing outlook for businesses already operating in emerging markets or planning to expand into these markets.

The executives expressed in the “Great Expectations: Doing business in emerging markets” report the markets they think are representing the best opportunities and the primary rationale for operating.

Aside from the BRIC bloc, global investors ranked Vietnam above Indonesia, Mexico, Argentina, Saudi Arabia, South Africa, Nigeria, Malaysia, United Arab Emirates and Turkey when they were asked about the emerging markets in their main targets for new and/or increased investment over the next two years.

In the top 10 investment targets for 2010, Indonesia advanced to second from fourth in last year’s survey and Argentina to fourth from twelfth while Mexico stood unchanged. Malaysia slid to eighth spot from fifth and the UAE to eighth from second in 2009.

On the global scope, the executives selected China as the top market for investment with 20% of them opting for the world’s second-largest economy, followed by Vietnam with 19% and India with 18%.

The survey points out up to 76% of global investors see emerging markets as a source of new business growth, and these markets are also viewed generating new consumer demand for the global economy.

According to the report, 71% of the respondents agreed that emerging markets beyond the BRIC countries collectively offer an opportunity too big to ignore. As a result, companies are prioritizing a range of other countries alongside their well-established operations in the bloc.

Many global firms are increasingly familiar with emerging markets, as recognized in the survey that shows nearly half of the respondents have been operating in one or more emerging markets for at least a decade and two thirds have been there for six years or more.

Far more executives believe that the potential rewards far outstrip the risks within both the BRIC countries and other emerging markets. The findings show 52% of them expect growth prospects for their once-risky emerging markets business to be “significantly better” over the next two years.

The UK Business Secretary Vince Cable said in support of launching the new report in London last week that the balance of global economic power was shifting towards emerging markets.

Emerging markets magnetize not only big companies but also small and medium enterprises. One in every three SMEs polled plan to expand into one new emerging market over the next two years through joint ventures or partnerships with local companies.

The survey found local companies in emerging markets are sought after for partnerships and alliances. Despite a greater ease with the risks of new places, the need to tap into local knowledge and contacts quickly remains strong.

The UKTI notes by 2030, 93% of the world’s middle class will live in emerging markets and the 30 fastest growing cities will be in emerging markets in the 2008 -2025 period.

Late last year, PricewaterhouseCoopers released a study showing that Hanoi and HCMC would be the top two cities having the world’s highest average real GDP of 7% in 2008-2025 in the list of the top 30 fastest growing cities in terms of economic growth.

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Power struggle threatens to paralyze IMF

Photo: Reuters

A power struggle threatens to throw the International Monetary Fund into disarray unless a compromise is reached soon between the US and Europe over how to give more say to emerging powers.

The US wants Europe to give some of the seats it occupies on the 24-member board of the global lender to emerging market countries to reflect their growing global economic weight.

Europe has balked at the idea of yielding some of the nine chairs it holds because it is divided over how to do it.

The sides face an Oct. 31 deadline when the mandate of the existing board expires.

"The IMF will be in crisis unless a solution is found in time," a senior board official said.

Frustrated with Europe's resistance to yield power, Washington took an unprecedented step on Aug. 6 by blocking a resolution which would have kept Europe's board dominance.

The US move also reflects broader economic tensions with Europe over new global liquidity rules for banks and Europe's emphasis on fiscal austerity while Washington has stressed the need to ensure economic recovery before belt-tightening.

There are concerns in Washington that the IMF might become irrelevant and lose its legitimacy if it fails to change with the times and become fully representative of both rich and poorer nations.

The US Treasury Department has said the election of the IMF executive board was an opportunity for broader governance changes in the Fund and has left the ball in Europe's court.

A senior European Union official said representatives of the 27 EU finance ministers will discuss the issue on Tuesday.

"Inevitably, the discussion will be about giving more room for emerging economies, but the question is how much," the official, who has knowledge of the talks, told Reuters.

The EU official was unsure whether EU finance ministers would discuss the impasse when they next meet on Sept. 6-7.

Some diplomats say the US maneuver was a surprise because the US, the IMF's largest and most influential shareholder, has never flexed its muscle in such an overt way at the Fund. Others acknowledged that Washington had long raised its concerns at meetings.

The dominance of the US and Europe on the board reflects the post-World War Two economic order that is being challenged by the rise of countries like China.

The board is one of the global lender's top decision-making bodies and has overseen the approval of billions of dollars in emergency loans for countries hit by the global financial crisis including Greece, Latvia, Romania and Ukraine.

Its approval is required for regular IMF reviews and the disbursement of funds to the borrowers.

Board officials warned that unless the sides reach a compromise before Oct. 31, four seats held by India, Brazil, Argentina and Rwanda would be scrapped because they have the least quota shares.

"It will be disorderly and everyone will rush to make deals with each other," one board official emphasized.

If Europe gives ground, small EU nations, such as Belgium, the Netherlands and Scandinavian states, could lose seats.

Compromises needed

Ted Truman, a former assistant secretary at the US Treasury, said he doubted whether Europe and the US would allow the situation to deteriorate.

"I am sure it will be sorted out. No one wants to be responsible for paralyzing the Fund," said Truman, a senior fellow at the Peterson Institute in Washington.

He said a compromise could include two options: a commitment by Europeans to reduce over time their number of seats, or to immediately give up two of them.

"The second option could be a down-payment," he said, noting that the size of the board also made it inefficient and costly to run.

Separate negotiations are underway among IMF member countries on how to increase the voting power of rising economic powers through membership quotas.

The Group of 20 major developed and developing economies has called for an agreement by the next meeting in November on how to give emerging economies more voting power in the IMF through their quota shares. China is set to gain the most power although other emerging economies are also likely to benefit.

"India's consistent stand has been that global bodies like the IMF need reform on an urgent basis to reflect the emerging world order," a senior Indian finance official said.

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