Vietnam is expecting huge growth in retail sales in 2008 as the government has lifted the restrictions from foreign players to operate as JVs in the Vietnam markets.
Vietnam anticipates that its retail sales will grow by 20%, amounting to VND 875 Trillion (US$ 54.3 Billion) in 2008. The goal set by the government is to achieve sales of VND 1,024 Trillion (US$ 63.9 Billion) by the year 2010, as per the Ministry of Industry and Trade (MIT), reported thanhniennews.com.
Retail sales accounted for 63% of the Vietnam’s Gross Domestic Product (GDP) last year. Moreover, retail sales of goods and services amounted to at VND 726 Trillion (US$ 45 Billion) in 2007, an increase of 23.3%.
Vietnam has decided to open its distribution service sector 100% to foreign organizations from January 1, 2009, setting the ground for Vietnam to give an optimistic forecast for retail sales. Vietnam is opening its distributive service sector doors for all products except oil products, tobacco, rice, sugar, and precious metals dealers. Consequently, the big players of retail industry will try to grab attention of consumers by providing goods at affordable rates and to prepare themselves for challenge from new competitors.
From January 2008, the government has removed restrictions from the foreign ownership in joint ventures with local retailers. So Vietnam will evolve as a hub for local and foreign companies as the speedy development in the retail industry in past few years has made Vietnam an attractive market for multinational distribution groups.
Another supporting reason fuelling growth in the sector is increased per capita disposable income. The income is expected to grow steadily in next five years from 2007 to 2011. This will have a positive impact on the retail market.
The growing young population of the country is also supporting retail sector. Besides, the economy of Vietnam is rapidly growing and it is pushing growth in the retail sector.
As per a Research Analyst at RNCOS, “Increased retail sales in Vietnam are reflecting boom in its economy but the country has to overcome the hurdles of underprivileged logistic and imbalanced infrastructure expansion between regions. However, the future holds vibrant opportunity for the fast emerging retail sector as international players are keen to invest in this sector.”
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