The country has brought in over 2,000 greenfield FDI projects between 2003 and 2014 as companies capitalized on the abundant and relatively cheap labor.
The Vietnamese government has also implemented reforms to attract investments. For instance, the country has cut corporate tax rate to 22% from 25%.
SEE MORE: Frontier Market ETFs Diverge from the Pack
In 2014, Vietnam formed a commission to explore taking the necessary steps for the country to shed its frontier status and gain entry into the widely followed MSCI Emerging Markets Index.MSCI does not have Vietnam on its list of markets that could potentially be upgraded to emerging markets status. When the index provider recently revealed its annual market classification, Pakistan was the only frontier market highlighted as being a potential candidate for promotion to the MSCI Emerging Markets Index.
The Trans Pacific Partnership (TPP) is another issue VNM investors should be mindful of.
“Delay or cancellation will affect Vietnam’s export market. I’m sure exports will still grow, but not at the accelerated rate we had hoped for, without TPP. Free trade agreements take a decade to get negotiated, and it could happen under Trump, watered down. But more likely it will get picked up after Trump,” Mantle told Barron’s.
VanEck Vectors Vietnam ETF
