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Why investing in Vietnam - The demographics advantage

Why investing in Vietnam? To be honest this is not a question that many of our clients ask us. Why? Simply because most of the time the people who contact Anh Thomas investment are people who are already interested in investing in Vietnam and most of them are actually even already interested in investing in Vietnamese stocks in particular. Nonetheless, if you ended up on this blog by chance and that you are still wondering if you should consider investing in Vietnam (whether through the use of an ETF or by buying stocks directly via a brokerage account), it is always a good thing to remind the reasons why an investment in Vietnam makes so much sense in 2020. One of the first reason to invest in Vietnam is linked to its population. Not only Vietnam as a quite large population, in fact the country should reach the 100 million inhabitants very soon, but the structure of this population makes the country really attractive for investors. A large portion of Vietnamese are young. Of course the situation may change in the future like in many countries around the world but right now the demographic is a real strength for the country. It is really interesting to see that countries close to Vietnam in terms of geographical localization or in terms of economic development have often a very different and much weaker demographic outlook. The situation of Vietnam is kind of unique in the sense that if you look at the birth rate you will easily see that the birthrate has never really fallen under 1.8 or even a bit more. This birthrate tends to stabilize around two which is a level which is unfortunately just a little bit under what a country needs to replace its population in the long term but at the same time is much higher than the birth rate that many other countries have. If you look at European countries for instance, not only birthrates are deeply concerning but also the population is quickly getting older. Immigration could be seen in a way as a solution to avoid an economic fall down but the reality is that when you rely too much on immigration you end up having to deal with other types of issues. As you might know at Anh Thomas investment we constantly try our best to stay away from politics but hit seems arguable that a country cannot rely 100% on immigration to fix its demographic problems. Contrary to most European countries, Vietnam has so far managed to keep its birth rate at a satisfactory level which might make a major difference in the next couple of decades or so. If you look at a country like Thailand for instance, the birth rate has fallen and is now close to 1.5.

Eastern European countries are maybe the best examples of what countries should try to avoid at all cost. You cannot have a fertility rate well under 2 for a long time without having to pay the consequences at one point.

So as we’ve seen that demographic is, contrary to what you may read sometimes, a strength of Vietnam at the moment. However, Vietnam benefits not only from its relatively high birthrate but it also benefits from the fact that its population is still young and above all very well educated.

Most young Vietnamese are motivated and are hard workers.

Even though this could sound a little bit shocking for Europeans, it is fair to say that young Vietnamese are willing to work extremely hard in order to make as much money as they possibly can. Money has become a very important social element in Vietnam over the last decades. If you want to show that you have succeeded in life in Vietnam you need to be rich. Even if you could agree or disagree on this way of thinking, what is sure is that the fact that you have motivated and talented young people in a country that is still relatively poor is a terrific combination for economic success. Vietnamese are smart and like technology, 96% of Vietnamese can read and write which is an amazing number for such a poor country. The average age of Vietnamese is 31 years old and the future look bright for Vietnam and its investors.

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