According to Ketut Ariadi Kusuma, at present, many international investors are interested in participating in Viet Nam economic growth and they are looking forward to investing in the country.

Viet Nam is currently still categorized as a frontier market, while the bulk of global investors can only invest in emerging market countries or more advanced, shared the economist.

This is one of the reasons why in Viet Nam stock market, the portion of international investors currently is only about less than 10 percent of the total trade. Compared to other ASEAN five countries (including Thailand, Singapore, Malaysia, Indonesia and the Philippines), this proportion is around 40 percent, he noted.

Ketut Ariadi Kusuma said that the reforms towards emerging market classifications, which is currently being pursued by the authorities are important.

Despite the remarkable growth in the past decade, Viet Nam capital markets have a big room for improvement for growth, he added.

The success of capital markets should not be viewed only from the perspective of the size, but also how effective it is in intermediating finance, including the funding function, savings function, and the pricing function.

According to the international institution's latest Taking Stock report released on August 26, development of capital markets would provide a vital source of long-term funding for Viet Nam's economy and help the country achieve its goal of becoming a high-income nation by 2045.

The report recommends a stronger policy framework, in which Viet Nam Social Security fund (VSS) could be a force in driving capital market development.

Policies that would allow markets to reclassify Viet Nam from frontier market status to emerging market status would help attract more foreign investors, as would reforms to enhance market transparency and investor protection. Effective coordination among financial regulators is crucial for achieving these goals.

At the same time, gradual diversification of VSS investment is key not only to improve its long-term investment, but also to fuel Viet Nam's economic growth through investments in the corporate sector, recommended the WB.

Viet Nam's economic growth to pick up in 2024

In its Taking Stock report, the WB said, Viet Nam's economic growth is expected to pick up in 2024, driven by a rebound in manufactured exports and tourism, and recovering consumption and business investment.

Viet Nam's economy is forecast to grow 6.1 percent in 2024, and 6.5 percent in both 2025 and 2026, up from 5 percent last year.

The report highlights the resilience of the Vietnamese economy despite rising global challenges.

Enhanced public investment would provide short-term stimulus while also addressing emerging infrastructure gaps for example in energy, transport, and logistics which are becoming a growing constraint on growth, the report said.

Bank asset quality remains a concern given rising non-performing loans (NPLs) and should be closely monitored by the authorities.

During the first half of the year, Viet Nam's economy benefitted from the rebound in export demand, said World Bank East Asia and Pacific Practice Manager for Macroeconomics, Trade, and Investment Sebastian Eckardt.

To sustain growth momentum not only for the rest of the year but over the medium- term, the authorities should deepen structural reforms, step up public investment while carefully managing emerging financial risks, he added.

Taking Stock is the World Bank's bi-annual economic report on Viet Nam.