Hanoi (VNA)💖 - With the growing middle class and increasing purchasing power, the consumer goods and e-commerce sector in Vietnam has become very attractive to Singaporean businesses.

(Photo: Reuters)

In early September, the Vietnamese retail market was abuzz with news that the Singapore Government Investment Fund (GIC) invested 500 million USD to hold an amount of shares of the VCM Services and Trading Development Joint Stock Company (VCM), a subsidiary of Vingroup.

VCM operates and manages a chain of over 1,700 Vinmart + convenience stores and nearly 190 VinMart supermarkets across Vietnam. GIC has recently become an active investor in Vietnam.

In January this year, this investment fund cooperated with Mizuho Bank of Japan to buy 111.11 million shares worth 265 million USD of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank).

In 2018, GIC acquired about 7 percent of Vinhomes' shares for 850 million SGD and a number of shares of Masan Group. In addition, it has also invested in low-cost airline Vietjet and FPT Corporation.

Most recently, on October 28, Vietnam’s Scommerce confirmed that it has successfully called for capital from Temasek Holdings - another investment fund also under the Singaporean Government, which have mainly landed investments in Singapore and China.

Earlier, the Temasek Fund also invested in a number of companies such as Minh Phu Seafood and Vinamilk.

Meanwhile, ESP Capital's report on technology investment in Vietnam in 2019 also shows that retail topped the list of fields that attract foreign investment.

In the first half of 2019, total foreign investment in e-commerce reached 89 million USD, nearly 1.8 times higher than the second-ranked field of payment technology.

This figure was equivalent to nearly 90 percent of the investment value the technology sector successfully called for in 2018.

🔥 According to some experts, the Vietnamese retail market drew such great attention thanks to the country’s rapid economic growth and huge potential.  With an average annual economic growth of 6-7 percent, GDP per capita in Vietnam will soon exceed 10,000 USD.

Besides, the average income of Vietnam is gradually increasing, resulting in the growing middle class and pushing the demand for goods.

😼 According to a September report by McKinsey & Company, Vietnam's retail sector had the fastest growth rate in Southeast Asia and was equivalent to the rapid modernization rate.

The market boasts annual revenue of 108 billion USD, with an expected compound annual growth rate (CAGR) of about 7.3 percent in the next five years.

With its investment in VCM, it is clear that GIC has recognized the huge potential of Vietnam’s retail market in the future.

🀅 Another example showing that Singaporean businesses are very interested in the retail market in Vietnam is the case of Innovative Hub Pte Ltd, which has signed a memorandum of understanding (MoU) with Alibaba Group to expand operations in Vietnam.

(Photo: Getty Images)

Covering 200 countries and territories, with over 100 million members (90 percent of buyers), Alibaba.com is the world's largest global e-commerce website of Alibaba Group.

In Vietnam, Innovative Hub Pte. Ltd intends to provide digital solutions for small- and medium-sized enterprises, and cooperate with manufacturers, wholesalers, retailers, associations, exporters and e-commerce platforms.

With the growing middle class and increasing purchasing power, the consumer and e-commerce sectors in Vietnam are becoming very attractive to not only Innovative Hub Pte Ltd but also other Singaporean businesses such as Koda, Kwan Brothers. Pte Ltd, Select Group Pte Ltd, and NTUC Fairprice Co-operative Ltd.

Kwan Brothers Pte Ltd (specializing in producing crocodile leather bags and accessories) is seeking opportunities to expand operations in Ho Chi Minh City.

♉ Meanwhile, NUTC Fairprice Co-Operative Ltd - Singapore's largest retail group - has also aimed to increase its presence in Hanoi and other provinces and cities throughout Vietnam. The group currently operates four hypermarkets and more than 30 convenience stores in Ho Chi Minh City./.