The Economist Intelligence Unit (EIU) of The Economist Group hasconfirmed Vietnam ’s improving economic prospects, saying afterseveral years of lacklustre economic performance, headline indicatorssuggest that Vietnam may be turning a corner.

Accordingto the agency, investment in export-oriented manufacturing indicatesrenewed confidence, HSBC's Purchasing Managers' Index, a snapshot ofmanufacturing conditions, hit 51.5 in September - the best readingsince the survey-based data started being collected in 2011.

Although macroeconomic uncertainty persists, Vietnam's competitivenessprovides fuel for cautious optimism about an uptick in growth in 2014from increased inward investment and higher export earnings , it said.

The EIU said that t he ruling Communist Party of Vietnamknows that political stability and, more importantly, the government'sperceived legitimacy depend on furnishing a growing and young populationwith jobs and rising living standards.

One of the firstmeasures the Vietnamese Government has taken is to imposeacross-the-board increases in minimum wages in early 2013 and further rises in the following year , despite the government'scommitment to containing inflation.

For the moment, growth ofthe so-called "foreign invested" sector in Vietnam continues to tip thebalance in favour of job creation. F oreign investment hasincreasingly flowed into the electronics-assembly sector, where inputssuch as circuit boards and lenses are matched with Vietnamese labour toproduce high-value electronic goods.

These investments haveincluded multi-million dollar projects by companies including Panasonic,JBL, Fuji Xerox and Nokia. Samsung of the Republic of Korea , inparticular, plans to increase its manufacturing investments in Bac Ninhprovince to 2.5 billion USD and to break ground on a new 2 billionUSD factory complex in Thai Nguyen province.

Meanwhile,some retailers are betting on growth in local buying power. Auchan, aFrench retailer that closed up shop in Vietnam five years ago, now hasplans to return in 2014 with investments totaling around 500 millionUSD over the next ten years.

According to the EIU,Vietnam's increasing popularity as a destination for export-orientedinvestors, reflects regional leadership in other important respects,including the transport infrastructure necessary to get inputs in andfinished goods out. The country also has an extensive electricitygrid that reaches more than 90 percent of populated areas.

Accelerating investment in higher value-added sectors suggests thatVietnam's increasingly sophisticated export basket can sustain risingwages. Looking ahead, the Trans-Pacific Partnership, a trade dealinvolving the US and several other countries, is expected to privilegeVietnam-based exporters with greater access to lucrative high-incomemarkets.

Vietnam ’s GDP growth is estimated at around5.3 percent this year, and the National Assembly, Vietnam 'slegislature, has endorsed an optimistic 5.8 percent target for 2014.

Despite continued uncertainty about the downside risksstill posed by bad debts in the banking sector, a combination ofincreased manufacturing activity, higher export receipts, and strongpositive signals from foreign investors is pushing growth expectationsupwards.-VNA