Vietnam is taking advantage of trade tensions to boost the nation’s profile as a manufacturing and export powerhouse, selling everything from shoes to smartphones (Illustrative image. Source: VNA)Hanoi (VNA) – The business news website Bloomberg has run anarticle explaining why Vietnam could get the most benefits among Asian nations fromthe US-China trade conflict.
The article titled “Why Vietnam could be Asia’sbiggest trade war winner” quoted a senior economist at Natixis in China’s HongKong as saying “Vietnam is poised to capture some of China’s global marketshare in labour-intensive manufacturing”.
Vietnam is taking advantage of trade tensions toboost the nation’s profile as a manufacturing and export powerhouse, sellingeverything from shoes to smartphones. Trade amounts to about twice its grossdomestic product - more than any country in Asia apart from Singapore, theeconomist said.
The article also looks at what makes Vietnamattractive to foreign investors.
Production workers in Vietnam are paid anaverage of 216 USD a month, less than half what their peers get in China.Thanks to government subsidies, electricity is also cheaper than in Indonesiaand the Philippines, according to GlobalPetrolPrices.com’s June data.
Vietnam also has one of the largest labourforces in Southeast Asia, at 57.5 million. That compares with 15.4 million forMalaysia and 44.6 million for the Philippines, according to the World Bank.
Regarding trade deals, Vietnamese leaders havepursued free trade agreements with the Republic of Korea and Europe and signedthe Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) in March this year.
Vietnam completed a trade deal with the EU inJune that will eliminate almost all tariffs. In Southeast Asia, only Singaporehas a similar agreement with the EU.
Vietnam’s government is also making it easierfor foreign investors to do business with a proposed securities law allowing100 percent foreign ownership of public companies, except those in restrictedsectors like banking and telecommunications.
Foreign direct investment (FDI) in Vietnam is surging, withthe government expecting disbursed FDI to rise to a record 18 billion USD thisyear.
Vietnam’s proximity to China also adds to itsappeal, according to the article.
Chinese companies that need raw materials or productcomponents from the US will find it easier to source these goods via Vietnam.
In addition, Vietnam is China’s largest tradingpartner in Southeast Asia.
Vietnam boasts one of the world’sfastest-growing economies, forecast to expand at about 7 percent this year. Thedong has been relatively stable in 2018, compared with other currencies inAsia.
“Strong economic growth and political stabilityare very important to investors,” said Tony Foster, the Hanoi-based managingpartner in Vietnam for law firm Freshfields Bruckhaus Deringer LLP.
Relating to this topic, Erik Lundh, senioreconomist of the Conference Board, a non-profit independent economy researchorganisation in the US, told Vietnam News Agency correspondents in the US thatmany multinational groups which previously depended on China have consideredbuilding manufacturing workshops in countries like Vietnam because of thelabour cost advantage and fewer risks posed by the US-China trade war.
According to the expert, to succeed like Chinaover the past two decades, Vietnam should aim to become a high-techmanufacturing destination and focus on developing high quality humanresources.-VNA
VNA
