Here’s a look at what makes Vietnam enticing to new investments:
In Vietnam’s efforts to attract companies seeking for options amid the China – U.S. trade war, it is wielding a plethora of advantages over its rivals.
A recent report by Natixis SA ranked Vietnam as No.1 among seven emerging Asian countries as manufacturing destinations. The report scouted demographics, electricitty costs, wages, rankings in business and logistics, as well as manufacturing as a part of total foreign direct investment.
According to Trinh Nguyen, a senior economist at Natixis Hong Kong, Vietnam is in a confident position to seize some of China’s global market share in labour-intensive manufacturing, adding that “[Vietnam] is the clear winner from the trade war.”
Apart from Singapore and more than any country in Asia, Vietnam’s trade has amounted to about twice its gross domestic product and its prime minister Nguyen Xuan Phuc is taking steps to ensure that the country benefits from the trade tensions boosting the nation’s portfolio as a manufactturing and export powerhouse.
Over the last few years, Vietnam was forecasted to expand and grow as one of the world’s fastest growing economies with the dong being relatively stable compared with other currencies like the rupee and rupiah, which has recently suffered large declines. According to Fitch Solutions Macro Research, a unit of Fitch Group reported in October that the dong will remain fairly stable in the near term after citing report from strong FDI inflows and manufacturing.
In the need to be at par with the rest of Asia and staggering use of social media as a generator of news and content plus growth from neighbouring countries, Vietnam is the proceed – a part of the trend we see in the rise of Asia. This trend has greatly impacted its population as well as industries including the entertainment world.
New Investment and Deals
In March, South Korea together with Europe and 10 other nation have signed free trade deals, a Trans-Pacific trade pact with Vietnam. The trade deal of which officials has completed will see almost all tariffs eliminated; as in SE Asia, only Singapore has a similar understanding and arrangement with the EU.
The government is also making special efforts to ease foreign investment to undergo business. With a newly proposed securities law, foreign owners of public companies would now be able to own 100 percent (exception to restricted industries including telecommunication and banking. The government is expecting disbursed FDI to rise to a breaking record of USD$18 billion this year after seeing a surge of foreign direct investment.
While still in preliminary levels, companies may even consider shifting production to Vietnam as a hedge against the trade tension between China and the U.S.
Affordable & Cheap
With over 57.5 million people in its labour forces, Vietnam boasts as the largest compared with 44.6 million for the Philippines and 15.4 million for Malaysia, according to the World Bank. Similarly, the Japan External Trade Organization has also released statistics showing some of Asia’s manufacturing wages with Vietnam ranking among the lowest in Asia. According to GlobalPetrolPrices data in June, Vietnam’s electricity (thanks to government subsidies) is cheaper (7 U.S. cents per kilowatt hour) compared with 19 cents for the Philippines and 10 cents for Indonesia.
As China and Vietnam become more central and dependent on each other’s production chains, Vietnam will remain as China’s largest trading partner in Southeast Asia. Unlike the proximity it shares with Indonesia, Malaysia and Philippines, China sharing a land border adds to its appeal.