Vietnam could benefit most in Asia from US-China trade war: experts

Export potentials 14:46 24/12/2018
The business news website Bloomberg has run an article explaining why Vietnam could get the most benefits among Asian nations from the US-China trade conflict.

The article titled “Why Vietnam could be Asia’s biggest trade war winner” quoted a senior economist at Natixis in China’s Hong Kong as saying “Vietnam is poised to capture some of China’s global market share in labour-intensive manufacturing”.

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. Trade amounts to about twice its gross domestic product - more than any country in Asia apart from Singapore, the economist said.

The article also looks at what makes Vietnam attractive to foreign investors.

Production workers in Vietnam are paid an average of 216 USD a month, less than half what their peers get in China. Thanks to government subsidies, electricity is also cheaper than in Indonesia and the Philippines, according to GlobalPetrolPrices.com’s June data.

Vietnam also has one of the largest labour forces in Southeast Asia, at 57.5 million. That compares with 15.4 million for Malaysia and 44.6 million for the Philippines, according to the World Bank.

Regarding trade deals, Vietnamese leaders have pursued free trade agreements with the Republic of Korea and Europe and signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in March this year.

Vietnam completed a trade deal with the EU in June that will eliminate almost all tariffs. In Southeast Asia, only Singapore has a similar agreement with the EU.

Vietnam’s government is also making it easier for foreign investors to do business with a proposed securities law allowing 100 percent foreign ownership of public companies, except those in restricted sectors like banking and telecommunications.

Foreign direct investment (FDI) in Vietnam is surging, with the government expecting disbursed FDI to rise to a record 18 billion USD this year.

Vietnam’s proximity to China also adds to its appeal, according to the article.

Chinese companies that need raw materials or product components from the US will find it easier to source these goods via Vietnam.

In addition, Vietnam is China’s largest trading partner in Southeast Asia.

Vietnam boasts one of the world’s fastest-growing economies, forecast to expand at about 7 percent this year. The dong has been relatively stable in 2018, compared with other currencies in Asia.

“Strong economic growth and political stability are very important to investors,” said Tony Foster, the Hanoi-based managing partner in Vietnam for law firm Freshfields Bruckhaus Deringer LLP.

Relating to this topic, Erik Lundh, senior economist of the Conference Board, a non-profit independent economy research organisation in the US, told Vietnam News Agency correspondents in the US that many multinational groups which previously depended on China have considered building manufacturing workshops in countries like Vietnam because of the labour cost advantage and fewer risks posed by the US-China trade war.

According to the expert, to succeed like China over the past two decades, Vietnam should aim to become a high-tech manufacturing destination and focus on developing high quality human resources.

VNA

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