Vietnam – The factory of the next world? – Economic analysis

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1. How would you rate Vietnam’s general economic performance? Besides manufacturing, are there other sectors that are worth investing in or have huge potential?

Vietnam’s economic performance has been impressive. In 2020, as the world’s major economies suffer from the Covid-19 pandemic, Vietnam posted the highest GDP growth in Southeast Asia, surpassing China, Singapore and Japan. In 2021, when Covid-19 led to an almost nationwide lockdown for most of the year, the country was still posting positive GDP growth of 2.68%.
Sectors with high potential: water and waste treatment, development of clean energies (biomass, LNG, offshore wind power, etc.), processing of agricultural products, health equipment

2. How have the CPTPP and other major trade agreements benefited Vietnam? What difference will RCEP make?

The CPTPP and EVFTA have made trade between Vietnam and the signatory countries cheaper and more efficient through the reduced tariff as well as administrative procedures. During the worst period of the Covid-19 pandemic, Vietnam’s exports remain exceptional thanks to these free trade agreements. Vietnam provides similar benefits from RCEP. In addition, RCEP brings enormous political benefit to strengthening ties between Vietnam and other countries in the region, which can result in a more stable and connected political scene in the region.

3. When Vietnam went into lockdown in the third quarter of last year, some productions returned to China. Was it just temporary and moving manufacturing out of China became an irreversible trend?

In my opinion, the move is temporary. As in a supply chain, it is generally more profitable for companies to move production, as long as production continues, rather than stopping production for some reason. So it’s no surprise that when businesses in Vietnam were suspended last year for Covid-19 protection, businesses had to seek a solution elsewhere.

I think once China recovers from the current Covid situation and releases policies that are more favorable to foreign investors, the tide may reverse.

4. Do you think the Sino-Vietnamese trade structure is more complementary or more competitive? How do you see their positions in the global supply chain?

I see that the structure is more complementary, where the two countries export to the other products that they need. China has closed its border in recent years due to Covid-19, the global supply chain has suffered greatly. I think that is enough to describe the importance of China in the global supply chain. If the flow of business moving production from China to Vietnam continues, Vietnam will very soon become a key player in the global supply chain.

5. Have you recently seen a significant increase in foreign investment? Where do they mainly come from and in which sectors do they invest?

In 2021, despite the complicated development of the Covid-19 epidemic, FDI inflows into Vietnam reached 31.15 billion dollars, up 9.2% compared to 2020. The total capital of foreign investment registered in Vietnam as of March 20, 2022 reached 8.91 billion dollars.
Among 35 countries and territories with newly authorized investment projects in Vietnam in the first three months of 2022, Denmark is the largest investor with $1.32 billion, accounting for 41.1 percent of total capital. new level registration; followed by Singapore with 626.6 million USD, or 19.5%; China $379.5 million, or 11.8%; Taiwan USD 219.9 million, or 6.8%; Hong Kong Special Administrative Region (China) $191.7 million, or 6%. Sectors: processing and manufacturing industry, real estate.

6. Is Vietnam ready to be the factory of the next world?

Yes. Vietnam now has the human resources, technology, government support and foreign investment to become the world’s next factory. Vietnam has grown so rapidly, economically and politically, over the past 5 years, that in the next 5 years, we might see something we couldn’t even predict from today.

Disclaimer: This alert has been prepared and posted for informational purposes only and is not offered and should not be construed as legal advice. For more information, please see the full disclaimer.

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