Vietnam could emerge as developed economy: expert
The prolonging trade war between the US and China makes it easier for Vietnam to continue its upward trajectory toward becoming a developed economy, Bennett Murray recently wrote on the ‘Foreign Policy’ paper.
|A corner of Hanoi|
He cited the Vietnamese Ministry of Planning and Investment’s report as saying that the flow of foreign direct investment (FDI) into Vietnam surged by nearly 70 percent year on year in the first five months of 2019, which was a record since 2015.
According to him, much of that is thanks to US-China trade tensions that have left US firms and others much less certain about investing in China.
While Vietnam has been steadily luring investment from its northern neighbouring country for years, businesspeople themselves have mentioned the discord between Beijing and Washington as a reason for moving south, he said.
Vietnam will likely continue to thrive as it attracts a greater share of high-value manufacturing, notably from Foxconn, a Taiwanese manufacturing giant, which may even begin producing iPhones in the country.
The article mentioned challenges faced by Vietnam such as taxation system and inferior infrastructure. Demand for skilled workers will also outpace supply if growth moves too fast.
These problems will not stop the rise of Vietnam, one of the world’s fastest-developing countries, the article said, adding that its infrastructure will catch up and the quality of its labour force will increase.
Vietnam will also desperately want to attract hi-tech industries as part of the fourth Industrial Revolution, it said.
The article also listed Vietnam’s advantages such as low labour costs, signatory to free trade agreements with the Republic of Korea and the 10 remaining members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), including Japan, Canada, and Australia.-VNA
The US-China trade war and Chinese yuan devaluation have increased the risk of a widening trade gap, with more imports from China flowing to Vietnam.
The Sino-American trade war is escalating in unpredictable ways. Contrary to some analyses, its impacts on Vietnam are arguably beneficial. A vulnerable economy such as Vietnam’s is unlikely to benefit from this global war.
Lawmakers urged the Government to devise plans to deal with the possible ramifications of the escalating US-Iran tensions and US-China trade war and the influx of foreign direct investment into Vietnam.