At the Japanese-invested Nidec Tosok Vietnam Co., Ltd, which manufactures mechanical parts in Ho Chi Minh City's Tan Thuan export processing zone. (Photo: VNA)The author said low wages are a large reason why so many manufacturers have moved to Vietnam in the last decade.
In addition, incorporating Vietnamese producers into supplychains is relatively straightforward both upstream and downstream. Unlike theASEAN-4 nations (Indonesia, Malaysia, Thailand, and the Philippines), Vietnamshares a border with China, which makes it easier formanufacturing firms in Vietnam to integrate into China’s vast network.
The article added that in the downstream side, incorporatingVietnam into the supply chain is also a relatively unencumbering process. Thisis because Vietnam is home to two international airports, several major ports,reliable power, and easy internet access. The country is also small ingeographic size, most suppliers are located close to an airport or majorseaport, making it easy to get the finished goods from the factory floor andinto the hands of waiting customers.
Vietnam is party to 15 different free trade agreements thatencompass more than 50 countries around the world. For manufacturers, thismeans that a product produced in Vietnam can be sold to other markets – includingmany wealthier western markets – without needing to pay prohibitively expensivetariffs along the way.
The author noted another reason why investors may lean moretowards Vietnam rather than some of the ASEAN-4 nations is Vietnam’s relativesecurity and political stability. According to the US Department of State’s2021 Investment Climate Statements: Vietnam, the country's political and securityenvironment is largely stable and protests and civil unrest are rare.
In conclusion, the article stated combination of all four isclearly enough to make an impact. Vietnam has weathered the COVID-inducedsupply chain disruptions well, still being regarded as a key and growingmanufacturing hub. As the government continues to strike free trade agreementsaround the world and invest in domestic transportation and communicationinfrastructure, Vietnam’s prominence as a rising manufacturing centre seemspoised to continue to grow./.
VNA
