Electronic components are manufactured at the Republic of Korean's Young Poong Electronics VINA in the northerrn province of Vinh Phuc. (Photo: VNA)Hanoi (VNS/VNA) - Vietnam has emerged as a destination for large tech firmsas the trade dispute between the US and China continues to intensify with noend in sight. However, whether and how much Vietnam can take advantage of theshifting FDI flow out of China remains to be seen.
“I’mafraid it doesn’t look very promising,” said Nguyen Duc Thanh, Director of theVietnam Institute for Economic and Policy Research (VEPR), commenting on aclaim by a former Japanese ambassador to Vietnam that some 20,000 Japanese businessesin China were said to be on the lookout for alternatives.
Whetherthey go to Vietnam, India or Indonesia or elsewhere will come down to the country’sbusiness environment and quality of labour force, he said.
AmongASEAN countries, Malaysia, Indonesia and Thailand are countries with betterindustrial infrastructure. India enjoys a significant advantage of havingEnglish as a common language and a massive young labour force. Vietnam was butone among many options.
Applesupplier Taiwanese Pegatron, for example, signed a letter of intent to investin a 1 billion USD factory in Indonesia instead of Vietnam in May. While it’ssafe to assume that FDI from tech firms will continue to flow into the countryin the short term, major improvements to Vietnam’s legal framework andinvestment environment must take place to sway the odds in its favour.
JohnChong, CEO of Maybank Kim Eng, said in order to take advantage of the shiftingof FDI flow from tech firms, Vietnam must make investments to improve its labourforce and infrastructure. In addition, the country’s financial sector must alsoquickly develop and adapt to make good use of the opportunities for growth.
In earlyAugust, Japanese-Taiwanese Sharp announced the construction of a new factory insouthern Binh Duong province. In an earlier development, Korean LG decided tomove its cell phone production to Vietnam. According to the Nikkei AsianReview, Apple will also begin trialling its AirPods wireless earphonesproduction in the country in a move to reduce reliance on China.
Figuresreleased by the Department of Foreign Investment under the Ministry of Planningand Investment showed a surge in foreign direct investment (FDI) in theprocessing and manufacturing sector with 14.46 billion USD, amounted to 71.5 percentof total FDI into the country during the first seven months of theyear.-VNS/VNA
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