A view of Hong Kong. Banking officials of HSBC have encouraged more trade between Vietnam and Hong Kong. (Photo: instyle-hk.com)HCM City (VNS/VNA) - Vietnam and Hong Kong should promote investment, tradeand service flows between the two sides to take advantage of a diversion oftrade from China amid escalating tensions between the US and China, abanking official said.
Speaking at a mediabriefing in Ho Chi Minh City on January 18, Terence Chiu, country head ofcommercial banking at HSBC Hong Kong, said that more Hong Kong investorswere eyeing Vietnam as a good destination to seize huge opportunities forinvestment.
Some companies hadstarted shifting production out of China to avoid tariffs imposed by the US, hesaid. “Vietnam is very likely to benefit from the adjusted supply chains,” headded.
“We have seen strongbusiness flow from Hong Kong to Vietnam,” he said.
Over the past fiveyears, trade between Vietnam and Hong Kong has seen double-digit growth.
Compared to other ASEANmember countries, Vietnam had many advantages, which have helped the countrygain attention from Hong Kong businesses, he said.
Vietnam offers affordablehuman resources and abundant raw material sources, which are more competitivein price than other ASEAN countries.
Hong Kong investors alsosee high potential from Vietnam’s increasing purchasing power thanks to itsgrowing middle class with increasing income.
Nick Mahon, head ofInternational Subsidiary Banking for HSBC Vietnam, said: “Vietnam is seen as apossible winner in the trade war due to its low costs in manufacturing.”
“With its rapidinfrastructure, economic and technological development, Vietnam has attractedattention from Hong Kong investors,” he said.
Vietnamese enterprisesshould try to attract more financial sources from Hong Kong to developinfrastructure and industry, while using trade transaction floors in Hong Kongto promote its goods to global buyers, he noted.
According to the HongKong Trade Development Council (HKTDC), in the first nine months of 2018,bilateral trade reached 18 billion USD.
Hong Kong was one of thefirst foreign investors in HCM City, the economic hub of the country.
As of June 2018, HongKong was the sixth largest foreign investor in Vietnam with total investment ofnearly 19 billion USD, with Vietnam among the 25 most attractive destinationsfor Hong Kong businesses.
Vietnam enjoyed a tradesurplus of around 3 billion USD with Hong Kong in the first half of last year,a year-on-year increase of 14.6 percent.
During the first sevenmonths of last year, Vietnam was the sixth biggest export market in the worldfor Hong Kong, with total value of 6 billion USD.
As of August 2018, HongKong companies had more than 1,300 projects operating in Vietnam with totalregistered capital of 9 billion USD, focusing on key areas like textiles andgarments, real estate and investments.
Vietnam continues toshine as the region’s brightest star with the strongest GDP growth.
Around 63 percent of allFDI in Vietnam is invested in the manufacturing sector.
According to theMinistry of Finance, the textile and garment sector is one of the country’s majorexport products, representing 12.4 percent of total export volume as ofNovember last year.
Bilateral cooperationbetween Vietnam and Hong Kong has grown steadily over years, with the twosigning an FTA in November 2017.
Hong Kong also signed anFTA with ASEAN that has opened the door to more cooperation opportunities forHong Kong and Vietnam, one of the fastest growing economies in ASEAN.
Vietnam has a stablepolitical system, a sizeable domestic market, young working population, andresilient domestic demand that can create a sound and supportive ecosystem forforeign investors.
The country ended 2018as one of the fastest-growing Asian economies. Last year the country’s GDPaccelerated to 7.08 percent year-on-year, the fastest pace since 2011.
In 2019, Vietnam willlikely remain one of Asia’s fastest growing economies. The strong economicgrowth of the country has opened up more business opportunities.
The Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP) took effect in Vietnamon January 14.
The CPTPP is expected toprovide improved access to 500 million consumers among member countries, whichaccount for 13 percent of global GDP.
The trade agreement willspur reform in Vietnam in such areas as competition, customs, e-commerce,environment, intellectual property, investment, labour standards, legal issues,and rules of origin.
By 2030, exports fromCPTPP countries are expected to increase by more than 6 percent, and 8 percentin Vietnam. The trade agreement will also lead to a shift in global supplychains as trade is rerouted to CPTPP countries.
Vietnam has implementednumerous reforms to improve its business environment for foreign investors.
According to the WorldBank’s Doing Business 2018 report, Vietnam ranked 68th among 190 economies, ajump of 14 against 2017 and 30 against 2012.
The country has signedmany FTAs that open up investment and trade opportunities and is committed tocreating a fair and attractive business environment for foreign investors.
According to a reportfrom the Government, foreign investment in Vietnam last year increased by 9.1 percentto $19.1 billion. This was the sixth consecutive record year for foreigninvestment in the country.
“Strong FDI flow shouldimprove productivity and industrial capacity, enabling the country to takeadvantage of trade diversion,” said Terence Chiu, country head of commercialbanking at HSBC Hong Kong.-VNS/VNA
VNA
