Many foreign investors plan to relocate their production bases to Vietnam

The HCMC Securities Company (HSC), in its latest report, showed an optimistic view about Vietnam’s economy in the context of the US-China trade war.

Manufacturers in Vietnam, both Vietnamese and foreign invested, in the fields of textiles & garments, interior furniture, lamps and technology have reported that revenue from key markets is on the rise amid information that importers have reduced orders with Chinese enterprises.

Vietnam, with its political certainties, low production costs and attractive policies for foreign invested enterprises, has emerged as an alternative choice for manufacturers with production bases in China. 

Meanwhile, enterprises in Vietnam will have more opportunities to do business with US companies which want to reduce the imports from China, according to HSC.

HSC’s analysts not only can see the optimism of businesses despite the escalation of the trade war, but also the macroeconomic certainties.

“We noted that the targeted GDP growth rate set for the next year is the same as this year. This is because the government can see opportunities and risks almost equilibrating,” the report said. “The figures about trade turnover are still very satisfactory, while the payment balance is good.”

HSC predicted that the inflation rate would be around 4 percent this year and slightly increase to 4.5 percent the next year. The import tariff hikes in foreign markets such as the US and China will not have a big impact on inflation.

The GDP growth rate is expected to be high at 6.7 percent in 2019, the same as the prediction for this year. The payment balance would still be good thanks to the trade surplus and current account surplus.

Japan has returned to the first position in the list of the biggest foreign direct investors in Vietnam, which shows that Vietnam has become an increasingly favorite destination for Japanese investors.

Dien Dan Doanh Nghiep quoted Japanese Ambassador to Vietnam Umeda Kunio as saying that Japanese businesses have high expectations for Vietnam’s development potentials. 

The moves by Japanese investors recently show that they not only set up production base that makes products for export, but also make investments based on domestic demand and urban development. The investment in R&D projects has also increased.

Prof Furuta Motoo from the Vietnam-Japan University has also noted the presence of Vietnamese staff at medium- and high-level positions in many Japanese invested enterprises in Vietnam. The enterprises are considering relocating parts of their R&D divisions out of Japan, while Vietnam could be a potential destination.

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