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Will Vietnam be a new production base for the world?

Vietnam has the opportunity to become a new production base for the world amid the US-China trade war.

Deep C Dinh Vu industrial park often receives groups of businesspeople who come to learn about industrial zones.




Bruno Jaspaert, CEO of Deep C Vietnam, said the demand for leased land in IZs (industrial zones) in general and Deep C in particular has doubled compared to the same period last year

Jaspaert said most multinational groups follow the China + 1 strategy. When the production potential in China reaches a critical point, they will relocate production to neighboring countries, including Vietnam.

As the US-China trade war escalates, economists believe that the groups will accelerate implementation of the China + 1 strategy. Chinese enterprises will ‘evacuate’ to avoid the US taxation. 

As the US-China trade war escalates, economists believe that the groups will accelerate implementation of the China + 1 strategy. Chinese enterprises will ‘evacuate’ to avoid the US taxation. 

“About 20,000 Japanese enterprises in China are thinking of shifting their investments,” Nguyen Duc Thanh from the Vietnam Institute for Economic and Policy Research (VEPR) said after a meeting with former Japanese Ambassador to Vietnam.

Pham The Anh, a respected economist, also commented that the scenario of replacing China as the world production base was possible.

As of May 20, Vietnam had licensed 1,360 new projects with total investment capital of $.6.46 billion, an increase of 38.7 percent compared with the same period last year. If counting the additional capital registered by operating projects in Vietnam, the total FDI (foreign direct investment) capital registered in the first five months of the year would be $9.09 billion.

The quality of production

The new FDI will bring jobs and the opportunities to boost the economy. However, Vietnam’s capability of receiving FDI is not limitless.

Vietnam now is in the ‘golden population’ period with a workforce of 55.64 million people as of the end of 2018. However, Vietnam is also among the fastest aging countries in the world, which means that it may face a labor shortage in 5-10 years.

According to the United Nations, it will take Vietnam 20 years to increase the proportion of people aged from 65 from 7 percent to 14 percent of total population. It’s expected that by 2038, the elderly would account for 20 percent of population.

Anh expressed his doubts about the benefits Vietnam can get from the investment movement since foreign investors transfer most of the profits they make in Vietnam abroad.

The General Statistics Office (GSO) reported that $17 billion was transferred abroad and the figure was $20 billion.

Thanh Lich



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