Tiếng Việt
English
Korean
Chinese
Over the past 10 years, Vietnam has become a leading destination for investment in the manufacturing sector and is more attractive than the ASEAN-4 countries. Reasons for attracting Vietnamese investors include lower labor costs, simpler supply chain integration, better access to free trade and political stability.
That is the comment in the article "Why Vietnam is more attractive than ASEAN-4 as a manufacturing alternative to China". on the Tradefinanceglobal.com news site.
Mentioning four reasons why Vietnam is more attractive to investors in the manufacturing sector than ASEAN-4 countries (Indonesia, Malaysia, Thailand, Philippines), according to Tradefinanceglobal.com, first of all, lower labor costs is one of the reasons why many manufacturing companies have moved to Vietnam in the past decade.
However, this is not the only factor in determining the location of a factory as companies also have to consider factors such as supply chain integration.
Secondly, in Vietnam, it is relatively simple to incorporate manufacturers into the supply chain both upstream (the operation between manufacturers and their suppliers) and downstream (the act of delivering products to end customer).
In terms of the upstream supply chain, according to Tradefinanceglobal.com, in Southeast Asia, almost no manufacturer can completely escape China's "attractive field". However, unlike the ASEAN-4 countries, Vietnam shares a border with China, which makes it easier for Vietnamese manufacturing companies to integrate into China's vast network.
Downstream, incorporating Vietnam into the supply chain is also a relatively unhindered process given that Vietnam has two international airports, several large ports, reliable electricity, and easy internet access. In addition, due to Vietnam's small geographical size, most suppliers are located near major airports or seaports. This makes it easy to transport finished products from the factory to the customer.
The third reason, compared to many other Southeast Asian countries, Vietnam's domestically produced goods are easy to sell without unnecessary extra costs. This advantage is because Vietnam is a member of 15 different free trade agreements covering more than 50 countries around the world.
The most notable are the FTAs: European Union-Vietnam (EVFTA), the CPTPP Agreement, the Regional Comprehensive Economic Partnership (RCEP) and the UK-Vietnam Free Trade Agreement (UKVFTA).
For manufacturers, this means that goods made in Vietnam can be sold to other markets – including many more affluent markets in the West – without having to pay hefty tariffs.
Finally, another important factor that makes Vietnam an attractive destination for manufacturing investment is political stability.
Statement on investment climate in 2021 of the US Department of State assessed that "Vietnam's political and security environment is largely stable". According to the World Bank's index, Vietnam ranks above many Southeast Asian countries, including three of the ASEAN-4 countries, in terms of political stability and the absence of violence.
Tradefinanceglobal.com assessment: The combination of all four factors above is clearly enough to create the attractiveness of Vietnam for investors. Vietnam, which has overcome very well supply chain disruptions caused by the COVID-19 pandemic, is still considered a key and growing manufacturing hub. As the Government continues to implement free trade agreements around the world and invest in transport and communication infrastructure, Vietnam's status as a "rising manufacturing hub" will be further strengthened.
For any questions or comments, please contact:
OTIS AND PARTNERS LAW FIRM
Office address: K28 - Group K, Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi
Email: [email protected]
Hotline: 0987748111
Comments