Vietnam lift trade barriers, foreign manufacturers find new interest in imports
At a press conference early this month, Toyota Vietnam said there are chances that the world’s largest automaker will end its manufacturing business in the country and focus on importing cars instead.
The company’s president Yoshihisa Maruta said it is considering the option, as cars brought into Vietnam from other Southeast Asian countries will be exempt from import duties in 2018 under a regional agreement.
It then will be cheaper to bring a car in than to produce it here in Vietnam, where supporting industries are underdeveloped, he said.
Toyota is not and may not be the first foreign investor discouraged by local suppliers’ weak
broken down, manufactures will have to weigh all of their options. And unless its local business environment is improved, Vietnam will not be able to compete with its neighbors in the race to become the production hub of choice for foreign companies.
In 2008, Sony, another Japanese giant, closed its factory here after 18 years of operation.
Analysts then had different theories about the move, the most popular of which was that Vietnam was obliged to remove its trade barriers as part of its deal with the World Trade Organization, making local products unable to compete with imported goods.
Speaking to Thanh Nien, economist Le Dang Doanh said it is “very possible” that other foreign investors in sectors with a poor investment environment and a weak network of suppliers for materials and components will follow the footsteps of Toyota.
Economist Ngo Tri Long agreed, saying that for businesses, profits come first.
It makes sense when they turn to trading services, which are generally more profitable than manufacturing, Long said.
Meanwhile, Nguyen Minh Phong, another economist, predicted that foreign investors will likely move their production to Thailand, where infrastructure and supporting industries are good, and then import products into Vietnam.
However, he said, whether investors move their factories out of the country “totally depends on the
suggesting the government do something before producers jump ship.
Economist Bui Kien Thanh warned that when foreign businesses turn to import instead of production, foreign goods with cheap prices and high quality will flow into Vietnam, and local
as a result will lose their share of the market.
Vietnam attracted over US$1.8 billion of foreign direct investment in the first quarter, equal to 55.1 percent of last year’s value, according to statistics from the Foreign Investment Agency under the Ministry of Planning and Investment.
Investment from Japan hit $294 million, down nearly 30 percent year on
an economic agreement between Vietnam and Japan, more than 3,200 items like electronics imported from Japan will not carry any import taxes from April 1.
A similar trade pact with South Korea also took effect on March 30.
Vietnam Is Becoming the 'New China' With Foreign Manufacturers
TAIPEI, Taiwan (TheStreet) -- Vietnam may still be communist, but the Southest Asian country is all about business.
Helped by low costs and an eager government, Vietnam is taking over China's role as Asia's hotspot for foreign investment in manufacturing.
While China's economy slows and labor becomes more expensive, Vietnam is becoming to go-to place for manufacturing, making cars for Ford (F - Get Report) and Toyota Motor (TM - Get Report) . Offshore capital is expanding now into high-value, high-tech assembly. Hanoi is working on rules to bring in more of it.
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Chinese officials, worried about pollution and dependence on foreign capital, are promoting private domestic investment and consumer spending instead.
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Vietnam handicrafts , Satisfy the most demanding tastes of foreign customers, map of Vietnamese handicrafts are increasingly reaching further and confirmed its position on the market of crafts in the world. The handmade bags products from Vietnam are very popular in Western European countries. Vietnam handicrafts / The Vietnamese handicraft products made of bamboo can be used for decorations and a lot of corners in the dining room, bedroom, bathroom, living room, even the bathrooms. The rich handicraft products have been a source of cultural pride and a source of income for the people. As the varieties of handicraft products are too numerous to be fully introduced, only a few typical items and their sources are mentioned here. The woven tapestries and brocade handbags are unique works from the skilled hands of the ethnic women living in the Northwest regions, such as Cao Bang, Lao Cai.
welcomes most sectors with open arms and market entry, so licensing and operating have become much simpler than in China," says Ralf Matthaes, partner in the Ho Chi Minh City-based investment advisory Infocus Consultants.
There's now significant foreign investment in tech in Vietnam. PC processor icon Intel's (INTC - Get Report) has operated a $1 billion test and assembly plant in Ho Chi Minh City since 2010. Vietnam's largest foreign investor, Samsung Electronics (SSNLF) , has made an $11 billion investment in production there. Apple (AAPL - Get Report) contractor Hon Hai Precision (HNHPF) makes smartphone parts in Vietnam, as well.
China's government says Chinese economic growth fell to 7.4% in 2014, a 24-year low, partly on a modest 8.3% increase in industrial production, down from 9.7% a year earlier. The Chinese economy will grow 7.1% this year, the World Bank forecasts.
China still wildly outranks Vietnam in terms of total foreign direct investment. Its economy of $10.4 trillion, compared to Vietnam's of about $170 billion, had pulled in foreign direct investment of $119.6 billion last year. But that's up less than 2% over 2013.
Officials in Beijing are drafting a new foreign direct investment law to offer offshore projects more equal treatment alongside domestic peers. The law might scrap case-by-case reviews of foreign projects and let them into China with fewer restrictions, the country's state-run media say.
But rising wages and land prices over the past five years have frustrated foreign investors looking to cut costs in China, while skittish consumer demand challenges companies trying to sell their products for long-term profit despite a massive Chinese population.
Vietnam's foreign direct investment rose 60% year over year in the fourth quarter of 2014, to about $8 billion over those three months, the country's statistics office says.
Meet Asia's New Manufacturing Powerhouse: Vietnam
Vietnam's manufacturing is on a steady uptick fueled by its young population and cheaper wages
If you thought Asia's manufacturing giants are just China, South Korea and Thailand, say hello to a new one: Vietnam. Its benchmark purchasing managers' index for manufacturing has expanded -- a reading above 50 -- every month since Aug. 2013, according to HSBC and Markit Economics.
That feat is unmatched by any other Asian country that HSBC and Markit track. By contrast, China's manufacturing PMI has contracted in eight months in that same period. Thailand's manufacturing, as measured by the government, contracted for 22 months through January.
"Central to the latest improvement in business conditions were further rises in both output and new orders," HSBC and Markit said in a note accompanying the release of Vietnam's March data. Vietnamese firms were able to secure more new orders from both domestic and export clients and "falling commodity prices in world markets continued to feed through to lower input