VIETNAM – THE NEXT WORLD’s FACTORY? – Lawyer in Vietnam Dr. Oliver Massmann in interview with Caijing Magazine Beijing

1. How do you assess Vietnam’s general economic performance? Besides manufacturing, are there any other sectors worth investing in or have huge potential?

Vietnam’s economic performance has been impressive. In 2020, while major global economies suffer from the Covid-19 pandemic, Vietnam posed the highest GDP growth in South East Asia, higher than China, Singapore, and Japan. In 2021, when Covid-19 resulted in almost nation-wide lockdown for almost the whole year, the country still posed a positive GDP growth of 2,68%.
Sectors with huge potential: water and waste treatment, clean energy development (biomass, LNG, offshore wind…), agriculture products processing, healthcare equipment

2. How have CPTPP and other major trade agreements benefited Vietnam? What difference will RCEP make?

The CPTPP and the EVFTA have made trading between Vietnam and the signatory countries cheaper and more efficient thanks to the reduced tariff schedule as well as administrative procedures. During the worst period of the Covid-19 pandemic, Vietnam’s export remains outstanding thanks to these free trade agreement. Vietnam foresee similar benefits coming from the RCEP. Additionally, the RCEP brings about a huge political benefit of strengthening ties between Vietnam and other countries in the region, which can result in a more stable and connected political scene in the region.

3. When Vietnam went into lockdown in the third quarter of last years, some productions moved back to China. Was this just temporary and moving manufacture out of China has become an irreversible trend?

In my opinion, the move is temporary. As in a supply chain, it is usually more cost effective for business to move production, as long as production still going on, rather than to stop production for any reason. So it’s not a surprise that when businesses in Vietnam were suspended in the last year for Covid-19 protection, companies had to seek solution elsewhere.

I think that once China recovers from the current Covid situation and issues more policies favorable for foreign investors, the flow may be reversed.

4. Do you think the structure of China-Vietnam trade is more complementary or more competitive? How do you see their positions in the global supply chain?

I see the structure is more complementary, where both countries export to the other products that they need. China closed its border last years due to Covid-19, the global supply chain suffered heavily. I think that’s enough to describe the importance of China in the world’s supply chain. If the flow of business moving production from China to Vietnam continues, Vietnam will very soon become a key player in the global supply chain.

5. Have you seen a major increase in foreign investment recently? Where are they mainly from and which sectors they are investing in?

In 2021, despite the complicated development of the Covid-19 epidemic, FDI inflows into Vietnam reached 31.15 billion USD, up 9.2% compared to 2020. Total foreign investment capital registered in Vietnam as of March 20, 2022 reached US$8.91 billion.
Among 35 countries and territories with newly licensed investment projects in Vietnam in the first three months of 2022, Denmark is the largest investor with $ 1.32 billion, accounting for 41.1% of the total capital. new level registration; followed by Singapore with 626.6 million USD, accounting for 19.5%; China $ 379.5 million, accounting for 11.8%; Taiwan 219.9 million USD, accounting for 6.8%; Hong Kong Special Administrative Region (China) $ 191.7 million, accounting for 6%. Sectors: processing and manufacturing industry, real estate

6. Is Vietnam ready to be the next world’s factory?

Yes. Vietnam now has the human resources, technology, government support, foreign investment to become the next world’s factory. Vietnam has grown so fast, economically and politically, in the last 5 years, that in 5 years to come, we may see something we wouldn’t even be able to foresee from today.

Please do not hesitate to contact Dr. Oliver Massmann under omassmann@duanemorris.comif you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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