Vietnam has the potential to become the world’s next factory, and will probably be receiving investment from several international funds, whose collective assets amount to $5 trillion, according to experts which attended the Invest ASEAN 2015 summit, at Ho Chi Minh City on Tuesday. The country that is located right next to China, is likely to become the manufacturing hub for the ASEAN region, once the ASEAN Economic Community is formed, they added.
A young population, a stable political and economic scene, and an increasing number of consumer, makes it a particularly competitive economy in an attractive place like ASEAN; especially as its labour cost is just half of that of China, Thailand, Philippines and Malaysia, explained John Chong, CEO of Maybank Kim Eng.
Investors might have been familiar with the “China plus 1” strategy, in which Vietnam is seen as a hedging replacement for China, if their operations are exposed to risks in the most populated country.
Vu Minh Khuong, associate professor at the Lee Kuan Yew School of Public Policy, noted that the recent surge in export has again affirmed the position of Vietnam in the region’s economic map. The country’s export during the 2005-14 period increased nearly 20 per cent, far ahead of Indonesia, Malaysia, Thailand and Philippines.
“Vietnam has become a hot destination for global electronics producers and technology companies, who have brought in billion-dollar projects. Investors land in Vietnam not only because of cheap labour, but also with a desire to join the global supply chain,” commented Huynh Quang Hai, deputy general director of the Vietnam – Singapore Industrial Park (VSIP).
Foreign investors at the summit said that they were keenly observing the policy developments in Vietnam. These include, the privatisation of state-owned companies and increasing the limit of foreign ownership in public companies. Currently, the limit is 49 per cent for a joint stock company and 30 per cent in banks.