With a raft of free trade agreements, relatively low-cost labor and proximity to China, Phuc has a superb story to inform the worldwide executives he meets in Davos.
“We are trying to increase exports in both the quantity and quality of our products, especially in products where we have an advantage, such as seafood, bulk goods, footwear and electronics,” Phuc said.
“Our goal is to become an export economy that can grow rapidly and provide more jobs and higher incomes for our citizens.”
Despite this, the Southeast Asian country is yet to see a wave of firms relocating from China, he added.
And the economy faces serious challenges: inadequate infrastructure and a shortage of expert employees make it difficult to draw manufacturing that goes beyond assembly-line work, similar to sewing clothes.
Global economic conditions are also worsening. The U.S.-China trade war and more muted global growth are weighing on export demand, posing a risk to economies like Vietnam, where trade accounts for about twice the country’s gross domestic product—greater than any country in Asia except Singapore. About 1 / 4 of Vietnam’s total trade is with China.
Vietnam’s economy appears to be protected for now, with growth accelerating to 7.1 percent in 2018, among the many fastest on this planet.
Phuc said he was confident growth would reach the upper end of the federal government’s forecast range of 6.6 percent to six.8 percent this 12 months. He also pledged to maintain the Vietnamese dong stable in 2019.
“We see growth momentum in various areas and have a good foundation to achieve our goals,” Phuc said.
Vietnam, which has some 16 free trade agreements, became depending on global trade after introducing “doi moi” market reforms within the Eighties.
Exports rose to a record $244 billion last 12 months, with $48 billion of that going to U.S. customers – greater than twice the quantity five years ago.
Vietnam is already home to several major manufacturers, the most important of which is Samsung Electronics, which accounted for a few fifth of the country’s exports last 12 months.
Phuc, concerned in regards to the Trump administration’s anti-trade sentiment, has promised that his country will increase its imports from the U.S., from Boeing planes to grease products.
“Challenges this year will include global trade tensions, climate change and inadequate infrastructure,” he said.
As a growing economy, he added, “we want to grow to offer more jobs for our people and eliminate poverty. We have to grow by greater than 6 percent a 12 months to extend per capita income and escape the middle-income trap.”
Still, Phuc has a superb story to sell to global investors. Vietnam was ranked No. 1 amongst seven emerging Asian countries as a producing destination by Natixis SA, which checked out demographics, wages and electricity costs, rankings in business and logistics, and manufacturing as a share of total foreign direct investment.
“The government has done a lot to help foreign investors develop businesses in Vietnam in the long term,” Phuc said.
This article was published within the print edition of the South China Morning Post under the title: Phuc offers investors refuge in trade war
