Hanoi – France’s Le Temps newspaper on July 19 ran an article describing Vietnam as a new factory of the world.
According to the article, low wages, tax incentives and free trade agreements have facilitated Vietnam’s exports to foreign markets.
It highlighted the spectacular growth of industrial parks in Vietnam, but noted that the dependence on export and foreign direct investment (FDI) would make the country vulnerable to trade disputes between the US and other trade partners such as China and the European Union.
Meanwhile, the UK’s Inquirer.net also reported that Vietnam has switched from being an agricultural economy to one of the brightest manufacturing hotspots in Southeast Asia, citing the latest report from Jones Lang LaSalle, one of the world’s leading real estate services firms.
It quoted the report as saying that “This phenomenal growth can be attributed to Vietnam establishing itself as an export-driven economy, dedicated industrial and economic zones, numerous free trade agreements, strong economic growth and a young, plentiful, low-cost workforce.”
All these initiatives have led to significant investment by large foreign companies.
The best case study is Samsung, which has reportedly invested over 17 billion USD in Vietnam.
This has provided confidence to many other foreign companies from around the globe to set up operations in the country.
According to Inquirer.net, one of the challenges for Vietnam over the next few years will be the ability to adapt and embrace the inevitable disruption and changes brought about by technology and automation, now commonly known as industry 4.0.
In order for Vietnam to enter the next phase of the industrial/logistics cycle and become more competitive than other countries in the neighborhood, it is critically important that significant expenditure continues on infrastructure, including highway networks, deep-sea ports and upgrade of utilities, including renewable energy.