news Published on May 16, 2019

Vietnam stays attractive to foreign investors amid trade war: economist


Vietnam is the biggest beneficiary in the shift of the investment flow from China amidst the Sino-American trade war, according to Maybank Kim Eng senior economist Chua Hak Bin.

The expert told Vietnam Economic Times that most multi-national companies will continue restructuring their supply chains to reduce dependence on China, and ASEAN countries will benefit from this diversification.

In this context, Vietnam has emerged as a big beneficiary, he said, noting that the trade tension’s impact on the country’s growth rate will be eased thanks to the shift and diversification in global trade and investment.

Chua said recent data has illustrated this forecast. Foreign direct investment (FDI) in Vietnam set a new record in the first four months of 2019 when foreign investors registered USD 7.45 billion in new and additional capital – up 29% year on year.

They also registered USD 7.1 billion to buy shares of Vietnamese firms, rising more than three-fold from a year earlier.

The country’s exports of apparel, wood products, computer and electronic components, and mobile phones to the US are also growing sharply while similar commodities from China are now subject to higher tariffs due to the trade war.

The economist expressed his belief that FDI to Vietnam will continue increasing and support GDP growth this year.

Even when a US-China trade deal is signed in the next several months, multi-national companies planning to make new investments are still likely to apply a “China Plus One” strategy to reduce their vulnerability to any trade tensions in the future, and Vietnam is emerging as a “Plus One” destination, Chua added.