Sunday, September 22, 2019

Investors turn focus on Vietnam amid uncertainty caused by US-China trade war

Sep 07. 2019
Speakers at a Vietnam-US Trade Forum held on Friday by Vietnam's Ministry of Industry and Trade in Ho Chi Minh City. — VNS Photo Bo Xuan Hiep
Speakers at a Vietnam-US Trade Forum held on Friday by Vietnam's Ministry of Industry and Trade in Ho Chi Minh City. — VNS Photo Bo Xuan Hiep
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By VIET NAM NEWS
ASIA NEWS NETWORK
HO CHI MINH CITY

1,168 Viewed

Vietnam is now in a position to attract even more investors and promote mutual prosperity with the US, despite the uncertainties caused by the US-China trade conflict, a US official said at a trade forum on Friday in the city.

Mary Tarnowka, executive director of AmCham Vietnam in HCM City, said: “The US-China trade conflict and resultant uncertainty have the potential to create opportunities for Vietnam and AmCham Vietnam since firms look to diversify their supply chains to destinations such as Vietnam.”

“It will also create additional challenges,” said Tarnowka, who is also the US consul general in HCM City. “The escalating trade conflict between China and the US affects AmCham Vietnam’s members, including big, medium and small ones, in several ways.”

Change is happening in the global economy, and US businesses and other AmCham Vietnam members are affected, she said. “The change comes from uncertainty in the global marketplace. No one knows the duration or full impact of the US-China trade war.”

“We do know the tariffs are affecting American businesses in China, as well as US businesses trading with China. It is clear these trade sanctions will continue for the short term with no known end in sight.”

US President Donald Trump and US policymakers have put other trading partners on notice, including Vietnam. They want reduced trade deficits, elimination of trade barriers, and improved market access for US goods, services, agricultural products and intellectual property.

“Many of our AmCham members have already changed short- and long-term business strategies as they have diversified their supply chains, and increased production and sourcing from Vietnam while decreasing reliance on China and taking advantage of Vietnam’s relatively low wages and network of Free Trade Agreements [FTAs],” she said.

“Ongoing trade tensions have highlighted concern on concentrating production in China, and we at AmCham have seen increased interest by US companies looking to accelerate supply chain diversification by shifting additional prodtion to, or investing, in Vietnam.”

However, there are significant capacity constraints on logistics, infrastructure, real estate and labour shortages, among other challenges, according to the director.

Commercially viable public-private partnerships will be key to enabling world-class private investment in infrastructure projects.

Sustainable growth in Vietnam will hinge on investments in port infrastructure, airport facilities, roads and public transportation to support increased movement of people and goods in Vietnam.

The energy sector is another key field where US firms are eager to partner with Vietnam to provide energy infrastructure and promote clean energy and sustainable economic growth.

Labour costs in Vietnam have recently outpaced productivity gains, impacting Vietnam’s competitiveness, according to Tarnowka.

Though Vietnam’s exports to the US are growing rapidly, the country mainly ships raw or subcontracted products with low value addition, other speakers said.

“The country has achieved high volume of exports but a very modest value of exports,” Do Thang Hai, Vietnam's deputy minister of Industry and Trade, said at the forum.

Vietnamese firms should think about exporting value-added products, not just raw materials, especially at a time when trade protection is increasing globally, he said.

Hai said the big challenge for Vietnamese exporters is the US imposition of strict import regulations. In addition to federal laws, each state has different rules and regulations.

“Protectionism through new regulations and standards for quality, food safety and origin of products, especially for agro-forestry and fisheries products, is also increasing.”

Chu Thang Trung, deputy director of Vietnam’s Ministry of Industry and Trade’s Trade Remedies Authority, said the number of anti-dumping and anti-subsidy lawsuits by the US had already doubled under the new government there.

“Not only products with high export volume, but even minor items face these lawsuits,” he said.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, said the US annually imported around 600,000 tonnes of shrimps, or 80-90 per cent of its domestic demand, with imports from Vietnam just accounting for 10 per cent of imports.

“But trade protection has increased in recent years, causing challenges to seafood exporters to the US,” he said.

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