Four reasons why Vietnam is appealing to investors

DNHN - Over the last decade, Vietnam has emerged as a top destination for industrial investment, outperforming the ASEAN-4 nations. Lower labour costs, easier supply chain integration, improved access to free trade, and political stability are all reasons for attracting Vietnamese investment.

This is stated in the article "Why Vietnam is more appealing than ASEAN-4 as a manufacturing alternative to China" on Tradefinanceglobal.com.

According to Tradefinanceglobal.com, there are four reasons why Vietnam is more appealing to manufacturing investors than ASEAN-4 countries (Indonesia, Malaysia, Thailand, and the Philippines). First, labour costs are lower, which is one of the reasons why many manufacturing companies have relocated to Vietnam in the last decade.

However, this is not the only aspect to consider when deciding where to locate a plant; firms must also consider issues such as supply chain integration.

In Vietnam, including manufacturers in the supply chain both upstream (the activity between manufacturers and their suppliers) and downstream is quite straightforward (the act of delivering products to customers).

According to Tradefinanceglobal.com, nearly no company in Southeast Asia can escape China's "gravity field" in terms of the upstream supply chain. Unlike the other ASEAN-4 countries, however, Vietnam shares a border with China, making it simpler for Vietnamese manufacturing firms to integrate into China's huge network.

Downstream, because Vietnam has two international airports, numerous big ports, stable energy, and a quick internet connection, integrating Vietnam into the supply chain is also a reasonably simple operation.

Furthermore, due to Vietnam's small geographic area, the majority of suppliers are located near major airports or seaports. This facilitates the transportation of finished goods from the producer to the client.

The third reason is that, in comparison to many other Southeast Asian nations, domestically made items in Vietnam are easier to market without incurring unneeded extra expenditures. This advantage is due to Vietnam's membership in 15 distinct free trade agreements spanning more than 50 nations worldwide.

The most prominent are the free trade agreements (FTAs) between the European Union and Vietnam (EVFTA), the CPTPP Agreement, the Regional Comprehensive Economic Partnership Agreement (RCEP), and the UK-Vietnam Free Trade Agreement (UKVFTA).

For manufacturers, this implies that items manufactured in Vietnam may be marketed in other countries, including many more affluent nations in the West, without incurring high taxes.

Finally, political stability is a key feature that makes Vietnam an appealing place for manufacturing investment.

According to the US State Department's 2021 Investment Climate Statement, "Vietnam's political and security environment is essentially stable." In terms of political stability and the absence of violence, Vietnam rates higher than many Southeast Asian countries, including three of the ASEAN-4 countries, according to the World Bank's ranking.

According to Tradefinanceglobal.com, the combination of the four elements listed above is definitely enough to make Vietnam appealing to investors. Vietnam, which has fared well in the face of supply chain interruptions caused by the COVID-19 outbreak, is still regarded as an important and expanding industrial base. Vietnam's reputation as a "growing industrial hub" will be bolstered as the government continues to execute free trade agreements across the world and invest in transportation and communication infrastructure.

"Tradefinanceglobal.com" is an English and Welsh website with headquarters on Haverstock Hill, London.

Via: VNA/Tradefinanceglobal.com