The South-East Asian nation has become a new hub for low-cost manufacturing in Asian supply chains, eurasiantimes.com on Jan 14 quoted the report.
It said the report suggests that factors that make Vietnam better than its peers are the incentives for international firms for setting up units to manufacture hi-tech products, the pool of low-cost workers, and the proliferation of free trade agreements.
It also cited Ruchir Sharma, an emerging markets strategist at Morgan Stanley, as saying that Vietnam’s FDI has averaged more than six percent of GDP, which is the highest ratio in any emerging country.
In addition, the ever-changing policies as per the market demand, the vigorous changes in the business and investment climate, socio-political stability and population structure are also factors that made the country attractive for FDI, the report said.
It added that the recent free trade agreement between Vietnam and the European Union has benefitted the country as the EU lifted 85 per cent of its tariffs on Vietnamese goods in 2020 and the FTA’s biggest gains were witnessed by footwear manufacturers in Hanoi.
In a special report, the South China Morning Post, said The country’s success in tackling the coronavirus has not only raised the leadership’s profile, but that of the country more widely.
As well as burnishing its credentials for competent governance, its strong showing against the virus has converted into economic gains that made Vietnam one of the few countries in the world to post positive growth last year – strengthening the argument of those who say it should be viewed as a rising middle power.
Since sealing itself off to the world last March, the country’s strict monitoring systems, mandatory quarantine periods and extensive coronavirus testing have won it praise from around the globe.
The World Health Organization credited the country as having moved forward to a “safe coexistence with Covid-19” in which it had achieved the dual objectives of disease control and economic development.
Lye Liang Fook, a senior fellow and coordinator of the Vietnam Studies Programme at the ISEAS-Yusof Ishak Institute in Singapore, said this had allowed Hanoi to focus on regaining growth momentum.
“Vietnam’s economy grew 2 to 3 per cent in 2020, which is a very positive development in view of the negative growth in many other countries,” Lye said.
This year, Vietnam’s economy is expected to grow more than 6 per cent, a development that will solidify its claims to be Asia’s “rising star”.
According to Vietnam News, around 40 percent of exports to the EU in footwear manufacturing faced 30 percent tariffs, which were completely withdrawn from August 2020.
Even amid the COVID-19 pandemic, in the period from January to September 2020, the country attracted US$21.20 billion in FDI or 81.1 percent compared to the same period last year, it said, quoting data of the Vietnam Briefing. - Agencies
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