"In the trade war, the trend of US investment shifts will help Southeast Asia become a suitable place to receive investment flows to leave China, in which Vietnam will be a bright destination." , TS. Nguyen Duc Thanh, Director of the Institute of Economic and Policy Research (VEPR) commented at the Seminar on Macroeconomic Report of the fourth quarter and the whole year of 2018 in the morning of January 10, 2019.
The VEPR side assessed the movement of the supply chain as a clear consequence of the US-China trade war.
Accordingly, the race of technology, the size of the economy raises issues that make the supply chain, production leave China, even out of the US.
VEPR shifted production from the US to China under VEPR. However, this is happening. For example, Honda is considering shifting production of SUVs to China and then selling there, instead of importing from the US. The reason comes from the fact that vehicles imported from the US into China are at risk of taxing up to 40% due to commercial retaliation.
At the moment, the flow of production that has received the most attention today is shifting supply chains from China to Asian neighbors.
The US Chamber of Commerce in South China surveyed Chinese businesses and foreign businesses operating in the country, saying 60% of businesses will delay or cancel investment plans, and 70% of businesses. US industry surveyed will leave China.
The shift of US investment in the Indo-Pacific axis will help India become the biggest beneficiary in the new world because it is quite similar to the Chinese market, meeting the population size, labor size and future purchasing power. However, cultural differences also make investors in Northeast Asia such as Japan and South Korea afraid and spend a lot of time getting used to the market.
Another familiar destination is also likely to receive a shift in capital flows from Southeast Asia. In particular, Vietnam will be a bright choice due to cultural similarities and institutional environment. Cheap and skillful labor costs along with economic and political stability are also other advantages of Vietnam.
This is a great opportunity for the Vietnamese economy but to grasp this opportunity, it requires Vietnam to make great efforts in improving the institutional, business and quality labor environment in the country. .
