Invest in Vietnam – Asia’s other communist dynamo

Vietnam has reinvented itself. And now, this overlooked market is ripe for investment. Alex Rankine picks the best way to buy in.

The Trump-Xi rapprochement may have grabbed the headlines but last weekend also brought good trade news for Asia’s other Communist dynamo. The European Union signed a trade deal with Hanoi on Sunday that looks set to eliminate 99% of tariffs on goods and services between the two sides. That means that Vietnam’s exporters are enjoying new opportunities in both America, the world’s largest economy, and the EU, the world’s largest single market.
As for the dispute between the US and China, Vietnam “has emerged as the biggest winner”, say Gareth Leather and Alex Holmes for Capital Economics. Exports to the US have jumped by 50% since last summer as Trump’s tariffs on Beijing prompt American importers to look for other suppliers. Trans-Pacific trade tensions have boosted Vietnam’s GDP by around 0.5% over the last year. Economic growth for 2019 as a whole is now likely to hit an impressive 7%.
Trump’s next target?
The trade war has encouraged a growing number of businesses to relocate operations to China’s southern neighbour, where factory wages are often 50% lower than in the Middle Kingdom, note Gwynn Guilford and Dan Kopf for Quartz. Apple-supplier Foxconn has made moves to shift production out of China to India and Vietnam in recent months. Shoe company Brooks Running announced in May that it is shutting operations in China to move to Vietnam. South Korean electronics giant Samsung also looks poised to close its last factory in China, says He Huifeng for The South China Morning Post, and increase production in Vietnam and India.

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