Vietnam benefits from China-US trade war

BY SILVI WRITER

Vietnam may benefit from the escalation of trade dispute between China and the United States, according to a recent research, as stronger manufacturing output turns the ASEAN economy one of the world’s best performers.

Both Hanoi and Ho Chi Minh City are among the world’s top ten most dynamic cities, according to the latest City Momentum Index released by real estate services and investment firm JLL.

Hanoi, the Vietnamese capital, ranks the 3rd, while Ho Chi Minh City, the economic hub in the south, stands at the 8th.

Both cities perform very well for socio-economic momentum with fast-growing populations and economies, the research goes.

Ho Chi Minh City is generally viewed as the more business-friendly destination attracting more overseas investment along with a higher corporate presence, whereas Hanoi has lagged commercially but is a city that is swiftly evolving.

Manufacturing is one of the key sources of economic growth in Vietnam, driven in part by robust demand from China.

“Vietnam is often seen as a lower-cost alternative to China, and FDI has grown on the back of this; while escalation of the trade dispute between China and the US may benefit Vietnam’s economy in the longer term,” the research goes.

Vietnam is a rising destination for Chinese firms invest abroad, especially as the trade war between Beijing and Washington is pushing more firms, most of which manufacturers, move to the ASEAN countries to avoid additional tariffs charged by the US.

China’s 2018 FDI totaled $2.46 billion in Vietnam, making the world’s second largest economy one of fifth largest sources of investment.

FDI from China has been increasing over the last 10 years from $572.5 million in 2007 to $2.17 billion in 2017.

Ho Chi Minh City and Hanoi are both pulling in expanding levels of investment from large multinational technology firms, including Microsoft, LG, Intel and most notably Samsung.

Infrastructure plans, such as the official opening of Hanoi’s first metro line, should also help to ease the congestion caused by the rapidly-growing population.

As yet, Vietnam has a small real estate investment market struggling with issues such as low transparency and a limited volume of investment grade stock. However, headway is being made to improve transparency, such as enhancements in access to the land registry, better valuation practices and the increasing application of green building certification system such as LOTUS and LEED.

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