Viet Nam is Asia's new manufacturing powerhouse: Bloomberg

Friday, Apr 03, 2015 16:56

A production line of Samsung in the northern province of Bac Ninh. Viet Nam is considered a new manufacturing powerhouse of Asia. — Photo

HA NOI (Biz Hub) — Viet Nam has been termed the new manufacturing powerhouse of Asia, besides existing giants, such as China, South Korea and Thailand, Bloomberg said.

Viet Nam's benchmark purchasing managers' index for manufacturing has expanded to above 50, every month since August 2013, HSBC and Markit Economics said.

That feat is unmatched by any other Asian country that HSBC and Markit track. In contrast, China's manufacturing PMI had contracted during the eight months in that same period. Thailand's manufacturing, as measured by the Government, contracted for 22 months through January.

"Central to the latest improvement in business conditions was a further rise in both output and new orders," HSBC and Markit said in a note accompanying the release of Viet Nam's March data.

Vietnamese firms were able to secure more new orders from both domestic and export clients and "falling commodity prices in world markets continued to feed through to lower input costs," Andrew Harker, senior economist at Markit, was quoted by Bloomberg.

Viet Nam last year became the biggest exporter to the United States among the 10 members of Association of Southeast Asian Nations.

With its strategic location, younger population and lower costs than China, it has drawn the likes of Samsung Electronics, Intel and Siemens, besides apparel and shoe makers.

What works in Viet Nam's favour is that wages are still low, with the average monthly wage pegged at $197 in 2013, compared with $391 for Thailand and $613 for China, the International Labour Organisation pointed out.

However, its population is younger: only about 6 per cent are above the age of 65, compared with about 10 per cent in China and Thailand and almost 13 per cent in South Korea.

Nevertheless, much of Viet Nam's business is focussed on low-end manufacturing in textiles, garments, furniture and electronics. That may change, as companies invest more in training and R&D, Bloomberg said. —VNS

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