Containers awaiting clearance procedures at Kim Thanh Road II International Border Gate. One of Viet Nam’s key export items to China is electronic components which China uses to make products to export to the US. — VNA/VNS Photo Quoc Khanh
Viet Nam should take advantage of the opportunities offered by the US-China trade war but also be aware of the negative consequences, experts said on Thursday at a meeting in HCM City.
Truong Dinh Tuyen, former Minister of Trade (now the Ministry of Industry and Trade), said the trade dispute between two of Viet Nam’s top trading partners would have both a positive and negative impact on the country.
The trade war could have serious consequences, including a disruption to the global supply chain, an increase in prices, and a drop in FDI worldwide.
A decrease in American imports from China could present a good opportunity for Viet Nam to fill in the gap, experts said.
A recent report from the American Chamber of Commerce (AmCham) in Viet Nam found that Viet Nam was becoming more attractive to investors.
Up to 36 per cent of surveyed US companies said they wanted to expand their business in the country, compared to 21 per cent in Thailand and 19 per cent in Malaysia.
In April, the US announced a 25 per cent tariff on US$50 billion of Chinese goods. More than 800 Chinese exports, worth about $34 billion, were subject to tariffs starting on July 6, according to Tuyen.
At the same time, China also introduced countermeasures of the same scale by imposing its own 25 per cent tariff on 545 categories of US products worth $34 billion from the same day.
Don Lam, CEO of VinaCapital, told Viet Nam News during a recent interview that the US-China trade war in the short term could bring benefits to Viet Nam, especially in investment.
Because of the trade war and rising wages and costs in China, some investors in China are moving their business to other Asian countries such as Viet Nam, Thailand and Malaysia.
Viet Nam has shown an improving business environment and is attracting more investors, Lam said.
However, if the US imposes broader tariffs on China, it would affect the cross-border supply chain, including Vietnamese supplies used in many Chinese exports.
To minimise the risks arising from trade disputes, Viet Nam should focus on expanding its access to other markets.
Viet Nam is already a signatory of many free trade agreements, with two more major trade pacts coming in effect in the near future, the Comprehensive Progressive Trans-Pacific Partnership and the EU-Viet Nam free trade agreement.
These FTAs willl give Viet Nam an opportunity to increase exports to alternative markets.
However, Viet Nam suffers from underdeveloped supply chains, a heavy reliance on imports of raw materials and a lack of supporting industries, Lam said.
The country should focus on overcoming these challenges to survive the trade war, and fully realise the benefits of the upcoming FTAs, he added.
In January, China became Viet Nam’s largest export market with total export turnover of $3.708 billion, a 106 per cent year-on-year increase, according to the General Department of Viet Nam Customs.
One of Viet Nam’s key export items to China are electronic components which China uses to make products to export to the US. So, if the demand for Chinese products falls, Viet Nam will suffer too, experts said.
S Korea-VN trade
Also speaking at the meeting, Choi Bong Sik, chairman of the World Overseas Korean Traders Associations (OKTA), said that more than 7,000 Korean companies are operating in Viet Nam.
“Korean entrepreneurs consider Viet Nam a key for the future of South Korea,” he said.
The World OKTA has 141 offices in 70 countries with more than 7,000 official members and 15,000 young members representing the next generation of traders, he said.
South Korea and Viet Nam together have the second-highest trading performance among 200 countries over the world, only after China.
In Viet Nam, South Korea is the number one country in terms of FDI, with 30 per cent of Viet Nam’s total FDI, which is 3.5 times higher than Japan’s, which is second.
Trade between the two countries is expected to continue to expand because of the South Korea-Viet Nam FTA, he said.
“South Korea has world-class technology in many areas of industries, and its small- and medium-sized enterprises want to enter the global market to overcome price competitiveness.”
He said South Korea considers Viet Nam as the next China. “It is never easy to find your strategic partners for your future from North America, the EU or even Japan,” he said. — VNS