Vietnam benefiting from US-China Trade War with increased FDI: Reports

Foreign Direct Investment in Vietnam increased by 9.1% in 2018, with the trend expected to continue in 2019

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Pro sports clothing factory in Nam Dinh Province

Pro sports clothing factory in Nam Dinh Province (By Associated Press)

TAIPEI (Taiwan News) – According to recent data from the Vietnamese government, foreign direct investment in the country increased by 9.1 percent over the past year, making Vietnam one of the more successful countries in Asia to attract FDI in 2018.

Total FDI in Vietnam reached US$19.1 billion last year, and the country reported a GDP growth rate of 7.08 percent for 2018. Many analysts see the ongoing U.S- China trade disputes as an unexpected boon to the Vietnamese economy.

A report from Asia Nikkei declares that many firms, especially in the textile and apparel industry, have shifted production from China to Vietnam to avoid the high tariffs imposed by the Trump administration for the U.S. market.

Geographically and economically, Vietnam is seen as an increasingly attractive alternative to China as a base for product manufacturing.

The trend in shifting production factories to Vietnam is expected to continue over the coming year. The Mizuho Research Institute in Japan suggests that Vietnam might anticipate a further .5 percent increase in GDP over 2019.

The Mizuho Research Institute notes that Japan was the greatest source of FDI into Vietnam in 2018 with US$8.5 billion. The second highest foreign investor was reportedly South Korea with US$7.2 billion approved FDI.

The third, fourth and fifth largest sources of foreign investment were Singapore, Hong Kong, and China, respectively.

Despite the good economic turn for Vietnam’s economy, the report does points out that Vietnam’s economy is overly dependent on foreign companies, which could become a problem for Vietnam in the future.