Asia Minute: Vietnam’s Appeal to International Business
As President Trump and North Korean leader Kim Jong Un prepare for their second summit, a lot of attention has shifted to the country hosting the meeting: Vietnam. While the country’s political system is still under the tight control of the Communist Party, the economy has expanded its ties with international businesses.
You can see an economy through different lenses.
There’s economic growth – gross domestic product. GDP is gaining about 7-percent a year in Vietnam — a very strong rate.
Another perspective is foreign direct investment: the money that other countries put into businesses or real estate. In Vietnam’s case, that largely means manufacturing — mostly based in the south.
For many countries, and a lot of multinational companies, Vietnam has been a low-cost location for manufacturing – an alternative to mainland China.
For many years, U.S. companies were not a part of this picture until the early 1990’s. Vietnam was still under a U.S. trade embargo – the “Trading with the Enemy Act.”
Taiwan was a relative pioneer in Vietnamese FDI; Japan was not far behind.
According to the U.S. State Department, five years ago, the top three foreign direct investors in Vietnam were Japan, Singapore and South Korea.
The financial website TradingEconomics.com says that so far this year, the top three economies pledging future direct investment in Vietnam are Hong Kong, Singapore and South Korea.
And there’s always popular perception — hard to quantify, sometimes easier to visualize. Next year, Formula One racing is scheduled to make its debut in Hanoi.