Saturday, 06/07/2019 11:17 (GMT+7)
Vietnam’s booming economy will see another surge of new investment after signing a free trade agreement with the European Union (EU) that could hasten the exodus of manufacturers from China, according to analysts.
The South China Morning Post on July 3rd quoted experts as saying that Chinese firms looking to gain lower-tariff access to the EU market are likely to be incentivised to open production in Vietnam.
At the signing ceremony of the EVFTA (Photo: VNA)
Adam McCarty, chief economist at Hanoi-based Mekong Economics, said the agreement will “speed up, slightly, the already fast movement of factories from China to Vietnam”.
“The trade war adds a little to what was happening anyway, and this [free trade agreement] adds a little more. It is both Chinese and foreign firms relocating to Vietnam,” he added.
“From the business strategy point of view, Vietnam is actually a good manufacturing location that people are looking at for the advantage of the network of the [free trade agreement with the EU],” said Angelia Chew, founder of the Singapore-based consultancy AC Trade Advisory.
“On top of the trade tension, we have Chinese clients that are looking for manufacturing relocation [to Vietnam] to mitigate increased duties for goods made in China to the US. It is pretty exciting for companies investing into [Vietnam now] as well as existing companies in Vietnam, they knew the [free trade agreement] was going to attract more investment.”
Dr Cassey Lee, senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, a research institution that specialises in Southeast Asian studies, said the EVFTA would “help Vietnam diversify its portfolio of inward foreign direct investment”.
The EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA) were signed in Hanoi on June 30th. The agreements will be submitted to the National Assembly of Vietnam and the European Parliament for ratification./.
CPV/VNA