- How will Trump’s tariffs affect Vietnam’s export performance? Compared with the 46% tariff rate announced in April, would you consider 20% a favourable outcome from Vietnam’s perspective?
DMVN: While the imposition of 20% tariff will undoubtedly present challenges, Vietnam’s export performance is expected to remain strong due to its strategic approach and unmatched international integration. The new 20% tariff on Vietnamese exports to the US is certainly a more favorable outcome compared to the initially proposed 46%.
This reduction is a testament to the Vietnamese Government’s proactive and skillful negotiations. Furthermore, the tariffs also apply to a wide range of other countries, which could help level the playing field. To mitigate the negative effects, Vietnamese businesses are already diversifying their export markets, leveraging free trade agreements with the European Union (EVFTA) and other partners.
- How might Trump’s tariff policies affect FDI flows into Vietnam, particularly in light of the 40% tariffs on transshipment? Compared with other ASEAN countries, what are Vietnam’s unique strengths?
DMVN: The 40% tariff on transshipment is a significant measure aimed at preventing the rerouting of goods. However, Vietnam is well-positioned to handle this challenge. This policy may actually incentivize legitimate companies to invest in manufacturing with a higher local content, rather than simply using Vietnam as a transit point. This could lead to a higher quality of FDI in the long term.
Compared to other ASEAN countries, Vietnam’s unique strengths are numerous:
- Political Stability with the private sector at the heart of its development:Vietnam’s stable government and commitment to a pro-business environment, thanks to Resolution 68 issued recently, provide a secure foundation for long-term investment.
- Strategic Location:Its proximity and land border with China make it a natural hub for manufacturing and supply chain diversification.
- Strong Workforce:Vietnam has a large, young, and increasingly skilled labor force with competitive wages.
Unmatched international integration: The country has a robust network of free trade agreements, including the CPTPP and EVFTA, which opens up access to many international markets.
- How about Chinese investment? Do you anticipate an increase of Chinese investment?
DMVN: I do anticipate an increase in Chinese investment, as the country continues to be a key player in the regional supply chain. Chinese companies are increasingly investing in manufacturing facilities in Vietnam to produce goods that can be exported without being subject to US tariffs on Chinese-made products. While this trend has been ongoing, the new US tariffs on transshipment will likely encourage a greater focus on investments that involve substantial manufacturing and local value-add within Vietnam. This will ultimately benefit the Vietnamese economy by creating jobs and strengthening our manufacturing base.
- In recent years, have you observed any trends or shifts in foreign investment into Vietnam—either in terms of sectors, source countries or investment strategies?
DMVN: In recent years, we have observed several key trends and shifts in foreign investment into Vietnam. First of all, there is a clear trend towards investment in high-tech manufacturing, particularly in semiconductors, electronics, and advanced components, as well as renewable energy, where I have seen billions of dollars being committed to be invested in Vietnam. This aligns with Vietnam’s policy to attract higher-value and high-quality investment. Also, while traditional investors from Singapore, South Korea, and Japan remain strong, there is a growing interest from other nations and regions seeking to diversify their supply chains. Notably, foreign investors, especially Chinese investors, are increasingly targeting the development of industrial parks, warehouses, and logistics networks, recognizing the need to support the country’s growing manufacturing and export capabilities.
Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
