Having proclaimed success in contain the spread of the Wuhan coronavirus, Vietnam is positioning itself as the business-friendly country, capitalizing on demand from international manufacturers who are looking to diversify their supply chains away from China.
Vietnam has reported just 288 cases of infections and zero deaths, making it on course to revive its economy much sooner than most other countries surrounding China, said public health experts.
“Given its fast response to the virus, we expect foreign investment to pour in to Vietnam after the pandemic,” said Kizuna Joint Development Corp, which builds ready-to-go factories in Vietnam.
Kizuna Joint Development Corp’s client base consists mainly of South Korean and Japanese investors. Kizuna is now speeding up plans to complete a 100,000 square metre (1 million square foot) factory in southern Vietnam in anticipation of an increase in post-pandemic demand.
“The factory space will be ready by July,” said Kizuna.
According to advisers who help foreign firms relocate internationally, Vietnam’s success in dealing with the Wuhan coronavirus pandemic has boosted the confidence of foreign investors in the country.
“There is a sense from many of my discussions that Vietnam, relative to many countries in the world, will emerge even higher on the investor radar as a result,” said Michael Sieburg, a partner at Asia-focused consultancy firm YCP Solidiance.
In a statement, Hanoi’s planning and investment ministry said, it was well positioned to assist manufacturers who are seeking new production bases.
“These opportunities will include the shifting of investment, particularly by large multinational groups seeking to diversify their supply chains to other areas, including Southeast Asia,” said deputy minister Tran Quoc Phuong in a statement on a government website. “Vietnam is among the first of those destinations.”
Relocation of factories into Vietnam from China is already taking place.
Even before the pandemic, many China based businesses who were looking to escape the rising labor costs in China as well as the fallout from the U.S.-China trade war had been eyeing Vietnam as a destination. The country’s growing portfolio of trade deals, such as the European Union Vietnam Free Trade Agreement (EVFTA) has also encouraged foreign investment.
Vietnam is targeting an annual GDP growth of above 5% this year, a rare pocket of growth in a global economy facing a deep recession.
“Vietnam has generated substantial goodwill,” said Fred Burke, a managing partner at international law firm Baker McKenzie, in relation to Vietnam’s pandemic response which has reassured businesses.
“There was once a time when, in the face of such an epidemic, expats would have run back to their homes in North America or Europe, and even Northeast Asia, but this time, with the high death rates in those regions, people feel safe or even safer here”.