It appears that foreign investors are still considering Vietnam a highly attractive market despite US President Donald Trump’s decision to abandon the Trans Pacific Partnership (TPP).
The TPP was a trade agreement drafted between twelve countries that border the Pacific Ocean, together making up about 40% of world trade. Vietnam was set to benefit from the deal more than any other country.
In January of this year, Trump announced that the United States would not join the TPP in the hope of promoting his “America First” Policy, which aims to bring manufacturing jobs back to American soil. Both the TPP and the America First policy remain controversial within US politics.
Foreign trade, however, is immensely complex, and there is little hope of undoing globalization. CNN explains that Trump’s position was detached from reality because rising wages means that “manufacturing and low-skill jobs won't return to the United States; that goods are sold cheaper in the United States because they are made overseas; and that American companies also benefit from trade deals.”
Vietnam's trade surplus over the US – the latter country's sixth-biggest last year – has been under scrutiny as well, but it has not deterred foreign investors' interest in working with Vietnam. It seems that regardless of US interests, little has changed since January.
Reuters reports that Vietnam's foreign direct investment rose 6% year-on-year, to US$6.15 billion in the first five months of 2017. Vietnam also appeals to investors as a location to open factories, as the country scores high on middle management and has relatively low wages. For example, the average textile factory worker receives US$250 per month compared to US$700 for the same job in China.
China, while not a part of the TPP, still has a large impact on the region. As the third-largest investor in Vietnam, Chinese influence is gaining traction. The New York Times quotes Jonathan Koon-shum Choi, chairman of the Chinese General Chamber of Commerce in Hong Kong, who said, “After America stopped TPP, everyone is now looking to China."
Vietnamese Prime Minister Nguyen Xuan Phuc recently visited the White House, where the two parties welcomed the signing of billions of dollars worth of business deals. Phuc also became the first Southeast Asian leader to visit Washington during this administration.
It should also be noted the TPP is valid until February 2018, should President Trump change his mind.
[Photo via Retail News]
