A Samsung Vietnam employee works at a production plant in the northern province of Bac Ninh. (Photo: tuoitrenews.vn)
As wages has risen in China and its manufacturing bases shift toward more sophisticated products, many companies have opened basic production facilities in Vietnam to take advantage of lower wages, said Andrew Fennell, Associate Director, Sovereign Ratings, Hong Kong
Vietnam has a large population of around 90 million, a growing labor force, a stable political environment and a strategic location in Asia to access key suppliers such as Taiwan and China, he pointed out.
Foreign direct investment in Vietnam has quadrupled over the past decade, to more than $8 billion, as trade improves. Around 30% to 40% of Samsung
mobile phones are now made in Vietnam.
“We also believe Vietnam’s participation in the U.S.-sponsored Trans-Pacific Partnership, if ratified, will provide a further boost to its medium-term growth outlook. The partnership will lower trade barriers and give Vietnam enhanced access to some of the world’s largest consumer markets, including the U.S, Japan, Canada and Australia,” the analyst commented.
Late last month, Fitch Ratings affirmed Vietnam’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ‘BB-’ with a stable outlook.
The rating agency said the affirmation of Vietnam’s IDRs with a stable outlook reflects the balance of Vietnam’s recent macroeconomic stabilization and strong macroeconomic outlook against high public debt levels, sizeable budget deficits, and relatively weak structural indicators.