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Vietnam has became the fourth largest economy in Southeast Asia

28 Jul 2022

By Jennifer Chang.    Photo:Marcus Nguyen

In the past few years, China has become the "world's factory" by virtue of its huge labor market and low-cost processing, attracting many foreign investment to set up factories. After the  China-United State trade ware  broke out in 2018, the willingness of American companies to invest in China has dropped significantly.  Many multinational companies are alarmed that the "Made in China" that the world has relied on for many years may not be able to return. The number of foreign companies moving to Southeast Asia to invest and set up factories is increasing, and Vietnam is the most favored country for foreign investment.

 

Although China is still an important production base in the world, But in recent years, Vietnam has become a more attractive option for many large companies. During the COVID-19  from 2020 to 2021, China's strict anti-epidemic regulations have not only led to the withdrawal of foreign capital, but also caused some Chinese-funded enterprises to transfer their production lines to Southeast Asia. Vietnam is one of the few Asian countries that has not experienced economic contraction. China's zero covid policy and city closure measures hinder China's economic growth, Why is Vietnam so optimistic that it can replace China as the next factory in the world? According to the latest statistics, the total population of Vietnam is 98.51 million, It will soon become the 15th country in the world with a population of more than 100 million. The huge labor force and domestic demand market and the high economic growth rate have become a major advantage of Vietnam's rise.  Since Vietnam's labor cost is about half of China's,  taxes and electricity bill are cheaper, attracting many manufacturing industries to Vietnam. According to World Bank estimates, Vietnam's GDP will grow by around 5.5 percent this year. Due to strong exports and rapid economic growth in recent years, Vietnam is expected to replace China as the next world factory.

 

In the first quarter of this year, Southeast Asian economies recovered rapidly, and exports from Southeast Asian countries such as Vietnam performed well. In recent years, Vietnam's manufacturing industry has sprung up, driving the continuous growth of total exports. Last year, Vietnam's foreign trade volume exceeded US$668.5 billion, an annual increase of 22.6%, making it one of the top 20 economies in the world's trade volume. The reason why it can stand out among many Southeast Asian countries is due to Vietnam's industrial structure. Since 2010, Vietnam's export projects have focused on electronic products. In 2015, it surpassed Malaysia, which was the first to develop the semiconductor industry, and became the largest exporter of the electronics industry in Southeast Asia. In addition, because Vietnam’s economy is not overly dependent on China, it has been able to survive the China-United State  trade war, and during the epidemic, it has successfully caught up with technology products and long-distance business opportunities, This enables Vietnam to surpass Singapore and Malaysia in 2020 and become the fourth largest economy in Southeast Asia after Indonesia, Thailand and the Philippines.

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