GBS - A wave of American investments is hitting Vietnam in anticipation of the Trans-Pacific Partnership Agreement.
According to the 2015 ASEAN Business Outlook Survey of American Companies recently released by the American Chamber of Commerce in Singapore and the US Chamber of Commerce, 79 per cent of 77 respondents in Vietnam said the Trans-Pacific Partnership Agreement (TPP) would help them boost regional trade and investment. This is far higher than the ASEAN average of 51 per cent.
In addition, 62 per cent of respondents in Vietnam said the TPP would affect their investment plan in the country and the region. This rate was also the highest among all ASEAN member states and also much higher than the bloc’s average of 40 per cent.
US-backed agricultural firm Dekalb Vietnam’s corporate engagement lead Nguyen Hong Chinh told VIR that “We’re committed to invest another $1 million over the next five years in Vietnam into corn research and development.”
Nguyen Viet Ha, managing director of the US’ investment consultant Bower Group Asia Inc, told VIR that US enterprises, especially those producing goods for export to the US, such as garments and textiles, footwear and aquatic products, were seeking investment opportunities in Vietnam to benefit from the TPP’s investment and trade-related incentives.
Expected to be clinched next year, the TPP is a multilateral free trade pact between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam. Once signed, the pact will cover almost 40 per cent of global gross domestic product.
Under the TPP, all tariffs for exported agricultural products would be reduced to zero per cent, if 70 per cent of the products are sourced from TPP members.
Kevin Gardner, senior director of Walmart Global’s International Corporate Affairs, told VIR that Walmart was a strong advocate of the TPP negotiations which could greatly benefit it in the Vietnamese market.
“This comprehensive trade agreement provides market access and will bring a wide range of Vietnamese goods and agricultural products to consumers in our key retail markets in the US, Canada, Mexico, Japan, and Chile,” he said.
Also under the survey conducted in May and June, Vietnam was the second most listed location for business expansion in ASEAN, after Indonesia.
Specifically, 41 per cent of respondents select Indonesia, while 37 per cent select Vietnam, followed by Myanmar (35 per cent), Malaysia (32 per cent), Thailand (30 per cent), the Philippines (28 per cent), Cambodia (21 per cent), Singapore (18 per cent), Laos (13 per cent) and Brunei (7 per cent).
Some 66 per cent of respondents expected profits to increase in Vietnam during 2014, while 82 per cent predicted profits in 2015. 75 per cent said they would expand production in Vietnam in order to diversify their customer base, make use of readily available human resources and exploit the reasonable production costs. Some 57 per cent said they would increase their workforce in Vietnam.
Vietnam’s strengths include positive sentiments toward the US (66 per cent), the availability of low cost labour (66 per cent), and the level of personal security (61 per cent).
Vietnam registered the highest percentage of respondents who plan to diversify their investments from China into Vietnam, from 22 per cent in 2013 to 27 per cent in 2014. Meanwhile, 75 and 45 per cent of surveyed companies said business conditions were more favourable when compared to Asian and Eastern countries, respectively.
By Thanh Tung - VIR