Vietnam more attractive to investors than ASEAN-4: TFG

While not the lowest in Southeast Asia, Vietnam’s average monthly wage is around a third lower than wages in the ASEAN-4 nations, according to data from the National Wages and Productivity Commission.

For manufacturers whose labour costs are 20-30 per cent of the total gross sales value of their finished goods, low wages can lead to a significant business advantage.

Low wages are the top reason why Asia grew to become the world’s manufacturing hub in the latter half of the twentieth century and they are a large reason why so much manufacturing has moved to Viet Nam in the last decade, TFG noted. 

Incorporating Vietnamese producers into supply chains is relatively straightforward both upstream and downstream, according to TFG. As Vietnam shares a border with China unlike the ASEAN-4, the common border makes it easier for Vietnamese manufacturers to integrate into China’s vast network, reducing friction by eliminating the need for component parts to pass through multiple countries—potentially eliminating tariffs along the way, a Vietnamese newspaper reported.

On the downstream side, Vietnam’s two international airports, several major ports, reliable power and easy Internet access help.

Compared to many other Southeast Asian peers, Vietnam comfortably sells its goods in other countries avoiding unnecessary added costs as it is party to 15 different free trade agreements covering more than 50 countries.

Another reason why investors may lean more towards Vietnam is the country’s relative security and political stability, TFG observed.

ALCHEMPro News Desk (DS)