The rise of Vietnam on the global stage in terms of political and economic influences has not gone unnoticed in the eyes of international media.
The Diplomat in an article on March 30 called Vietnam as “an emergent and rising power in international affairs,” while saying the country is in favorable position to help rebuild the global governance system that has been paralyzed by increasing superpower tensions and the outbreak of the Covid-19 pandemic.
|Car production at Vinfast's manfuacturing plant. Photo: Pham Hung|
Under this context, the article called for Vietnam to play a stronger role in global governance in the years to come.
According to the Diplomat, while the existing global governance system has deteriorated due to the Covid-19 pandemic and the increasing strategic tension between China and the US, this offers Vietnam a chance to contribute to the reform of the international system.
Thanks to its impressive response to the pandemic, Vietnam ranked second among 98 countries in terms of performance in managing Covid-19. More importantly, the country has also witnessed a relatively high growth rate compared to its neighbors, and is forecast to recover quickly from the pandemic. To this extent, Vietnam has become the role model in terms of governance.
These achievements have laid a solid foundation for Vietnam to contribute more to the governance of the post-pandemic world, and “if the country takes this chance, it will be able to both enhance its international image and play a more active role in world affairs,” stated the article.
Moreover, as the country is likely to be among the most affected by climate change, due to its geographical location, Diplomat’s article said by staying active in tackling global threats, Vietnam will have more chances to learn more from other developed countries and receive assistance from them.
The article cited Vietnam’s proposal for an International Day of Epidemic Preparedness during its non-permanent membership of the UN Security Council as a good example of how the country can gradually contribute to the revival of global governance, and truly turn into a responsible member of the international community.
Another key factor pointed out by the article is that the country could gain economic benefits from engaging more effectively in global governance. “The proliferation of free-trade agreements (FTAs) that Vietnam has signed in recent years testifies to its desire to integrate itself further into the global economy,” it added.
Prime location for export manufacturers
The significant rise of Vietnam also comes from the economic factor. The Counterpoint’s recent article suggested in an era of protectionism where the jitters of Covid-19 are still being felt by many economies, “Vietnam is soaring to become one of the prime locations for export manufacturers.”
“With its continuous and proactive efforts for open border partnerships, Vietnam is a country that could possibly change the course of the tech era that lies ahead,” stated the Counterpoint.
Vietnamese electronics manufacturing services (EMS) market will grow at a CAGR of 5% between 2020 and 2026. According to Vietnam’s General Statistics Office, the country’s consumer electronics sector recorded its highest ever production at 369.6 million units in October 2020, followed by the electronic components sector at 325.7 million units.
Given the exponential growth in its manufacturing sector along with growing domestic demand and exports, primarily in electronics and automobiles, the EMS business is projected to scale new heights in the country. Many global OEMs and EMS providers like Samsung, LG and Foxconn (Apple’s contract manufacturer) are investing in the production of printed circuit boards, camera modules, printers, servers, phones, networking equipment, televisions and other electronics equipment in the country.
Samsung, which in 2020 held almost 70% of the handset market share in Vietnam, is also one of the largest FDI players in the country. Vietnam has one of Samsung’s largest smartphone production bases outside South Korea. By 2022, Samsung is also projected to complete its $220-million research and development center in Vietnam.
The constant improvement in investment and business policies, participation in bilateral and multilateral free trade agreements, increased FDI and geographical proximity to China have all been active factors in making Vietnam a favorable destination for manufacturers.
Pegatron has pegged almost $1 billion worth of investment in its Vietnamese plant that will be rolled out in three phases, targeting investments in computing, communication and consumer electronics facilities, by 2027.
Foxconn is also moving some parts of its iPad and MacBook assemblies to Vietnam from China against the backdrop of rising US-China tensions, thus seeking to de-risk its production. It has also been awarded a license to build a $270-million plant to produce laptops and tablets in Vietnam.
Google too is moving production of its smartphone brand Pixel for the US market to Vietnam. It is also likely that the company may end up moving its hardware production to Vietnam. Similar plans are underway at companies like Samsung, Intel and Microsoft.
Xiaomi too is aiming to take advantage of cheap labor and other favorable market conditions in Vietnam. Most recently, the company opened its first phone assembly factory in Vietnam.
Counterpoint noted Vietnam is known for its comprehensive and mostly five- to ten-year strategies, like ‘Made in Vietnam 2025: Industrial Policy and Strategy 2025’ and Vision for 2035.
These policies have not only helped in changing Vietnam’s growth story which started 30 years ago but have also facilitated absorption of industry from China, including the shifts triggered by trade wars.
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