the morning market in Sapa to bilateral trade agreements with the U.S.,
Vietnam is sharpening its business teeth. Is it the next Asian Tiger?
Tokyo Weekender gets the lowdown from Christopher W. Runckel.
Tokyo Weekender: Even SARS-free, will
Vietnam suffer from long-term effects on foreign investment and
business projects due to the disease?
Christopher Runckel: Vietnam's
tourism industry along with that of Thailand and much of Southeast Asia
has been greatly affected by fear of SARS.
The effect on industrial
production has been much less but most countries in Southeast Asia
including Vietnam have had their economic growth projections reduced by
one percent or more. This figure translates into hundreds of thousands
of jobs, less tax revenue and lesser payrolls.
The effect therefore has been real and hard on individuals but I
believe the effect will be largely limited to this year as long as
governments in the region such as Vietnam continue to demonstrate the
vigilance on SARS that they have shown to date.
TW: What do you see as the most profitable
sectors for foreign investors to become involved in?
CR: Vietnam is still in transition from a
state-controlled to a market-controlled economy. In this situation, the
opportunities for investment are changing and an investor needs to
continue to research and look for opportunities and to compare these to
opportunities being offered in other countries in the region.
has proved itself an attractive location for production of shoes,
textiles, handicrafts, food items and seafood. For example, Ho Chi Minh
City's textile and garment exports were estimated at US$57.5 million in
April, up nearly US$1 million against those in the prior month.
Meanwhile, its seafood exports reached US$15.2 million in April, or a
10.8% increase compared with the March figure.
In 2003, Vietnam has made a concerted
attempt to attract more light industry by allowing local authorities to
approve business licenses and other changes to speed up investment.
Vietnam wages are low and quality of work is extremely good. Light
industry such as toys, metal fabricated goods, etc. that require a
larger labor component and that compete aggressively on the basis of
cost may find Vietnam a good choice for a new factory.
TW: When do you think Vietnam will be
in the WTO? What reasons can you give for this forecast?
CR: Hanoi has set an ambitious target
date for membership of 2005. Although I don't know whether Vietnam can
meet this target, it is obvious that China's recent entry into the WTO
has further spurred government efforts toward accelerating change in
the economy and that this change is promoting further economic
development and trade.
The increase in Vietnam-U.S. trade is also showing the benefits of
increased openness and for these reasons I am certain that Vietnam will
continue to push aggressively for WTO membership.
TW: What can Vietnam offer that China
doesn't in terms of setting up business there?
CR: Vietnam offers many niche market
opportunities that can compete with China. Vietnam labor costs can be
as cheap and sometimes cheaper than in China. Quality of workmanship is
as good as and often better than in many regions of China.
Local governments in Vietnam have fully realized that they need to do
more to encourage investment and many are revising old policies to
better attract investment.
One thing I have learned in more than 30 years experience with Vietnam
is to never underestimate that Vietnam will continue to improve as a
site for investment and any investor should certainly evaluate it and
compare it with China, Thailand and many other sites. If they do, I
think they may be surprised at the advantages it may offer the right
| Country Name:
Republic of Vietnam
(Official), English (Increasingly favored 2nd
| Political Party:
Party of Vietnam
($1= 14,512 VND,
¥100= 12,400 VND)
|GDP Growth Rate (2002):
Vietnam is the only country in Asia with an average
growth rate of 7% over the last 15 years. It has been as high as 9% and
as low as 4.5%.
tourists to Vietnam have tripled in the last
Marine products (e.g. seafood)
Garments and shoes
| Major Export
the U.S. and Vietnam signing a Bilateral Trade
Agreement in December, 2002, the U.S. is now Vietnam's largest export
market. In the first four months of 2003 following the agreement,
Vietnam's exports to the U.S. jumped 238 percent, with seafood exports
to the U.S. growing to $230 million. Japan also continues to be a major
Information taken from Runckel &
Christopher W. Runckel
is President and Principal of Runckel & Associates. They assist
companies interested in investing, manufacturing or opening an office
or factory in Asia.
Runckel worked in President Ford's White House as
Deputy General Counsel of the Presidential Clemency Board. He was also
the first permanently assigned U.S. diplomat after the Vietnam War. In
1997 he was awarded the U.S. Distinguished Honor Award, the highest
U.S. Award for diplomatic service.