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The trade war slows down global economic growth, especially the US and China (two major trading partners of Vietnam), thereby reducing demand for exports of Vietnam. Vietnam and its negative impact on FDI inflows.
This trade war is inevitable and is likely to last, although recently it appears that the parties are making some progress in negotiations. For a number of reasons:
– On the US side, although the approach between the US presidents is different, the US basically sees China as a geopolitical rival, threatening America’s No. 1 power position.
(President Barack Obama uses TPP as a tool to create an alliance to surround China. President Donal Trump uses direct hit measures on goods to force China to negotiate and change policy)
– On the Chinese side, the implementation of US requirements on intellectual property rights and equality between FDI and domestic enterprises is very difficult. Unlike Vietnam, Chinese enterprises (both private and state-owned enterprises) are very strong, have great power (lobbying policy) and exist in industries where the US has strengths (information technology). , car, bank …). It is unlikely that China will treat American businesses equally.
The US-China trade war is an opportunity for Vietnam to participate more deeply in the global value chain, improving the quality of FDI inflows.
* Challenge:
– The trade war slows down global economic growth, especially the US and China (two major trading partners of Vietnam), thereby reducing demand for exports. of Vietnam and its negative impact on FDI inflows.
– Some Chinese products are affected by tax rates, especially those produced by domestic companies, which can be dumped to the Vietnamese market (making it difficult for domestic production in Vietnam). countries), or disguised as Vietnamese goods for export to the US (increasing Vietnam’s export turnover to the US, leading to an increase in the risk of Vietnam being punished by the US).
– Trade war can lead to currency war. The sharp devaluation of the RMB and a series of other Asian currencies makes it difficult for Vietnam to both maintain a competitive advantage (in terms of production costs and export prices) in attracting FDI, both at the same time. maintain stable exchange rate and macro economy.
The trade war slows down global economic growth, especially the US and China (two major trading partners of Vietnam), thereby reducing demand for exports of Vietnam. Vietnam and its negative impact on FDI inflows.
* Opportunity:
This trade war is inevitable and is likely to last, although recently it appears that the parties are making some progress in negotiations. For a number of reasons:
– On the US side, although the approach between the US presidents is different, the US basically sees China as a geopolitical rival, threatening America’s No. 1 power position.
(President Barack Obama uses TPP as a tool to create an alliance to surround China. President Donal Trump uses direct hit measures on goods to force China to negotiate and change policy)
– On the Chinese side, the implementation of US requirements on intellectual property rights and equality between FDI and domestic enterprises is very difficult. Unlike Vietnam, Chinese enterprises (both private and state-owned enterprises) are very strong, have great power (lobbying policy) and exist in industries where the US has strengths (information technology). , car, bank …). It is unlikely that China will treat American businesses equally.
The US-China trade war is an opportunity for Vietnam to participate more deeply in the global value chain, improving the quality of FDI inflows.
* SOLUTION
1. Macro solutions:
– Continuing to maintain the target of macro stability in 2019, not sacrificing stability in exchange for economic growth: In the context of global instability, political and macroeconomic stability should continue to be the goal. priority of Vietnam to ensure a favorable and attractive investment environment.
– Flexibility in exchange rate management: it is possible to consider loosening a reasonable exchange rate band for 2019 especially in the context that currencies of other countries are falling sharply in 2018 – 2019 (Indonesia, India …). reduce Vietnam’s competitiveness in exports and attract FDI.
– There are policies to boost investment of all economic sectors in 2019-2020: This is the period when the global economy is going down and growth slows down. Therefore, in order to maintain the growth rate of 7% / year, solutions to unlock investment resources from private economic sectors, FDI need to be implemented quickly (such as the early adoption of the PPP Law).
– Proactively prepare conditions and take advantage of opportunities in integration with economies in CPTPP, EVFTA, … in the coming time: strengthen trade and investment promotion delegations with the above countries.
– Accelerate the equitization process of State-owned enterprises in order to create flexibility and dynamism in improving and accessing new technologies from FDI enterprises: I.
2. Solutions to attract FDI:
– Establishing an interdisciplinary working group for international trade and investment in the model of macroeconomic operating group 1317: The working group is headed by a Deputy Prime Minister and the standing focal point is the Ministry of Ke. Planning and Investment. Members are leaders of relevant ministries, departments and agencies from other ministries. This working group is responsible for advising the Prime Minister on: (i) Flexible preferential investment mechanisms to attract spillover FDI, (ii) Monitoring factors affecting spillovers. FDI (such as technology transfer, connecting with domestic enterprises) and proposing policies to enhance spillovers, (iii) Monitoring developments of political tensions between countries, trade war and trade association trend and propose suitable solutions.
– Increase the initiative in investment promotion: Leaders of ministries actively go abroad to approach large corporations. Proactively propose flexible incentives for these corporations to attract large enterprises with spillovers, holding high technology, and source technology to invest in Vietnam.
– Additional funding for investment promotion activities suitable to the size and number of investors and investment markets that need to be promoted.
– Develop technical barriers towards the goal of improving the quality of FDI (in technology transfer, linking with the local economy) while preventing FDI projects that pose a risk of environmental pollution. schools, FDI projects in areas sensitive to security and defense (by planning barriers, technology …) or FDI projects with too small scale (by entry and exit visa barriers. FDI enterprises that create 100 jobs or more for Vietnamese have an open visa policy; in contrast, for micro FDI enterprises that create less than 10 jobs, only short-term visas are issued. Tourist visa for investors …).
– Develop specific mechanisms to create a favorable business investment environment to attract hi-tech FDI projects in the context of Industry 4.0 through the following specific solutions:
+ The Government develops or has policies to encourage businesses / organizations to build large data warehouses.
+ Promote investment in the development of information technology (5G) infrastructure, traffic connecting to – to high-tech parks.
+ To attract investment in infrastructure and services so that high-tech zones and cities become areas with high quality of life, meeting the requirements of international human resources in the high-tech sector.
+ Have a mechanism to attract high quality human resources in the field of Industry 4.0 (such as granting open work visas), proactively approaching a team of brainpowered Vietnamese workers abroad.
+ Attract and adopt policies to support Universities to train high-tech industries, develop interdisciplinary training programs (such as information technology and finance, information technology and agriculture …).
+ To speed up the construction progress so that the National Innovation Center will soon come into operation and bring into play its effectiveness.
Source: Foreign Investment Agency