Vietnam striving for global value chain lift
🔁 #Vietnam is transforming into a manufacturing-oriented economy via its increasing participation in the global value chain, especially in manufacturing. Nevertheless, amid the post-pandemic reconfiguration, related policies need to be carefully aligned to the country’s development strategy.
🇰🇷 Over the past years, Samsung Electronics from South Korea has become an exemplary story of a multinational corporation in Vietnam that has been operating successfully in the country and supporting it to climb the global value chain (GVC).
🏭 Samsung inaugurated its biggest research and development centre in Southeast Asia. The new research facility was opened in Hanoi at an estimated cost of $220 million. Samsung has invested an estimated $20 billion and the group is set to add an additional $3.3 billion in Vietnam.
🌍 Samsung Vietnam exported $65 billion worth of products last year, down 0.8 per cent from 2021. According to Samsung’s Supplier List 2022, which covers 80 per cent of goods, the electronics giant had 28 factories producing electronics in Vietnam across 11 provinces. The bulk is centred in the north, with 25 factories.
❓Vietnam’s economic outlook:
📌 According to the Ministry of Planning and Investment (MPI), the contributions of such businesses to Vietnam’s economic growth are hugely significant. The country’s economy grew 8.02 per cent last year, and 3.32 per cent in the first quarter of 2022. The Vietnamese government has consistently underlined the big role of foreign direct investment (FDI) in spurring its exports via GVC participation, as well as boosting economic growth.
📌 MPI statistics indicate that disbursement of FDI in Vietnam in 2022 was estimated at nearly $22.4 billion, up 13.5 per cent on-year, the highest in five years. As of December 2022, total newly registered and newly added capital and capital contributions and stake acquisitions in the country reached $27.72 billion, down 11 per cent on-year.
📌 Foreign investors pumped money into 19 out of 21 national economic sectors, of which the processing and manufacturing industry took the lead with $16.8 billion, or 60.6 per cent of the total registered capital.
📌 During January-April 20, 2023, total newly registered and newly added capital, and capital from stake acquisitions and capital contributions from foreign investors hit $8.88 billion, down 17.9 per cent on-year. Total four-month FDI disbursement touched an estimated $5.85 billion, down 1.2 per cent on-year.
🆕Vietnam continues to be a highly attractive production base to other multinationals, the influx of these new projects will also help shape its future GVC participation. For example, the media reported Apple shifting nearly 30 per cent (up to four million units) of its wireless headphones into Vietnam away from China. As a result, supplier GoerTek Inc. will move its production in the same direction.