Vietnam is becoming a hotspot for the global economy. Geography and politics are also helping the country. Vietnam was the only country in 2023 that received both presidents of the United States and China on a state visit.
The country has a single party ruling system just like China. However, it seems that the Vietnamese people are more sympathetic with the United States. According to a survey only 25 percent of people have a positive view about China, whereas 58 percent of people think positively about the United States. Anyway, China is claiming parts of South China sea waters that belonged to Vietnam.Â
On the political front, China and the United States governments try to cooperate with this country. China thinks of it as a potential ally with a shared history and culture, with a communist party running it. America on the other hand, is trying to diminish its economic reliance on China and Vietnam is a proper candidate.
Vietnam also looks interesting for private sector and multinational companies. As you can see in the chart, the inflow of foreign direct investment to Vietnam is more than its neighbors. Businesses like Vietnam for various reasons. First of all, there are strong tax incentives for companies to move their production line to the country. On the other hand, Vietnam, unlike Indonesia and Malaysia, is not home to radical Islamist thoughts. On the other hand, its young labor is relatively educated and skilled. The wage rates in Vietnam are still lower than the coastal regions of China. On the other hand, its working age population is growing until the next 15 years. All of these factors, attracts the businesses.
Of course there are some drawbacks, mostly related to the government. The bureaucracy of the government is still sophisticated and ineffective. In order to start a new business, numerous licenses are required by different ministries.
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Source: Economist
