Pham Hong Hai, CEO of HSBC Vietnam (Photo courtesy of HSBC) HCM City (VNS/VNA) - Vietnam is atthe top of the list of markets that could benefit from trade diversion comingfrom US-China trade tensions, building on its increasing competitiveness inmanufacturing, according to Pham Hong Hai, CEO of HSBC Vietnam.
According to HSBC Global Research for the firstquarter of the year, if an Asian economy captured 1 percent of Chinese exportsto US or 1 percent of FDI into China, its GDP would increase significantly.
Vietnam is on the top of the list with apotential increase of 1.2 percent. This was the advantage that Vietnam couldleverage to further boost trade flow across ASEAN, Hai said.
Hai also noted that the threat of macro-economicheadwinds dragging global growth should be the impetus ASEAN needs to push itsreform agenda harder in 2019.
“The year is already shaping up as one where theheadlines will write themselves: markets second-guessing a return of policytightening by the Fed, a Brexit deal or no deal, company downgrades from tradetariff uncertainty, and oil prices running roughshod,” he said.
“Amongst the bearishness, ASEAN remains one ofthe most optimistic and open regions in the world and in 2019 the region hasthe opportunity to further distinguish itself by continuing to drive reform andseek increased openness,” he added.
ASEAN economies can partly offset any tradedownturns if the much-discussed supply chain diversion to Southeast Asia — fromChina, US and the Republic of Korea — materialised, but the transition would bemore widespread if the ease in which goods and services flow across ASEAN wasenhanced, Hai noted.
With great fundamentals of a strong and openeconomy, Vietnam remains an attractive investment destination for internationalbusinesses.
Last year, total foreign investment in Vietnamreached 35.46 billion USD with total disbursed capital increasing 9.1 percentto 19.1 billion USD, marking 2018 as the sixth consecutive record year forforeign investment in Vietnam, according to the Ministry of Planning and Investment.
To drive a more sustainable ASEAN, the regionshould focus on developing regional incentive frameworks and standards, whichwill increase cost effectiveness and the attractiveness of these financialinstruments for corporations, he said.
He noted that it was also important to startconverting the ASEAN Smart Cities Network – launched in April 2018 – from aconcept programme into specific projects across 26 pilot cities.
In addition, it will be crucial to work withChina, the US, Europe and Japan, which have all earmarked Southeast Asia fortheir sustainable development programmes, to push for bankable and transparentinfrastructure projects that will generate commercial demand and, therefore,sustainable debt.
“Clearly, there is no shortage of priorities forASEAN policymakers this year and continued integration of the region is crucialin the face of 2019’s challenging global backdrop,” Hai said.
“Businesses are crying out for tangibledevelopments that will ease intra-regional trade, encourage internationalinvestment and create a sustainable future. So achieving more reform,integration and openness in 2019 will help the region both capitalise andshield itself from global events that are likely to play out over the comingyears,” he added.
“Vietnam has achieved great advantages as thefastest-growing economy (in the region) with a pro-growth government, and thecountry should continue the momentum to further integrate into the region andgain benefits from globalisation opportunities,” Hai said.-VNS/VNA
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