In the longer term, FDI flows may decrease in China and move out of the country. Vietnam has the opportunity to attract investment capital when many investors wish to set up business to enter Vietnam market.
Earlier, according to the survey of FDI Market in the Asia – Pacific region, Vietnam is the 2nd largest country that attracts FDI after China. However, rising labor costs in China in recent years has created opportunities for the emerging markets in Asia including Vietnam to enhance their competitiveness in the manufacturing sector.
Specifically, the cost to open one factory to produce chemical equipment or pharmaceutical technology in Vietnam is cheaper than in China by 50%. Similarly, the cost to build an auto manufacturing plant in Vietnam is 40% cheaper than in China. Foreign investors have sent signals to switch manufacturing into Vietnam.
Looking at the medium term, the picture of foreign investment in Vietnam is bright. The domestic market continued to recover with the forecasting GDP growth for 2015 is 6.1% and increase to 6.2% in 2016.
Therefore, if Vietnam can make good use of opportunities, maximize cost benefits; enhance the skills of workers and improve production technology, Vietnam will benefit in the upcoming shift.