China leads among East-Asian nations in the Global Retail Development Index, ranking second globally. Other Eastern Asian nations in the index include Malaysia (9), Indonesia (15), Sri Lanka (18), India (20), the Philippines (23) and Vietnam (28).
Op-Ed Commentary: Chris Devonshire-Ellis
The most recent FDI data from the World Bank shows that China and the larger ASEAN nations have performed well the past 18 months in terms of generating increased foreign direct investment. The data, which covers 2013 figures in total, show a 17.7 percent overall increase in FDI for China, yet an even more impressive 20.4 percent for the Philippines and 19 percent for Malaysia. The Philippines data may seem overly strong given the much publicized spat with China over disputed islands, yet this has clearly, as was stressed at the time, not manifested in a slowdown of investment. Both the Philippines and Malaysia remain strong destinations for Chinese as well as other foreign investment.
HANOI – Vietnam’s Department of Foreign Investment (DFI) has reported that, in the first five months of this year, the country saw a steep rise in foreign direct investment (FDI) capital from Hong Kong and China.
Thirty-eight countries and territories invested in Vietnam between January and May. Hong Kong contributed US$630 million in newly registered FDI, making them the second largest investor into Vietnam, and accounting for 11.5 percent of total investment into the country. Hong Kong’s FDI was a fourfold increase over its investment during the same period last year.
HANOI – Following in the footsteps of the Philippines, Vietnam is considering taking China to an international maritime court to resolve a simmering dispute over contested waters in the South China Sea (also known as the East Sea by Vietnam). Vietnamese Prime Minister Nguyen Tan Dung has stated that Vietnam is contemplating a series of measures in response to recent provocative Chinese actions – these include possible legal action, such as filing a case with the Permanent Court of Arbitration at The Hague, located in the Netherlands.
But problems could flash up and some countries have longer term issues.
Op-Ed Commentary: Chris Devonshire-Ellis
With China becoming embroiled in increasing numbers of regional tensions, the operational risks for foreign investors in a number of these countries should be assessed. Recent riots in Vietnam for example, while going completely unreported in China, have hit the headlines in the West, while Hong Kong Shippers’ Council chairman Willy Lin Sun-mo has said that Hong Kong manufacturers based in the Pearl River Delta are running out of alternative, low-cost factory locations elsewhere.
The issue, especially as many foreign manufacturers are looking at nearby low-cost manufacturing locations, is key to businesses faced with rising China labour costs. The Chinese middle class consumer market is expected to increase by 350 million people over the next seven years, and that additional manufacturing capacity to service them is increasingly being placed elsewhere. This is especially true in light of the China-ASEAN Free Trade Agreement, which impacts upon many countries, including Vietnam, reducing customs tariffs on thousands of products to zero.
- Deciding on Your Sourcing Partner
- Understanding Vietnam’s Sourcing Models
- Choosing the Right Sourcing Model
- Op-Ed: Vietnam as the Ideal Sourcing Destination
The newest issue of Vietnam Briefing Magazine, titled “Developing Your Sourcing Strategy for Vietnam,” is out now and available as a complimentary download in the Asia Briefing Bookstore from now through the month of July.
Rising costs throughout the Asian region, and in China particularly, are driving businesses to look elsewhere for their sourcing partners. Vietnam has emerged as a prime location for foreign companies seeking lower cost sourcing options.
The country stands out as an ideal location for sourcing for a number of reasons. Key among these are Vietnam’s plentiful supply of cheap labor, low business expenses, political stability, and growing domestic consumer market. The country also has substantial tariff, tax, and quota advantages for a number of products due to the country’s inclusion in numerous free trade agreements. Vietnam also has a number of strategically located industrial parks that investors can take advantage of.
An Introduction to Doing Business in Vietnam 2014 (Second Edition), which is out now and available as a complimentary download in the Asia Briefing Bookstore, provides readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in the country.
HANOI – The Vietnamese government has recently released a new Circular on the procedures a foreign worker must adhere to in order to be considered for a work permit. Circular 03/2014 tightens the regulations for foreign workers seeking to come to Vietnam.
The Circular will take effect on March 10, 2014 and is intended to help guide the implementation of the proposed Government Decree 102/2013.
HANOI – Created in 2009, Bitcoins are a peer-to-peer virtual form of currency able to be bought or sold on online exchanges. Additionally, the coins can be “mined” using high-performance computers and complex algorithms. While the value of a single Bitcoin can be very volatile (the price often swings wildly), the total value of Bitcoins in the world is estimated to be around US$7.5-10 billion.
Bitcoin was originally seen as a low-cost way of sending money electronically. It essentially removed the need to use third parties, such as banks, in order to move funds. A key differentiator from other currencies for Bitcoin is that it is not regulated by a central bank.
Dec. 4 – The government last week passed a new decree that will increase minimum wages throughout Vietnam as of December 31, 2013, which will be effective for enterprises, co-operatives, household businesses, foreign companies and international organizations operating in the country.
Replacing Decree 103/2012/ND-CP, the new Decree 182 will implement increases of up to VND2.7 million (US$130) in Vietnam’s four different geographic regions categorized on the basis of living standards.