ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Trade war

Vietnam reaps sixth straight record year in foreign investment

Trade war drives 9% gain in 2018, pulling garment production from China

The garment industry is shifting production out of China and into Vietnam, such as at this factory near Hanoi, in order to avoid higher U.S. tariffs.   © Reuters

HANOI -- Foreign direct investment in Vietnam climbed 9.1% in 2018 to reach $19.1 billion, the government reports, marking a sixth straight annual record as capital keeps flowing into one of Southeast Asia's fastest-growing economies.

Industries such as apparel have been moving production out of China and into Vietnam looking to escape the higher U.S. tariffs. A prolonged trade war is expected to accelerate this shift.

Vietnam is Asia's biggest beneficiary of the Sino-U.S. trade war, according to Mizuho Research Institute, which estimates the effect will be a 0.5 percentage point boost to its real gross domestic product.

Though investment approvals fell 1.2% in 2018 to $35.4 billion for the first decrease in four years, the dip may be due to the figure not including the large fossil-fuel power plant projects in central and southern Vietnam that received green lights in 2017.

Japan led all nations in 2018 with FDI approvals for Vietnam totaling $8.5 billion. South Korea ranked second at $7.2 billion, followed by Singapore, Hong Kong and mainland China.

Approvals last year included the Hanoi "smart city" project, in which Japanese trading house Sumitomo Corp. takes part, as well as liquid crystal display and camera facility investment by South Korea's LG group in the northeastern city of Haiphong.

Vietnamese real GDP growth is estimated at 7.08%, according to government data. But heavy economic reliance on foreign companies represents a concern. South Korea's Samsung Electronics accounts for roughly 25% of Vietnam's overall exports by value.

"For sustainable growth, Vietnam needs to ease its dependence on foreign capital," said Hiromasa Matsuura, an economist at Mizuho Research Institute.

Vietnam, with a population of nearly 100 million, ranks third among the 10 members of the Association of Southeast Asian Nations, trailing just Indonesia and the Philippines. The country's middle-income population is expanding in large cities, including the capital and the southern commercial center, Ho Chi Minh City.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media