Friday, September 14, 2007

Taiwan's CNAIC says says Vietnam is a great opportunity

Vietnam an opportunity, challenge: CNAIC

Thursday, September 13, 2007
By Dimitri Bruyas, Special to The China Post

The Chinese National Association of Industry and Commerce (CNAIC) said yesterday than Vietnam has become an opportunity and a challenge since it has joined the World Trade Organization (WTO) in January.

The round table discussion addressed in particular the question of Taiwan foreign investment in Vietnam for the last 9 months of this year.

Following a survey on the evaluation of the environment and risks involved with investment in China, published this year by the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA), Vietnam was already cited by Taiwan overseas investors as the second-best choice of investment in the near future.

"I first invested in Vietnam 12 years ago," said Screen Chen, director of a textile company, Jatta Enterprise Co., Ltd. "But two years ago, in the wake of Vietnam participation into the WTO, foreign investors have suddenly been pouring a lot of capital into the country."

While between 1988 and 2005, Taiwan's investment in Vietnam ranked first with a total value of US$8.2 billion, in 2006, Taiwan's position deteriorated. The country ranked 9th last year following the massive investments from Korea, Hong Kong, or Japan.

Korea invested in Vietnam US$2.8 billion in 2006, and Taiwan invested US$225 million, according to the CNAIC's figures.

"More than 30 percent of the Vietnamese population is ethnic Chinese," said Chen. "This is an important factor for the 30,000 investors from Taiwan who are already settled in Vietnam."

However, as some participants in the CNAIC's forum said, Vietnam's participation in the WTO should not only be seen as an opportunity, but also as challenge.

"In the mid- and long- term, there is a potential risk that the labor market would not be strong enough to support the increasing labor demand of foreign companies, which would increase average wages paid by employers," said Chen. "For the last 8 months, the prices of land and stock-shares on the market have been multiplied by ten," he added.

Moreover, participants in the CNAIC's forum also said that Vietnam has already signed many Free Tree Agreements (FTA) with the U.S., Japan, Korea and China. On the other hand, Taiwan has so far only signed FTAs with less developed countries.

"However I am optimistic because Taiwan and Vietnam compete in extremely different economic sectors, which means that cooperation is more probable than competition," said Chen.

In 2006, the overall trade balance of overseas investors from Taiwan in Vietnam amounted to US$4 billion, according to the CNAIC's figures.