Sat, Dec 08, 2018 - Page 12 News List

Local firms eyeing Vietnam to avoid US tariffs: ministry

By Lisa Wang  /  Staff reporter

More than a dozen local manufacturers have begun scouting production sites in northern Vietnam to circumvent heavy US tariffs on Chinese imports amid a trade dispute, the Ministry of Economic Affairs’ Department of Investment Services said yesterday.

“The US-China trade tensions pose a great risk to Taiwanese manufacturers,” the department said.

“Many companies are assessing the feasibility of moving manufacturing sites [out of China], or adding new sites to mitigate the impact,” it said.

Media reports earlier this week said that Hon Hai Precision Industry Co (鴻海精密), a major assembler of Apple Inc’s iPhones, plans to build a production line in Vietnam.

The department declined to disclose if Hon Hai was among 13 local companies visiting the Southeast Asian nation on a six-day trip that began on Monday.

Vietnam tops the list for Taiwanese manufacturers seeking to avoid the effects of the trade dispute, given its relatively low wage and land costs, as well as attractive tax incentives, the department said.

Vietnam’s northern provinces also have a geographical advantage, as they are adjacent to China and have a convenient port for raw material imports, it said.

In the past, Taiwanese firms such as Formosa Plastics Group (台塑集團) built factories primarily in southern Vietnam.

Indonesia is a popular second choice for Taiwanese manufacturers seeking new production bases outside of China, the department said, adding that it plans to arrange trips to Indonesia, India and the Philippines next year to help local firms gain a better understanding of the investment environment in those countries.

Pegatron Corp (和碩) has reportedly opted to allocate iPhone production to Indonesia to avoid US tariffs.

While Washington and Beijing last week reached a 90-day ceasefire, Taiwanese manufacturers have not halted their efforts to diversify their manufacturing sites beyond China, the department said.

Separately yesterday, Minister of Economic Affairs Shen Jong-chin (沈榮津) said that potential US sanctions against China-based telecommunications equipment maker Huawei Technologies Co (華為) are expected to have little effect on Taiwan, thanks to local firms’ market diversification efforts.

“The impact on Taiwanese companies will be little, as Huawei mainly builds core network equipment. Given its limited sales to the US, the matter will not be a big threat to Taiwanese suppliers that have partnered with other countries, even if Huawei needs to transfer orders to other countries,” Shen told reporters.

Additional reporting by CNA

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