With China and the US as its largest export destinations, Vietnam is seeking ways to insulate itself from an escalating trade war between the world’s two biggest economies.
Analysts are calling for measures from devaluing the dong to increasing scrutiny of products to counter an anticipated flood of Chinese goods.
The Hanoi-based National Center for Socio-Economic Information and Forecast — under the Vietnamese Ministry of Planning and Investment — has submitted a report to the ministry on the potential effect of the trade war and how authorities should prepare to defend the economy.
Photo: Reuters
“If the US and China escalate the tension with tit-for-tat moves, it could reduce our exports and foreign investment inflow and hurt domestic production,” center deputy director Luong Van Khoi said in an interview, without giving details of the report.
Vietnam’s reliance on exports and foreign direct investment to power growth makes it vulnerable to the showdown between the US and its trading partners such as China and the EU.
The economy, much like other developing nations, is also under threat from financial volatility with the currency and stocks weakening while inflation is surging.
“It would be naive to think that Vietnam will remain unscathed from the global trade war,” said Eugenia Victorino, an economist at Australia and New Zealand Banking Group in Singapore. “Vietnam is well integrated into global supply chains. The government needs to carefully calibrate its external and domestic policy settings to offset these risks.”
The State Bank of Vietnam, the central bank, should consider devaluing the dong against the US dollar to boost the competitiveness of Vietnamese products, the Vietnam Institute for Economic and Policy Research said this month.
The dong, which has lost more than 1 percent this year and is trading at a record low, is still performing better than most Asian currencies.
“Devaluing the dong can help exports, but it will also fuel inflation and increase costs in importing materials for domestic productions, therefore we must be very cautious,” said Can Van Luc, a senior economist at Hanoi-based Bank for Investment and Development of Vietnam. “A drop of about 2 percent for the dong for the entire 2018 will be suitable.”
With the US threatening more tariffs on Chinese goods, Vietnam is worried that Chinese products such as garments, leather and furniture would flood the local market.
The Vietnamese Ministry of Industry and Trade is working to prevent such an eventuality, Minister Tran Tuan Anh said this month.
The nation last year imported US$57 billion in goods from China.
Ministries should work together to come up with non-tariff measures to limit large inflows of Chinese products, both Luc and Khoi said, adding that authorities need to intensify quality checks at border checkpoints and increase quality requirements.
Reducing costs for exporters and producers by cutting the number of licenses and permits, as well as helping them find new markets, would also help, said Nguyen Anh Duong, head of the macroeconomic policies department at the Central Institute for Economic Management, a government think tank in Hanoi.
Exports, which accounted for 102 percent of GDP last year, are holding up. They gained 16 percent in January to last month from a year earlier, outperforming those in Singapore and the Philippines.
Vietnam has transformed itself into a manufacturing giant and shipments of Samsung Electronics Co alone accounted for about one-fourth of its US$227 billion in exports last year.
It would need exports to remain strong to support economic growth, which eased to 6.8 percent in the second quarter. The government has already forecast a further slowing in the second half of the year.
In months, Lo Yuet-ping would bid farewell to a centuries-old village he has called home in Hong Kong for more than seven decades. The Cha Kwo Ling village in east Kowloon is filled with small houses built from metal sheets and stones, as well as old granite buildings, contrasting sharply with the high-rise structures that dominate much of the Asian financial hub. Lo, 72, has spent his entire life here and is among an estimated 860 households required to move under a government redevelopment plan. He said he would miss the rich history, unique culture and warm interpersonal kindness that defined life in
AERIAL INCURSIONS: The incidents are a reminder that Russia’s aggressive actions go beyond Ukraine’s borders, Ukrainian Minister of Foreign Affairs Andrii Sybiha said Two NATO members on Sunday said that Russian drones violated their airspace, as one reportedly flew into Romania during nighttime attacks on neighboring Ukraine, while another crashed in eastern Latvia the previous day. A drone entered Romanian territory early on Sunday as Moscow struck “civilian targets and port infrastructure” across the Danube in Ukraine, the Romanian Ministry of National Defense said. It added that Bucharest had deployed F-16 warplanes to monitor its airspace and issued text alerts to residents of two eastern regions. It also said investigations were underway of a potential “impact zone” in an uninhabited area along the Romanian-Ukrainian border. There
The governor of Ohio is to send law enforcement and millions of dollars in healthcare resources to the city of Springfield as it faces a surge in temporary Haitian migrants. Ohio Governor Mike DeWine on Tuesday said that he does not oppose the Temporary Protected Status program under which about 15,000 Haitians have arrived in the city of about 59,000 people since 2020, but said the federal government must do more to help affected communities. On Monday, Ohio Attorney General Dave Yost directed his office to research legal avenues — including filing a lawsuit — to stop the federal government from sending
A Zurich city councilor has apologized and reportedly sought police protection against threats after she fired a sport pistol at an auction poster of a 14th-century Madonna and child painting, and posted images of their bullet-ridden faces on social media. Green-Liberal party official Sanija Ameti, 32, put the images on Instagram over the weekend before quickly pulling them down. She later wrote on social media that she had been practicing shots from about 10m and only found the poster as “big enough” for a suitable target. “I apologize to the people who were hurt by my post. I deleted it immediately when I
RSS