Vietnam is the top destination for investment capital from Taiwan.
Van Nguyen
According to experts at HSBC, many advanced manufacturing activities from Taiwan (China) will be transferred to Vietnam in the next few decades. Whether it is traditional or high-tech industries, Vietnam is considered a top destination for investment capital from Taiwan…
In 2023, trade between ASEAN and Taiwan (China) reached 117 billion USD, of which ASEAN economies accounted for 17.6% of Taiwan’s exports. According to HSBC, since the Covid-19 pandemic, the trade corridor between both markets has been raised to new heights, largely due to the rearrangement of supply chains in the electronics sector.
STRONG TRADE LINKS
According to HSBC experts, Vietnam has emerged as a leading investment destination attracting Taiwanese businesses. Figures from the Ministry of Planning and Investment show that in 2023, Taiwanese investment in Vietnam increased fourfold compared to 2022, reaching the milestone of 2.2 billion USD.
To date, Taiwan is Vietnam’s fourth largest investor, with nearly 3,200 projects and a total registered capital of over US$39.5 billion. In addition, Taiwan has become Vietnam’s fifth largest trading partner, with annual bilateral trade currently reaching US$25 billion.
Mr. Ahmed Yeganeh, Head of Corporate Banking, HSBC Vietnam, commented on the trade corridor between Vietnam and Taiwan, the direct investment as well as the shift of high-tech manufacturing from Taiwan to Vietnam, known as Taiwan’s top investment destination. From there, it shows the overall picture of future strategic and trade cooperation opportunities between the two economies.
Sharing the same view, Ms. Daphne Lee, Head of Corporate Banking, HSBC Taiwan, said that looking further, it is clear that Taiwan’s strengths in the technology sector make them an indispensable link in the supply chain.
“Therefore, the opportunity is mutual, as Taiwanese businesses can strengthen their trade links in ASEAN, while international technology companies increasingly view Taiwan as an attractive investment partner to realize large-scale technological innovations,” said Ms. Daphne Lee.
According to HSBC experts, one of Taiwan’s most popular exports to ASEAN is bubble tea. The island’s signature drink has become a staple in shopping malls and takeaways across ASEAN, with annual sales estimated at $3.7 billion. Of this, Vietnam, with a population of more than 100 million, contributed $362 million to this sales, behind only Indonesia and Thailand.
“However, the drink combining tea, milk and pearls is not the only success story of Taiwan in Southeast Asia,” HSBC experts commented.
ATTRACTION IN SEMICONDUCTOR INVESTMENT
Taiwan is known as the world’s leading market for electronics and semiconductors, accounting for more than 70% of the high-end chip market. Taiwanese companies produce more than 80% of the world’s personal computers and 90% of servers.
Along with that, Vietnam owns a semiconductor industry that is expected to reach a value of 20 – 30 billion USD by 2030, with the ambition to become an important link in the global semiconductor industry.
“Vietnam has begun to realize that aspiration by issuing policies focusing on attracting high-quality FDI and enhancing training. At the same time, Vietnam possesses an abundant, highly skilled young workforce, a strategic geographical location, a growing consumer market, competitive operating costs, and above all, has signed many free trade agreements with different countries and territories,” said Ms. Daphne Lee.
Currently, the Taiwan Chamber of Commerce Vietnam Branch has more than 600 members, the largest among the trade associations for Taiwanese companies worldwide. In contrast, there are more than 250,000 Vietnamese people living and working in Taiwan.
“Recently, Taiwanese companies have stepped up investment in more advanced electronics. Such investments will help Vietnam improve the skills of its workforce, move up the manufacturing value chain and attract other suppliers,” said Ahmed Yeganeh.
“This is when the two trade partners found each other, Vietnam has become the second largest recipient of investment from Taiwan in the ASEAN region, only after Singapore.
With the key shift from labor-intensive industries to those employing highly skilled and educated workers, the Vietnamese government is introducing preferential policies for high-tech sectors, aiming to attract more quality investments and promising more benefits for foreign investors, including Taiwan.”
Vietnam is familiar with Taiwanese electronics giants such as Foxconn, Pegatron, Qisda, Compal, Quanta and Wistron. Vietnam recently received a US$250 million investment from Tripod Technology in Ba Ria – Vung Tau province.
According to Ms. Daphne Lee, with the key shift from labor-intensive industries to those employing highly skilled and qualified workers, the Vietnamese Government is introducing preferential policies for high-tech sectors, aiming to attract more quality investments and promising more benefits for foreign investors, including Taiwan.
While complex manufacturing operations such as the most advanced semiconductors are likely to remain in Taiwan for the foreseeable future, Ms. Daphne Lee believes that more and more advanced manufacturing will move to ASEAN and Vietnam in the coming decades, as demand increases and the region’s supply chains become more developed.
According to HSBC’s report, Vietnam has witnessed a strong and widespread economic recovery, bringing GDP growth in the second quarter of 2024 to 6.9% and accelerating growth in the first half of 2024 to 6.42%, the second highest mark in the past 5 years.
HSBC forecasts that this unexpected result shows that Vietnam could achieve a growth rate of 6.5% in 2024, becoming the fastest growing economy in ASEAN. These factors have increased the attractiveness of Vietnam in the eyes of international investors, including Taiwanese businesses.
vneconomy.vn
