Vietnam to remain manufacturing hotspot

[15 Dec. 2012] - Vietnam is expected to move into the top 10 most competitive nations for manufacturing in next five years.  

According to a Global Manufacturing Competitiveness Index report released by Deloitte Touche Tohmatsu and the US Council on Competitiveness, Vietnam will jump from its current global ranking of 18th to 10th.

The report is based on the responses of more than 550 senior manufacturing executives worldwide to a wide-ranging survey discussing the current business environment and manufacturing sector global competitiveness.


This is the second time this report has been released and the first time Vietnam is ranked among the most competitive nations for manufacturing.

Executives said access to talented workers was the top indicator of competitiveness, followed by a country's trade, financial and tax policies, and then the cost of labour and materials, supplier network, legal and regulatory system, physical infrastructure, energy cost and policies and local market attractive.

Currently, China is the most competitive and is expected to hold that distinction five years from now, followed by India, Brazil and Germany. In South East Asia, Vietnam is the second most competitive manufacturing nation, following Singapore but ahead of Thailand, Malaysia and Indonesia.

"Frontier markets in Asia such as Vietnam and Indonesia are on the rise," said Tim Hanley, Deloitte Touche Tohmatsu's global leader of manufacturing.

"The global CEO survey results echo the view that while China and India are still prominent in discussions, manufacturers are turning their focus to these frontier markets for growth to capture both the growing local consumer demand and to serve as strategic manufacturing hubs in the global value chain," he added.

Foreign direct investment inflows into Vietnam are currently on a downward trend amid the challenging domestic economy and global economic troubles. However, the responses of executives in this report underscore the attractiveness of Vietnam for manufacturing investors in the long-term.

Several multinational companies have recently announced huge investments in Vietnam. Samsung Electronics this month got an investment certificate for investing additional $830 million in Vietnam. Back to April, Nokia broke ground of its $320 million mobile-phone factory in Bac Ninh province, not far from Samsung's manufacturing site.

Coca-Cola last month announced plans to invest an additional $300 million in Vietnam, raising total investment capital of this company in the country to $500 million.

"Vietnam is an important growth market in Asia-Pacific as we work to achieve our 2020 vision goal of doubling system revenues this decade," Muhtar Kent, chief executive officer of Coca-Cola Company, said during a visit to Hanoi.

"Vietnam's economy has maintained healthy growth in recent years and this new financial commitment is more than an investment in Coca-Cola's expansion in Vietnam, it is also an important acknowledgement of our belief in the long-term potential of this key market," he added.

Japan's Fuji Xerox, a manufacturer of copiers, multifunction devices and printers, in August also decided to build a $110 million manufacturing facility in Haiphong.

Fuji Xerox said it chose Vietnam because of the country's steady progress toward industrialisation.

"The country is advantageous as it has industries such as information equipment manufacturers in a concentrated manner, as well as an extensive land transportation network connecting the country with China, Thailand and other ASEAN nations, which will facilitate Fuji Xerox in establishing supply chains," the company said in an announcement. (Vietnam Investment Review)

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