Vietnam Seeks to Expand Its Economy

China is Vietnam’s biggest trading partner. However, the two countries are competitors in international trade. Now, Vietnam is taking steps to deal with China’s surprise decision to devalue its currency. Vietnam is also making an effort to increase its exports in a very competitive part of the world.

In August, the value of China’s money fell by 3.5 percent against other currencies in foreign exchange markets. In recent months, the value of the Japanese yen, the Korean won and other Asian currencies also fell. That made exports from those countries less costly.

Vietnam let the value of its currency, the dong, go down two times earlier this year. The idea was to gain more foreign investment in the country.    

Manufacturing is an important part of Vietnam’s economy. In fact, the manufacturing sector grew by nearly nine percent last year. However, Vietnam faces strong competition from its trading partners. Vietnam also could face a flood of Chinese imports as China seeks new markets for its goods. The reason for those imports: slowing demand for goods in China.

Pham Luu Hung is with SSI Research in Hanoi. He says low taxes and problems in China are resulting in more shipments of Chinese trucks and steel to Vietnam.

“We share a border with China, so we import a lot from China, so if the economy is slowing down, I think cheap Chinese products would be easier to come in to flood the market here.”

Infrastructure investment is becoming a major trade issue

Some Asian countries are improving roads, air and sea ports, and other infrastructure in an effort to increase trade. The Philippines has increased work on infrastructure this year. Philippine officials note that the country has an English-speaking workforce, which can appeal to foreign investment.       

Like many Southeast Asian nations, Vietnam is seeking money for infrastructure projects. The planned improvements are to meet the demands of international cargo shippers.

Vietnam has accepted development aid from Japan to build a new airport terminal in Hanoi. The building is expected to open this year. More aid has gone to help build Ho Chi Minh City’s public transportation system, which has yet to open.

With better infrastructure and low-cost labor, Vietnam hopes to develop high-value manufacturing industries to replace the clothing industry. Major technology companies, such as Intel in the U.S. and Samsung in South Korea, have invested billions of dollars in Vietnam since 2010.                   

Sandeep Mahajan is an economist with the World Bank. He says Vietnam needs to do more to make land and financing available to private businesses. That way, he says, local companies can join the factory supply chain. Today, investors from other Asia countries operate factories that receive parts and supplies manufactured in China,        

An increase in private investment could raise earnings in a country where 12 percent of people live in poverty. Vietnam’s trade relationship with China is valued at $50 billion in trade a year.

I’m Mario Ritter.

Ralf Jennings reported this story for VOA. Mario Ritter adapted it for VOA Learning English. George Grow was the editor.