Experts suggest that in order to maintain a high rate of development in exports, it is vital to target new trends, such as semiconductors. This market was worth more than $600 billion last year and is expected to be worth $1.4 trillion by 2029.
According to economists, Vietnam has an open economy with total import-export turnover exceeding 200% of GDP, rendering the economy exposed to external swings. Former director of the Central Institute for Economic Management (CIEM), economic expert Nguyen Dinh Cung, told Doanh Nhan Vietnam online magazine that the country’s economy was open.
As a result, the economy was vulnerable to even external causes. Experts say that finding a solution to this problem will prevent problems, and Vietnam has to adapt immediately.
Cung identified three key components of the Vietnamese economy’s weakness: the foreign direct investment (FDI) enterprise sector, the private sector, and the state-owned company sector. However, according to Cung, these sectors have not been intimately linked or merged with one another.
These components needed to be more closely integrated, he argued, to improve the economy’s resilience to external shocks. When exports decline, they require assistance from the domestic market, and vice versa, he added.
Cung anticipated that the FDI and export sectors would continue to be significant drivers of the economy in the future, but that fundamental changes were required for long-term success. First, analysts say that in order to attract FDI and boost export growth, we cannot continue to rely on the advantage of low prices.
According to Cung, major countries are currently changing their mindset and strengthening their foundations. These countries are boosting their self-reliance in supply chain control by relocating factories to their home country or neighbouring countries, which has had a big influence.
According to experts, the good news was that Vietnam’s position was growing since it had become an essential partner of many large countries. Vietnam’s relationship with the US has also recently been elevated to the status of comprehensive strategic cooperation.
This event has created numerous prospects for Vietnam, particularly in attracting investment in high-tech industries with significant added value, such as the semiconductor industry. Recently, prominent US semiconductor companies and corporations concluded that Vietnam has numerous prospects to build the semiconductor industry ecosystem.
These companies also stated that they were looking into the idea of locating chip facilities in Vietnam. Many significant US semiconductor companies, including Intel, Amkor, Marvell, and GlobalFoundries, announced commitments to invest in Vietnam during US President Joe Biden’s recent visit.
They believe that high-quality human resources, as well as improved business and training capabilities in Vietnam, are more important than low-cost human resources. It is clear that the trend of competing with low-cost human resources has passed.
Previously, the majority of Vietnam’s early investment and export activities were in low-value-added sectors such as textiles, garments, and footwear. Following that, the country quickly climbed up the value chain, becoming a significant electronics assembly centre thanks to the investment of a number of technology “giants.”
Typically, Samsung’s investment has reached US$18 billion, accounting for almost one-quarter of Vietnam’s export value. This has also prompted other tech behemoths, like Apple, to expand their operations.
Experts estimated, however, that in order to retain export momentum, it was required to recruit and grow industries with high technological content, such as the semiconductor industry, because this was the leading trend in the future. According to Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, the worldwide semiconductor market was worth more than US$600 billion last year.
According to Mai, semiconductor technology is a “world story,” and industrialised countries are providing incentives to promote research and manufacturing in this field. He noted that because Vietnam did not have much money to invest, it had to rely on FDI capital attraction for development.
Samsung and Intel are two electronics giants and also leaders in the semiconductor industry. Intel has increased the investment capital of this project to nearly US$1.5bil in 2021, and is planning to invest more to expand the factory in Vietnam.
