Amid the escalation of trade tension between the United States and China, the Southeast Asian region has the potential to become a destination for companies that want to move their production from the US and China.
These companies are concerned that the trade war between the two largest economies in the world, in the form of the imposition of import tariffs, can damage their demand and production.
Based on the results of a survey from AmCham China and AmCham Shanghai, as many as one-third of US companies in China that number more than 430 companies have or are considering moving their factories out of Panda Country. Southeast Asia was recorded as its main destination.
There are a number of reasons that make the region consisting of ten countries and incorporated into the Association of Southeast Asian Nations (Asean) become “magnet” for foreign factories. The area whose position is not far from China offers low production costs and a manufacturing plant that works well.
In addition, the five largest Asean countries have solid economic growth with an average growth of Gross Domestic Product of around 5.3%, and have improved the ease rating of ease-of-doing-business.
This was also predicted by the Hong Kong Trade Development Board (HKTDC). Nicholas Kwan, Research Director at HKTDC called the Asean region an economic resource and suggested that Hong Kong businessmen place the Asean region as a safe haven during the US-China trade tension.
In addition, producers in the Southeast Asia region also benefit because the United States and China have the opportunity to import more from neighboring China. One of the producers that benefited was Phu Tai Corp., a producer of furniture goods in Vietnam.
Deputy Director General of Phu Tai Corp. Nguyen Sy Hoe revealed, producer of furniture items for Wal-Mart Stores Inc. in the US plans to increase exports to Uncle Sam’s country by 30% this year and next.
He explained, his company would add an investment of around US $ 10 million to develop two plants in Binh Dinh province and renew the production line in two other factories in Dong Nai.
“We see this [trade war] as a great opportunity to increase exports to the US because of the many requests from there. Seeing the escalation of the trade war between China and the US, now many US importers are moving [from China] and buying from Vietnam, “said Nguyen Sy Hoe.