Biden economic policies likely to be kinder on Vietnam: analysts

By Phuong Anh, Quynh Trang, Vien Thong, Dat Nguyen November 8, 2020 | 08:33 pm PT

Joe Biden, then U.S. Vice President, shakes hands with Vietnam's General Secretary Nguyen Phu Trong at a luncheon in Washington D. C. on July 7, 2015. Photo courtesy of Vietnam's Ministry of Foreign Affairs.

The possible revival of a major trade pact and a less aggressive policy on currency manipulation will benefit Vietnam when Joe Biden assumes the U.S. presidency, analysts say.

Dang Hoang Hai Anh, a visiting professor at Indiana University in the U.S., said Biden, unlike Donald Trump, supports global trade and wants to reduce protectionism, which would likely benefit Vietnam, for whom exports are vital.

Biden last year expressed a willingness to lead the U.S. back into the Trans-Pacific Partnership, which is now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

In 2017 Trump pulled the U.S. out of the TPP, which would have put around 40 percent of the world economy on the side of the U.S. compared to China’s 18-20 percent.

Other analysts expect Biden to take Vietnam’s so-called currency manipulation less seriously than Trump.

Michael Piro, COO of Ho Chi Minh City-based consultancy Indochina Capital, said though Biden has concerns about the U.S.’s trade deficit with many countries, including Vietnam, he is unlikely to put pressure as Trump has done.

The U.S. under Trump has placed Vietnam on a "currency manipulation watch list" following its rising trade surplus in recent years.

The U.S. was Vietnam’s largest export market, with the value of its shipments rising 24 percent year-on-year to over $62 billion in the first 10 months, according to Vietnam Customs.

The U.S. Treasury Department determined that in 2019 Vietnam’s currency was undervalued by about 4.7 percent against the dollar due in part to government intervention, and the Commerce Department last week slapped preliminary countervailing duties on Vietnamese vehicle tires, alleging they were subsidized by an "undervalued currency."

"The charge of ‘currency manipulation’ is a distinctive tool of the Trump presidency that is unlikely to be used by Joe Biden," Salvatore Babones, an associate professor at the University of Sydney in Australia, said.

He added that Vietnam could easily prevent any such charges by making more data available about its currency holdings and operations.

Nguyen Xuan Thanh, a lecturer at Fulbright University Vietnam, said less pressure in the matter of currency manipulation would lower the risks for the country next year.

Tough on China

Some analysts said Biden would maintain the tariffs that Trump imposed on China and the ongoing bilateral trade tension would likely continue, meaning more companies would seek out Vietnam as a safe haven.

"In terms of policy, Washington will continue to be tough with Beijing regardless of whether the U.S. president is a Democrat or a Republican," Thanh said.

If so, the shift by manufacturers from China to Vietnam will continue as they seek to diversify their supply chain, a trend that began last year.

But Vietnam is not their only destination since other Southeast Asian countries are also taking initiatives to attract foreign direct investment and many companies are also considering returning to their base in North America and Europe.

Analysts expect a Biden-led administration to have a less dramatic effect on stock markets than Trump’s.

Nguyen Quoc Bao, head of the School of Finance at the University of Economics Ho Chi Minh City, said in the short term the stock market could drop as many Vietnamese expected a victory for Trump.

In the longer run it is likely be stable, and this is not what most investors want since a fluctuating market provides more opportunities for a quick buck, he added.