Vietnam not reaping expected US-China trade war benefits

Loc, who represents Thai Binh Province in the parliament and chairs the Vietnam Chamber of Commerce and Industry (VCCI), said Vietnam’s economic growth was under threat, in the context of its declining trade growth, global recession and U.S.-China trade war.

He said at a October 30 National Assembly session that the GDP growth target of 6.8 percent in 2019 would be "a very arduous" target, especially when the national economy depends on two main sources, foreign investment and exports.

Loc cited government data as saying nine-month exports this year had increased by 8.2 percent, half the growth rate in the same period of 2018 and about one-third compared to previous years.

On the other hand, the export market structure has witnessed adverse shifts. Vietnamese exports to the top markets, including the EU, China, ASEAN, and Japan, have all slowed down. "The U.S. is the only export market where it has surged, but this contains a lot of risks and trade fraud," he said.

In the first nine months, exports to U.S. reached nearly $45 billion, up 28 percent year-on-year. Vietnam became one of the six countries with the largest trade surpluses with the U.S.

"While most of these countries are punished by the U.S, who can guarantee that Vietnam is going to be an exception? The ability to maintain exports to the largest market accounting for nearly a quarter of Vietnam's total export turnover, therefore, become fragile," said Loc.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry.

Vietnam's registered FDI, which includes newly-registered capital, capital supplements and stake acquisitions, was $26.16 billion in the first nine months, up 3.1 percent year-on-year, according to the Ministry of Planning and Investment.

While the total registered FDI inching up, investment capital from the two main investors, Japan and South Korea, decelerated in the period, and that from mainland China and Hong Kong surged.

"This is a sign of unsustainable movement and imbalance in FDI, which affects the quality of growth in the long term," said the chairman of VCCI.

To Van Tam, an MP representing the Central Highlands province of Kon Tum, said that Vietnam's GDP growth in recent years has always been among the top in the region, but mainly based on cheap labor, export of resources and agricultural products.

"These elements are important but facing challenges when Vietnam's labor productivity is low," Tam said.

Loc stressed that enterprises have failed to meet the government's tax collection targets for three consecutive years. "That means they are in difficulties."

He proposed that business conditions and business development institutions are reformed to meet new realities. "Otherwise, Vietnam will remain in danger of falling behind."