The two factories - in Bac Ninh and Thai Nguyen outside the capital Hanoi - look like small towns scattered along the mainland of the Red River (Red River). The facility is also a gigantic scale - filled with more than 149,000 workers. So, when the prospect of relocating mass-produced industries from China is increasingly becoming increasingly reality, who will take advantage of these three countries?
The Philippines is unfortunately left behind in the infrastructure aspect. The expensive electricity costs and the famous complex bureaucracy make it the last competitor. Vietnam is the one who leads. In 2017 alone, the country managed to attract foreign direct investment (FDI) of 35.88 billion US dollars. For comparison, Indonesia, which has a population three times larger, can only attract 32.34 billion US dollars. In my mind, there are four main issues that determine a country's competitiveness. The first, is education. All three countries have millions of young workers.
The challenge now is to match it with industry needs. Although Indonesia and Vietnam produce more than 100,000 engineers each year, their compatibility is often questionable. It is clear, there is a shortage of engineers for the next two to five years. According to the Indonesian Engineers Association, the industry will require an additional 280,000 engineers by 2023. VietnamWorks, an online labor agency in Vietnam, predicts that the country lacks 500,000 Information Technology (IT) engineers by 2020. Certainly, more emphasis is needed on vocational training and placement work based on the specific needs of the industry. Also read: In order not to lose from Vietnam, infrastructure development must continue to be done The second issue is nationalism. Business barriers like this are more rhetorical and are used by elite players who have an interest in preventing competitors. Interestingly in Indonesia, more than 350 businesses in 16 sectors are included in the Negative Investment List by the Government. As a comparison, Vietnam's communist government limits similar lists to only 14 strategic sectors, including broadcasting, import / export, airports and telecommunications. Whatever the consideration, the government needs to voice clearly why foreign participation is prohibited in certain sectors, is it more to the issue of national security (the defense sector) or to safeguard the sector with high employment absorption (agriculture and food processing)? The third issue is democracy. Behind all the arguments by liberal western media, most investors don't care about democracy and human rights, that's why many American corporations have entered China over the past few decades. It needs to be emphasized first the difference between democratic principles and legal certainty. Multinational companies are more comfortable operating in markets that respect the sanctity of contracts and have a legal system that cannot be corrupted (such as Singapore). The same is true in the Philippines and Indonesia, where companies are haunted by administrative regulations that accumulate. This bureaucratic deduction has a significant impact on business expansion. The fourth issue - which may be more abstract - is about 'character' and 'national history'. Vietnamese people have lived in war for more than thirty years - against aggressors from France, the United States and China. Economic reform (called "Doi Moi") was only launched in 1986 where after that the country grew rapidly - from GDP 36.65 billion US dollars in 1987 to 223.8 billion US dollars in 2017. The last few decades are a period of " pursue "where the younger generation enjoys the benefits of a clearly capitalist economic system. The same cannot be said for Indonesia and the Philippines, where decades of Western-style "trickle-down" implementation still leaves millions of poor and marginalized people. There are almost 26 million people in Indonesia who live below the poverty line. Coupled with distrust of the Washington Consensus - some economic policy recommendations that look promising a lot, but produce little. When President Donald Trump continues his attack on China, Southeast Asian giants need to take heavy decisions to attract foreign investment. If not, this historical opportunity will be wasted and millions of manufacturing jobs will be lost in this area.