ICRT continues its Looking South project this week with a look at Vietnam. Join Eric Gau as he chats with CIER Research Fellow Kristy Hsu about the New Southbound Policy’s implications for Hanoi.
Transcript:
Eric Gau: Good morning, everyone and welcome to Looking South here ion ICRT. I’m Eric Gau and we are taking another look at the government’s New Southbound Policy specifically how it will impact ties with Vietnam. With me on the air on today is Kristy Hsu, Associate Research Fellow with the Chung‑Hua Institution of Economic Research. Miss Hsu, welcome to the program.
Kristy Hsu: Good morning.
Eric: Miss Hsu, Taiwan has already been one of the top sources of investment in Vietnam for about a decade now as I understand it. Can you tell us how the Taiwan government can build on this to further expand relations between the two sides under the New Southbound Policy?
Kristy: Yes. Vietnam has been the second most important investment destination to Taiwan. Only next to China for more than a decade. Taiwan started investing in Vietnam as early as late 1980s soon after Vietnam opened door to foreign investment in 1986 under the Doi Moi Economic Reform.
Taiwan has been the number one source for investment for many, many years. Currently, according to Vietnam’s official statistics, as of June this year, accumulated investment of volume from Taiwan into Vietnam reached US$31.8 million ranked as the fourth largest foreign investment source in the country.
However, as many Taiwanese companies are registered in Vietnam as a third country company. For example, a lot of them are registered as a Cayman Island company or Hongkong or Singaporean companies so if we include all these indirect investments together and Taiwan investing in Vietnam will exceed US$50 billion.
What is more important, as Taiwan investments concentrate in manufacturing sector, meaning they’re hiring a lot of workers in their factory. It is estimated that Taiwan employers to get and create as many as 1.5 million jobs in Vietnam.
Given the importance of Vietnam in Southbound Policy as well as the profound basis for Taiwan‑Vietnam trade and investment relations in the past two decades, Taiwan and Vietnam can further work under President Tsai’s New Southbound Policy.
The first thing came into my mind is to facilitate and upgrade Taiwan’s investment in their operations in Vietnam by helping them to improve efficiency and profitability and to provide better investment protection for and assistance to their operations.
In Taiwan, companies are more profitable and continue to expand their operations, the more tax they will paid to the government and create more jobs as I just explained for Vietnamese worker.
The second priority is to work together to develop and nurture human resource needed in both countries for economic growth and sustainable development.
Eric: Miss Hsu, can you give us any concrete examples of successful cases of Taiwanese investment in Vietnam?
Kristy: Yes, and there are around 6,000 Taiwanese companies in Vietnam and lots of them are very successful and highly appreciated by Vietnamese government and consumers.
For example, I was invited two weeks ago by a company named Taisan Holding Company to attend a ceremony where the company made an announcement that they are going to get listed in Taiwan Stock Market since January next year.
The company was established in Vietnam in early 2000 manufacturing baby diapers, adult diapers, and sanitary napkins under its own brand as well as OEM for other international brands. The reason the chairman, Mr. Tai, chose to invest in Vietnam is because of its huge and very young population and the rise of middle‑class.
Therefore, very different from most Taiwanese investors who focus in contract manufacturing or what we called OEM 代工 or 代工生產.
The company decided to create its own brand, and so far the company has established 35,000 distribution channels in Vietnam in the past years and it’s now not only a leading brand in Vietnam but also a very successful brand in Cambodia.
These kind of companies are exactly the New Southbound Policy wishes to promote as OEM manufacturing is always subject to cheap labor costs and clients demand cost down, creating Taiwan’s own brand may provide a solution in the fierce competition.
Eric: What expertise or technology does Taiwan have that you think would be highly sought after in Vietnam?
Kristy: Currently, Vietnam is keen in learning from Taiwan a few things to further advances its economy, and these include Taiwan’s technology and experience in agriculture, in aquaculture, green technology, electronics, and ICT industry.
Furthermore, Taiwan’s experiences in development of SME, small and medium enterprises and entrepreneurship, privatization and reform of their own enterprises.
Land reform and our higher education system and vocational training system as well as our labor management, can provide Vietnam valuable models and lessons as the country moves towards an industrialized and more developed economy.
Eric: In your view, what steps can the Taiwan government take to improve the flow of people in Taiwan between the two countries?
Kristy: The New Southbound Policy emphasized a people‑centered nature and gives priority in people‑to‑people exchange so as to help Taiwan better integrate into the region. Currently, there are around 170,000 Vietnamese workers in Taiwan, only second to Indonesian workers. The number of Indonesian workers is around 240,000.
There are around 4,000 Vietnamese students in Taiwan including a good friend of mine, who is now studying PhD degree in Chung Shan University in Kaohsiung. What is very special about Vietnam is that Vietnam is the second largest source of international marriage migration to Taiwan, only second to China.
There are around 100,000 Vietnamese spouses in Taiwan. They and their children are important new immigrants what we call in Chinese 新住民 to Taiwan.
To improve the flow of people, more and more young Vietnamese are interested now in studying in Taiwan and therefore, our Ministry of Education and local universities are also very keen in inviting more students from Vietnam to study here.
The ministry also encouraged our young people to study in Vietnam or participate in internship programs in Taiwanese companies in Vietnam. This young generation can bridge two countries to better know each other.
The government also encourages more and more provincial level, city level, government and people to exchange with each other.
There are increasing exchanges amongst scholars, researchers, NGOs and functional associations between Taiwan and Vietnam in the past years. With all this kind of exchange, we hope that it will be significant in bringing two countries closer and to develop more comprehensive relations.
Eric: We’ve been chatting with Kristy Hsu of the Chung‑Hua Institution of Economic Research. Miss Hsu, thank you so much for enlightening us today.
Kristy: Thank you very much.
Eric: That’s it for this installment of Looking South here on ICRT. I’m Eric Gau and thank you all for joining us on the air today.