Why Vietnam can become the new Factory of the World (Term Paper Sample)

Why Vietnam can become the new Factory of the World
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Why Vietnam can become the new Factory of the World
Although most people know Vietnam as one of the few Asian countries that have engaged in warfare with American and European countries, it is becoming one of the fastest growing business hubs in Asia. For decades, China has dominated business in Asia mainly due to its business relations with the United States and other first world countries; however, the growing military tensions between China and the United Sates and the emerging trade wars are forcing most foreign counties to move their business to other Asian countries such as Vietnam which are more accommodative in terms of trade policies and government. Government support, openness to foreign investors, free trade agreements and emerging demographics are some of the reasons Vietnam can replace China as the new factory of the world.
As Vietnam’s government continues developing new strategies to improve the country’s socio economic status, the government has identified entrepreneurship as one of the foundations of improving the country’s business environment. Unlike other Asian countries such as China which are enforcing tough rules making it difficult for businesses to grow, Vietnam has introduced its Social-Economic development plan to improve the country’s business competitiveness (Malesky & Taussig, 2019). The SEDP plan encourages new and young entrepreneurs in conducting research and providing business education to increase the likelihood of new businesses to grow and become established.
The current Vietnam government also plans to replace China as the new factory of the world by encouraging foreign direct investment and welcoming foreign businesses by providing them with tax benefits. To encourage foreign investors, the government has formulated a new plan through which it applies small corporate income taxes to foreign companies and gradually increases them until they reach the world standard levels when the businesses have stabilized (Reilly, 2021). The move cautions foreign investors from losses and high income taxes that are currently applied in China. Vietnam has also classified remote regions such as Ho Chi Minh City and Hanoi as economically disadvantages and encouraging foreign investors to venture there through tax cuts and other business incentives such as subsidized land rates.
As China and the United States continue engaging each other in trade wars, Vietnamese leaders have been busy signing multiple trade agreements and connecting Vietnam with other South East Asian countries. Vietnam is also a dedicated member of the AFTA, Asian free trade area and the world trade organizations which is critical to establishment of more foreign businesses in Vietnam (Reilly, 2021). Another recent bilateral agreement between the United States and Vie