To maximize the benefits accrued from FDI, Vietnam cannot continue to rely on the advantages of cheap labor at a time when competitors in the region are quickly catching up.
Vietnam must determine which industry is the most priority sector today. If the manufacturing and processing industry continues to take this position, Vietnam may be the world's factory but always be the employee of the global value chain with short-term benefits while pharmaceuticals and health products, financial and IT services, and education are mid-term ones and they are all high added-value sectors. FDI flows are very crucial but more importantly, the country needs high-tech and modern technology to restructure its economy for the sustainable development, to increase competitiveness, add more value to products and services and deeply participate in the global supply chain.
b. Accelerate the process of economic reform
As mentioned above, Vietnam may face more difficulties from the US market due to its non-market economy, especially in anti-dumping and countervailing investigations.
To be recognized as a market economy, Vietnam must satisfy three conditions: the VND
must be a free convertible currency, the state does not interfere with business decisions and the market must be a fair competition. According to the orientation of the government, state-owned enterprises still play a key role and enjoy more priorities than private enterprises. Therefore the country needs to accelerate the process of economic reform, not only to be recognized as a market economy by the US, but also to become a foundation to create a more favorable business environment for both domestic private companies and FDI enterprises.
Vietnam can implement this process by: strengthening its financial system, equitizing state-run enterprises, liberalizing capital accounts, developing infrastructure and technology … The legal environment should be more transparent for businesses, reduce the administrative burden on foreign corporations, and at the same time reform the legal framework to create a more predictable environment.
Regarding to the human resources, the government should consider investing heavily to boost “start-up” trends. The young generation of Vietnam is gradually affirming its influence, and it will be the core factor that promote the integration and development of Vietnam to the globalization. Additionally, labor quality must be improved to attract higher- value industries and gain a more competitive position than skilled regional workers. Thus, Vietnam enterprises will be able to take best of both worlds from the US-China trade war.
c. Support Vietnamese enterprises to resolve disputes related to trade defense First, on the basis of inspecting the production and export activities of each commodity sector of Vietnam and the anti-dumping policy of each country, Vietnamese authorities need to make a list of possible taxed commodities of Vietnam to have the necessary precaution. In addition, the government should develop a database of information on export markets, international trade law, and foreign trade protection policies and then provide necessary information to the enterprises. Therefore, they can avoid loopholes leading to lawsuits.
Second, government-level negotiations in dealing with trade disputes should be promoted. Vietnam needs a flexible approach through diplomatic channels to prove its
partners and the world about Vietnam's production capacity, the competitive price of products without dumping and commercial fraud.
Third, Vietnam should support enterprises to appeal in the framework of the World Trade Organization (WTO) to protect the national interests. The authorities should consider establishing a financial support fund for Vietnamese enterprises to re-trial; provide information about the appeal procedure and recommend attorneys in the host country to help businesses as well.
Last, the government must strengthen measures of quality and origin control, anti- commercial fraud and have strict sanctions against violating enterprises to ensure Vietnam's reputation in international relations. In particular, the government needs to control strictly the movement of Chinese goods through the informal cross-border way.
d. Protect Vietnam’s ecological environment
Vietnam needs to be more assertive to refuse investment projects, such as cement and iron-steel manufacturing and oil refineries, to achieve its green growth goals by establishing environmental impact assessment standards and improve management and sanctioning activities. This is an indispensable issue that the Vietnamese government cannot neglect because the negative impacts of environmental destruction projects on people's health are very serious. It also can make the Vietnamese lose confidence as well as cause people to be averse to foreign projects, especially from China.
*Summary
This chapter provided solutions for both Vietnamese government and enterprises to leverage opportunities and minimize negative impacts which come from the US-China trade war as well. To make the most of the trade war, Vietnamese enterprises must continuously update information to find out new business opportunities and innovate domestic products to improve their competitiveness. Importantly, they should associate with domestic businesses, associations and the government to discuss existing problems and ask for help. On the other hand, challenges can be taken up by the accurate presupposition of Vietnamese enterprises and the intercession of the government.
Attracting FDI but choosing wisely, reforming the economy but also developing the human resources… Therefore, Vietnam will no longer be easily vulnerable when the US-China trade war escalates or some trade war comes.