TPP withdrawal of The US – Vietnam investment impacts

Improved Legal Environment Will Boost Vietnam Despite Possible Failure of TPP

After Donald Trump, the US president-elect issued a note of intent to withdraw from Trans-Pacific Partnership (TPP) trade deal, there is a question raised on the attraction of FDI into Vietnam: would foreign investors continue to flood to Vietnam to set-up company?

Vietnam as well as other countries has delayed TPP ratification awaiting for the approval of the US because it has been assured that TPP would be meaningful if only the US is a member and if TPP is ratified, Vietnam will attract large volumes of FDI capital.

Nevertheless, there are opinions that Vietnam will continue to grow and attract FDI remarkably regardless of TPP approval from the US.

Vietnam has recently signed a number of trade agreements with other nations and territories which could attract foreign investments into Vietnam in the coming years.  For the US, there is a potential that instead of TPP, the US would negotiate and conclude other bilateral trade agreements with Vietnam.

Vietnam might attract foreign investment capital through TPP and this statement could not be denied. Therefore, in the process of speedy preparation to welcome TPP, Vietnam has changed the legal policies and regulations to adapt to TPP Agreement.  A number of newly passed laws have been considered that improve the rights and benefits of private enterprises in Vietnam such as Civil Code, Law on Investment, Law on Public Investment, Law on Environmental Protection, Labour Code… The new legal framework will create more opportunities in the process of international economic integration for Vietnam, encouraging foreigners to invest and set-up business in Vietnam.

In conclusion, TPP, despite the potential for not being approved by the US would not significantly negatively impact Vietnam.  Besides the continuously improved legal environment, Vietnam still has its own value in competitive labour, growing number of mid income earners, and  stable government to attract investment.

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