TPP’s Biggest Winner Candidate: Vietnam

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TPP’s Possible Downsides for Vietnam’s Factories

October 8, 2015.

Vietnam’s economy, which is heavily reliant on exports, may be the biggest winner of the Trans-Pacific Partnership (TPP). This Pacific trade deal, which reached a final agreement on October 5, 2015, eliminates about 18,000 tariffs between the 12 countries that are involved. Vietnam, whose largest trading partner is China, is trying to be less reliant on China and create closer ties with the U.S. and Japan, who are also participating in TPP. In the next 10 years, Vietnam’s GDP is expected to rise by 11%, or $36 billion, and exports are expected to increase by 28%. TPP will have a huge impact on the country’s apparel manufacturers, which may result in a 50% increase in apparel and footwear exports within the next decade. Also, the country’s seafood industry will greatly benefit from the elimination of import taxes on shrimp, squid, and tuna, which average about 7%. In addition, TPP’s elimination of tariffs in Vietnam will likely cause more foreign direct investment, with companies relocating operations in Vietnam to take advantage of this deal. Although the agreement still needs to be passed by the governments of all the participating nations, Vietnam’s economy has a very promising outlook.

Louie Nguyen, CFA is the CIO of San Diego-based Soledad Investment Management. Soledad invests qualified clients’ assets in markets around the world, including Vietnam.

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