Low-tech, polluting FDI firms will try to set up shop in Vietnam as the U.S.-China trade war escalates, experts have warned.
Nguyen Bich Lam, head of the General Statistics Office, said that small-scale Chinese firms are likely to eye a shift to Vietnam to avoid high tariffs imposed by the U.S.
Such firms typically use pollution causing technology, he said, adding that there have been previous warnings about such FDI projects.
The latest escalation of the U.S.-China trade war only heightens this possibility, he noted.
Vietnam needs to carefully inspect projects which were registered in the last nine months with capital lower than $1 million to prevent those with outdate technologies from harming Vietnam’s natural environment, Lam added.
Echoing Lam, Le Dang Doanh, former director of the Central Institute for Economic Management under the Ministry of Planning and Investment, said that a number of these companies have already entered Vietnam in recent years.
It is the responsibility of the ministry to say no to FDI projects that can harm the environment.
Lam emphasized: “At this time, Vietnam needs to filter out FDI projects, not accepting them at any cost as it did 30 years ago.”
Other experts expressed concerns that Vietnam could end up becoming a dumping ground for Chinese goods.
Economist Nguyen Tri Hieu said that China might seek to dump its goods on Vietnam to avoid Donald Trump’s tariffs.
Cheaper Chinese goods competing with Vietnamese goods will not benefit Vietnam’s economy.
Meanwhile, industry insiders have expressed fears that China might borrow the “made in Vietnam” label to dodge U.S. tariffs.
Diep Thanh Kiet, vice chairman of the Vietnam Leather, Footwear and Handbag Association (LEFASO), said there was a “very high” possibility that Chinese bags would be exported to the U.S. through Vietnam.
Chinese businesses can do this by easily setting up a factory in Vietnam with a budget of only $200,000 to manufacture products with materials imported from China, he told local media.
If this cannot be controlled, there could be grave consequences for Vietnamese textile firms since “the U.S. might apply the same tariffs as they have done on China,” Kiet said.
The U.S. slapped tariffs of 10 percent on $200 billion worth of Chinese goods on September 24, and Beijing immediately retaliated with tariffs at 5 and 10 percent on $60 billion worth of U.S. products.
The two countries have already slapped tariffs on $50 billion worth of each other’s goods earlier this year.