Vietnam enjoys competitive advantages against investment-related costs

The 19th annual survey of investment-related costs in 30 major Asian cities conducted by the Japan External Trade Organization (JETRO) found that in 2008 wages followed an upward trend, along with accelerating inflation, across Asia.

In Vietnam, due to high inflation, the minimum wage was raised in October by about 20% for employees of foreign firms in Hanoi and HCMC, and 35% for employees in Danang. But the wage that Japanese companies in Vietnam pay for workers is lower than in China, Thailand, Malaysia and Indonesia, says the survey which provides guidelines for Japanese investors.

The survey revealed that up to October 2008, local workers in Hanoi were paid US$95.8 per month while workers in Beijing and Dalian (China), Bangkok (Thailand), Kuala Lumpur (Malaysia) and Jakarta (Indonesia) got US$286.7, US$145.5, US$241.1, US$290.5, and US$131.3 per month respectively.

JETRO pointed out that Vietnam had the region’s lowest telephone charges for both landline and mobile phones including installation, monthly charge and rate per minute. However, Internet connection in Vietnam was much higher than in neighboring countries.

The survey also revealed that industrial estate rent in Vietnam was low but office rent and housing remained high. Ocean transport costs in Vietnam were not competitive compared to other Asian nations. Viet Nam was found to have favorable industrial utility costs. Lower costs are one condition for Vietnam to lure investors but they are not enough and not sustainable, the research team warned.

“Vietnam needs to improve the quality of its labor force, reduce red tape, reform the administrative procedures and make the legal system more transparent. These are ‘indirect-cost’ factors but play an important role for Vietnam in attracting investors,” the researchers said.