In 2023, trade between ASEAN and Taiwan reached $117 billion. ASEAN economies accounted for 17.6% of Taiwan’s export value. According to HSBC, since the COVID-19 pandemic, the trade corridor between these two markets has reached new heights, largely due to the rearrangement of supply chains in the electronics industry.
STRONG TRADE LINKS
Vietnam has emerged as a top investment destination for Taiwanese businesses, according to HSBC experts. Data from the Ministry of Planning and Investment shows that in 2023, investment from Taiwan to Vietnam quadrupled compared to 2022, reaching a milestone of $2.2 billion.
Taiwan is currently the fourth-largest investor in Vietnam, with nearly 3,200 projects and a total registered capital of over $39.5 billion. Taiwan has also become Vietnam’s fifth-largest trading partner, with bilateral trade reaching $25 billion annually.
Mr. Ahmed Yeganeh, Director of Corporate Banking Services at HSBC Vietnam, commented on the trade corridor between Vietnam and Taiwan, stating that the direct investment and the shift in high-tech manufacturing from Taiwan to Vietnam showcase Vietnam as a top investment destination for Taiwanese businesses. This provides a comprehensive overview of the strategic and commercial cooperation opportunities between the two economies.
Sharing the same view, Ms. Daphne Lee, Director of Corporate Banking Services at HSBC Taiwan, said that looking ahead, Taiwan’s strength in technology makes it an indispensable link in the supply chain. “This presents a mutually beneficial opportunity, as Taiwanese businesses can strengthen their trade links in ASEAN, while international tech companies increasingly view Taiwan as an attractive investment partner to realize large-scale technology innovations,” said Ms. Daphne Lee.
According to HSBC experts, one of Taiwan’s most popular exports to ASEAN is bubble tea. This signature drink from the island has become a staple in shopping malls and takeaway shops across ASEAN, with an estimated annual turnover of $3.7 billion. Vietnam, with its population of over 100 million, has contributed $362 million to this turnover, ranking third after Indonesia and Thailand.
“However, this unique combination of tea, milk, and tapioca pearls is not Taiwan’s only success story in Southeast Asia,” HSBC experts commented.
ATTRACTION IN LEADING INVESTMENTS
Taiwan is renowned for leading the world in electronics and semiconductors, accounting for over 70% of the market share of high-end chips. Taiwanese companies manufacture more than 80% of the world’s PCs and 90% of its servers.
Meanwhile, Vietnam’s semiconductor industry is predicted to reach a value of $20–30 billion by 2030, with ambitions to become a crucial link in the global semiconductor industry.
“Vietnam has begun to realize this aspiration by implementing policies focused on attracting high-quality FDI and enhancing training. Additionally, Vietnam boasts a young and skilled workforce, a strategic geographical location, a growing consumer market, competitive operating costs, and has signed numerous free trade agreements with various countries and territories,” said Ms. Daphne Lee.
Currently, the Taiwan Trade Association’s branch in Vietnam has over 600 members, the highest number among trade associations for Taiwanese companies worldwide. Conversely, more than 250,000 Vietnamese live and work in Taiwan.
“Recently, Taiwanese companies have increased their investments in more advanced electronics. Such investments will help Vietnam upgrade its workforce, enhance its production value chain, and attract other suppliers,” said Mr. Ahmed Yeganeh.
“This is the moment when the two trading partners find each other, with Vietnam becoming the second-largest recipient of investment from Taiwan in the ASEAN region, only after Singapore.
With the crucial shift from labor-intensive industries to those utilizing skilled and highly educated labor, the Vietnamese government is offering preferential policies for high-tech sectors to attract more quality investments and promise greater benefits for foreign investors, including those from Taiwan.”
Vietnam is familiar with Taiwanese giants in the electronics industry, such as Foxconn, Pegatron, Qisda, Compal, Quanta, and Wistron. Recently, Vietnam received a $250 million investment from Tripod Technology in Ba Ria-Vung Tau province.
According to Ms. Daphne Lee, with the crucial shift from labor-intensive industries to those utilizing skilled and highly educated labor, the Vietnamese government is offering preferential policies for high-tech sectors to attract more quality investments and promise greater benefits for foreign investors, including those from Taiwan.
While complex manufacturing operations, such as producing the most advanced semiconductors, are likely to remain in Taiwan in the near future, Ms. Daphne Lee believes that more advanced manufacturing will shift to ASEAN and Vietnam in the coming decades as demand increases and the region’s supply chain develops further.
According to HSBC’s report, Vietnam’s economy witnessed a strong and broad-based recovery, resulting in a GDP growth rate of 6.9% in Q2/2024 and accelerating the growth pace in the first half of 2024 to 6.42%, the second-highest in the last five years.
HSBC forecasts that this outstanding performance indicates that Vietnam is likely to achieve a 2024 growth rate of 6.5%, becoming the fastest-growing economy in ASEAN. These factors have increased Vietnam’s appeal to international investors, including Taiwanese businesses.
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