Labour, infrastructure issues hold back surging Vietnam investment

Author: AFP

President Joe Biden visits Hanoi Sunday to boost economic ties as Washington looks to move away from over-reliance on China, but a lack of highly skilled labour and infrastructure weaknesses mean Vietnam may struggle to replace its neighbour.

Vietnam has become an increasingly important destination for some of the world’s top companies — including Samsung and Apple supplier Foxconn — as concerns escalate over tensions between the US and China. Many have expanded into the country as part of a “China plus one” strategy, and Washington sees Hanoi as an important partner as it looks to source less from China after supply chain shocks rocked the global economy in recent years. But in an industrial zone in the northern port city of Haiphong, Ko Tae Yeon — general director of Heesung Electronics Vietnam, which makes components for LG automotive displays — frets over a lack of skilled engineers. “I’m forecasting a manpower shortage,” he told AFP, ahead of a potential relocation of the company’s research and development centre from South Korea. “Foreign investors are leaning towards high-tech industries but the number of schools training engineers is absolutely low.” While Vietnam has plenty of people skilled in garment making and producing simple parts for electronics, industry leaders foresee problems as the country moves up the value chain.

“Vietnam is a good place to make things,” Adam Sitkoff, chief executive of the American Chamber of Commerce in Hanoi, told AFP.

“But if it wants to continue to attract all this investment, to create wealth opportunities and economic growth, they need to up their game.” Only about 11 percent of the domestic labour force is deemed highly skilled, while 26 percent are trained workers with degrees and certificates, according to the labour ministry. Ho Chi Minh city alone needs 165,000 more skilled workers in the second half of this year, according to the city’s Centre of Forecasting Manpower Needs and Labour.

Road, power problems — There are other serious issues the country must overcome, analysts say, including a road network struggling to keep up with demand and a power grid pushed to its limits.

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