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Clampdown on Anti-China Protests in VietnamThursday, May 22, 2014 > 13:35:50
(Lloyd’s Loading List – Mike King)
A clampdown on anti-China protests in Vietnam following riots has enabled most manufacturing plants to reopen this week. But many export warehouses are still operating below capacity and port volumes are down, according to forwarders and container lines.
“Loading ex-Ho Chi Minh City has fallen this week, but not significantly,” Nguyen Thi Ngoc Bich, general director, Maersk Line Vietnam and Cambodia Cluster, told Lloyd’s Loading List.com earlier today. “We have not seen any impact in other ports so far.
“Most factories are back to operation since last weekend, so we expect more cargo next week.”
In the key southern industrial parks where many foreign manufacturers are located the police presence has been substantial since the riots. Hundreds of protestors have been arrested and China-owned premises are being closely guarded to prevent further looting and arson.
Marco Civardi, area managing director of Damco Vietnam/Cambodia, said apart from those severely damaged last week, most factories and warehouses had now resumed operations although not all were at full capacity.
He expects to see a temporary drop in export volumes from the most affected parks in southern Vietnam for at least the next few weeks, depending on the extent of the damage and the speed of recovery in operations. “A slight drop in activity to/from industrial zones is also expected in North Vietnam,” he added.
Should the situation remain stable, forwarders then expect volumes to pick-up in late May and early June as clients expedite delayed shipments. “We are experiencing an increase in spill-over volumes for both airfreight and ocean freight and foresee volumes increasing steadily,” said Civardi.
But even without further disruptive protests, analysts expect the impact of the territorial dispute with China on Vietnam’s international trade and transport demand to be substantial.
“China accounts for an estimated 10% of total Vietnamese exports, with total bilateral trade of USD 50 billion, so the anti-Chinese backlash in Vietnam may result in significant reductions in Chinese orders of Vietnamese products, in addition to any disruption caused by damage to factories,” said Rajiv Biswas, Asia-Pacific chief economist, IHS.
“Chinese investment flows into Vietnam to build or expand factories are also likely to significantly decrease, at least for the next two to three years.”
He said Vietnam would probably seek to reduce its economic vulnerability to China by strengthening its trade and investment ties to other large economies such as Japan, the US and the EU.
“In the medium-term, there is also scope to substantially strengthen its bilateral trade with India,” he added. “These strategic responses would help Vietnam to rebalance its external trade and investment ties away from China and reduce its vulnerability to China.”