Amid the onset of the TPP is a reduction of trade barriers for Vietnam and other countries, and Taiwan and Hong Kong investors have immediately responded by buying up Vietnam equities.
Along with the removal of this set of trade barriers will be a closer look at the country, and particularly how additional capital into the country is going to bring additional interest in alternative spots of investment into the country – some routine, some drastic.
Together, this new investment environment will shine more light on the uncapitalized opportunities that firms can springboard into after their entry or further positioning into the Vietnam market. Technology deployed will bring usefulness to previously idle land in agriculture, reduce power and water bottlenecks retarding growth and GDP plans, and more sophisticated dovetailing of separate business sections to integrate into new profit streams. Much of this has been done to one extent or another in developed countries, but this is brand new territory in developing countries. Inserting one’s business along the efficiency chain, and providing integration and maximization of yield in frontier markets undergoing rapid economic reform, provides firms with first mover advantages and the opportunity to carve out a majority share in newly-created markets.
Improving agricultural yield
Agriculture in Southeast Asia will increasingly be about maximizing yields on existing land, and utilizing previously unusable land. This will increase the land area of key agricultural markets in the region, and increase the historical low levels of agricultural productivity in these markets as compared to developed markets in the world. The coming boom in productivity in Vietnam, Laos, Cambodia, and Myanmar is set to provide massive gains for agriculture investments that target increased productivity in these countries.
Reducing power and water needs
Vietnam is planning for a near quadruple in electricity demand from 2010 to 2025, and the Asia Development Bank foresees an even tighter squeeze on water resources; Vietnam’s economic growth mandates a necessary increase in water demand, as Vietnam’s economy grows at over 5% a year. There is profitable space in providing solutions in the power and water industry, particularly when it comes to bringing the underdeveloped agricultural industry up to international standards of agricultural productivity.
Integrate petrochemical chains more deeply into agriculture and pharmaceuticals
With the equivalent of new lands in Southeast Asia opening up due to innovative agricultural solutions providing new yield in these agricultural spaces, there is more of an opportunity than ever to take advantage of the ASEAN FTA structure to provide a much needed increase in productivity to ASEAN agricultural lands. A well-developed petrochemical chain can be integrated into agriculture and pharmaceutical operations. For petrochemical companies, this could be a closer step to solid business relations with agriculture and fertilizer companies, or it could be a new business line entirely as petrochemical companies step directly into the arena of agricultural yields and pharmaceutical solutions, blurring the lines between a petrochemical business and a pharmaceutical business.
Source: vietnam-briefing
Key words: The TPP, Vietnam, A Market Entry, FDI Signal, for Firms Along the Efficiency Chain
