The 19th survey of investment-related cost comparisons said Vietnam has a competitive advantage in terms of some cost components, including legal minimum wages, the cost of land area in an industrial estate, telephone installation fees and call charges, and electricity and water costs, compared to that of China, Thailand, Malaysia and Indonesia.

The survey, conducted by the Japan External Trade Organization (JETRO) in 30 Asian cities, showed that inflation hikes in 2008 enabled minimum wages in the region to increase.

In Vietnam, in October 2008, minimum wages increased by 200 percent for workers in foreign companies in Hanoi, Ho Chi Minh City and by 35 percent for those in Danang.

However, the survey by JETRO showed that wages paid by Japanese companies for Vietnamese workers is lower that that of China, Thailand, Malaysia and Indonesia.

Specifically, Vietnam has the lowest call charges (both subcribers and mobile phones) in the region, but the connection fee to the Internet is much higher than neighboring countries.

The survey also said that the cost of land areas in an industrial estate of Vietnam is very cheap, but the cost of office and housing leasing is high.

Moreover, regarding container transport cost, Vietnam is less competitive than other neighboring countries. Vietnam has advantages in electricity and water costs for production activities.

According to JETRO, these lower costs are key factors for Vietnam to further attract potential investors, but they are not enough and unsustainable.

Vietnam should improve the quality of the labor force, decrease bureaucracy, reform administrative formalities, and make the legal system transparent. These are indirect costs, but play a most important role in attracting foreign investors.

(Source: CPVOnline)