The latest trade figures show that Vietnam has remained the only bright spot in the export slump that is expected to continue to 2016.

Hong Kong's exports to Vietnam in the first eight months of 2015 surged 20 percent from the year earlier period to HK$50 billion, official figures show. Industry experts predicted that shipments to Vietnam will continue to increase while exports to traditional markets will stay flat in coming months.

The government-sponsored Hong Kong Trade Development Council (HKTDC) has revised its export growth forecast for 2015 to zero from the earlier estimate of 3 percent because of deteriorating global economic conditions. The HKTDC export index, which tracks Hong Kong's export performance, slipped to 37.1 for the 2015 second quarter, the lowest in three years.

HKTDC Director of Research Nicholas Kwan Ka-ming was quoted as saying that the global economy faced several potential risks as economic growth on the Chinese mainland, Hong Kong's major trading partner, continued to slow.

In contrast, the potential for growth in the Vietnam economy, which has been advancing at an average rate of above 6 percent a year in the past several years, is widely expected to gather pace as more and more foreign investment, including that from South Korea, Hong Kong and the Pearl River Delta region, flows into the country to take advantage of a large, well-educated pool of young workers.

Despite the annual double-digit increases in wages in the past few years, labor costs in Vietnam have remained significantly lower than in other manufacturing bases, including the Pearl River Delta region. As a result, many local manufacturers and foreign investors have relocated their production facilities from the Pearl River Delta region to Vietnam.

Some of those who moved to Vietnam earlier are planning to greatly expand their operations. For instance, South Korea's Samsung Electronics, the world's largest smartphone maker, plans to double the capacity of its Vietnam factories.

A substantial portion of the imported manufacturing intermediary materials to supply the factories in Vietnam is routed through Hong Kong. But business people in Hong Kong can do themselves a big favor by exploring opportunities in Vietnam and other Southeast Asian economies other than being just a trans-shipment center.

Indeed, the economic potential of Vietnam is expected to be greatly enhanced by its membership in the US-led Trans- Pacific Partnership agreement. The trade pact seeks to introduce, among other things, a uniform set of rules to ensure transparency and free movement of goods and services. This could help clarify any gray area in trading with and investing in an emerging economy like Vietnam's.

To be sure, Hong Kong must stick to its priority of seeking further economic integration with the mainland. But that should not preclude it from actively pursuing opportunities in other markets.

(HK Edition 11/05/2015 page7)