Multinationals are looking to set up their bases in Vietnam despite various challenges that the country poses as a manufacturing destination, according to the Financial Times in the UK.

The newspaper cited Michael Kokalari, chief economist of VinaCapital in Ho Chi Minh City, as saying that more and more foreign companies are moving their production to Vietnam, and one prominent example is Apple, which began mass production of some of its AirPods wireless earbuds in Vietnam in the second quarter of this year when most of the world was in lockdown to contain the spread of COVID-19.

According to Financial Times, Vietnam’s labour markets are not as deep as China’s. Industrial park space is in brisk demand, especially around HCM City, where the bulk of Vietnam’s clothing, furniture and other exporters are based.

The city’s Tan Son Nhat International Airport has long operated at well over capacity. Meanwhile, Long Thanh airport is being built, but it is scheduled to be ready only in 2025. Many of the components used to manufacture high-value products in Vietnam, from microchips to smartphones, are still sourced from China, the Republic of Korea, Taiwan or elsewhere.

The newspaper, however, noted businesspeople say the Vietnamese market is adjusting to all these difficulties, even amid the pandemic. Many projects to construct industrial parks are on their way. For example, GLP, Asia’s biggest warehouse operator, is developing projects in Hanoi and HCM City, and plans to invest US$1.5 billion over three years as it promotes its business in Vietnam.

The Financial Times also took note of Vietnam’s big numbers which remain robust, pointing out that despite the pandemic, foreign direct investment disbursements are down only 2% to US$17.2 billion in the year to November.

The Vietnamese economy is on track to grow by 2.4% this year, becoming one of the fastest growing economies in the worlds. The Vietnamese Government is targeting growth of 6.5% next year.