Vietnam- Singapore: New Cooperation Opportunities

The Connectivity Framework Agreement has been the cornerstone of bilateral economic relations between Singapore and Vietnam. Since coming into force in 2006, it has served as a useful platform for both governments to meet regularly and take stock of activities and projects that are grouped under the six pillars of cooperation, and to discuss new initiatives. The Connectivity Framework Agreement has also enabled both sides to raise and resolve issues that arise from time to time. Singapore appreciates the efforts of the Ministry of Planning and Investment in helping to coordinate and resolve inter-agency issues among the relevant Vietnamese agencies. This has helped to facilitate a more conducive environment for foreign investments into Vietnam and further strengthen our bilateral economic relationship.

How do you assess the investment environment in Vietnam? What are the main difficulties of investing in Vietnam? What are the policies that Vietnam will have to change to attract more investments from Singapore?
Vietnam is among the top investment destinations for Singapore companies. Singapore companies’ strong interest in Vietnam is a reflection of our confidence in the long term growth prospects of Vietnam. Our companies recognise that Vietnam is a country with a demographic advantage in its young working population. It is also a country rich in natural resources such as agricultural land, minerals, and oil and gas.

The macroeconomic situation in Vietnam has improved over the last two years. However, there are still structural issues and challenges that need to be addressed before Vietnam can fully realise its potential. In that regard, we welcome the recent steps that Vietnam has taken to restructure its economy and improve its business environment, such as the revision of the Foreign Investment laws, allowing greater participation in state-owned sectors, and promoting infrastructure development in Vietnam through Public-Private Partnerships (PPP). These initiatives, when implemented fully and effectively, will help address obstacles that enterprises currently face when operating in Vietnam, and attract further foreign investments. In addition, Singapore companies hope that there will be greater clarity and consistency in the implementation and enforcement of laws and regulations so that our companies can have greater confidence when doing business in Vietnam. To further improve the business environment, more can be done to improve transparency and tackle the corruption problem effectively.

What are the business sectors that Singapore will focus on developing with Vietnam over the long term?
Vietnam’s rapid urbanisation and the government’s focus on key growth industries have presented many opportunities for Singapore companies. Sectors which Singapore companies are looking at include banking, urban solutions, tourism and hospitality, manufacturing, agribusiness and consumer goods. These are sectors which many Singapore companies have expertise in and are keen to share their experiences with Vietnam. For example, Singapore companies are keen to tailor customised solutions to meet the needs of key industries across Vietnam, such as water supply and waste water treatment. Singapore companies are also keen to share experiences in areas such as master-planning and hospitality.

The ASEAN Economic Community (AEC) is expected to be established by the end of 2015. This year, the Trans-Pacific Partnership (TPP), which both Vietnam and Singapore are members of, is likely to be finalized. How will this impact trade relations and investments between the two countries?
The AEC is a critical milestone in ASEAN’s efforts to establish an economic community. Through the AEC, ASEAN has progressively removed trade barriers to facilitate a free flow of goods, services, investment and skilled labour. Even though the AEC will only officially be established on 31 December 2015, some initiatives have entered into force, and businesses are already reaping the benefits of these initiatives. For instance, the ASEAN Trade in Goods Agreement enables virtually all goods to flow throughout the region tariff-free. These cost-saving benefits are currently being enjoyed by both businesses in Vietnam and Singapore.

Other than the elimination of tariffs, the AEC focuses on removing non-trade barriers, which will also benefit businesses in Vietnam and Singapore. In addition, under the ASEAN Framework Agreement on Services, businesses can enjoy a progressive reduction of services barriers, such as a lowering of foreign equity limits. Through these and other measures in the AEC, we expect greater trade and investment flows between Singapore and Vietnam.

The TPP is an ongoing Free Trade Agreement (FTA) being negotiated among twelve countries which aims to advance regional integration and serve as a possible pathway to an eventual Free Trade Area of the Asia Pacific (FTAAP). This will benefit businesses from all countries involved, especially as businesses today increasingly operate across regional supply chains. Beyond linking Asia and the Pacific, the TPP pushes the boundaries in creating an agreement that addresses both long-standing and new challenges that businesses face in trading and operating across borders. It goes beyond ensuring market access to goods, and covers other areas such as services liberalisation, investment protection and regulatory improvement in technical barriers to trade and e-commerce.

The TPP holds much promise for Singapore, Vietnam and all negotiating parties. It will better integrate member countries into the regional value chains and allow them to capture a larger portion of regional trade and investment flows. Singaporean and Vietnamese companies will be able to operate more effectively across the region, become more competitive and as a result, raise the competitiveness of the region as a whole. As Vietnam moves up the value chain, the linking of Asia and the Pacific through the TPP will present new opportunities for collaboration.

Singapore and Vietnam have cooperated on many issues of common interest, and we look forward to further collaboration and working with regional countries to advance negotiations in the TPP. All TPP parties will have their respective sensitivities. As we strive for the conclusion of the TPP, we hope that all parties will also make their utmost efforts to work together and devise solutions to address these concerns.

Together, the AEC and the TPP will usher in an era of an integrated ASEAN region and closer links between the Asia and the Pacific. These initiatives and the new opportunities for collaboration they present promise to bring many benefits for businesses from all countries involved, including Singapore and Vietnam. 

Could you share the plan of the Embassy of Singapore in Vietnam to promote cooperation between two countries in the future?
The Singapore Embassy is committed to further strengthen existing bilateral cooperation as well as explore new opportunities to take our Strategic Partnership to even greater heights. We will continue to maintain the regular exchange of visits by leaders and officials on both sides. On the economic front, our companies are continuing to explore the expansion of their operations in Vietnam. For example, the Vietnam-Singapore Industrial Park Co Ltd (VSIP) will be opening two more Industrial Parks in Hai Duong and Nghe An provinces. Singapore companies are also keen to explore new projects in Vietnam, including “smart” townships and high technology parks. We are also looking forward to even closer cooperation with Vietnam with the establishment of the AEC, as well as striving towards the conclusion of the TPP negotiations.

We will also seek to deepen our people-to-people ties through creating more avenues for interaction between our two peoples. This year, Singapore celebrates the 50th Anniversary of our independence, or what we call SG50. In commemoration of this joyous occasion, the Embassy will be organising some activities to celebrate this special event together with our Vietnamese friends. Recently, the Embassy co-organised a “SG50 Food Festival”, a month-long event featuring a wide selection of Singaporean gastronomic delights. We are planning to organise a SG50 art exhibition later in the year which will feature scenes of Singapore over the past 50 years.