Vietnam and Singapore: Playing a big role in Asean’s future

Vietnam and Singapore: Playing a big role in Asean’s future

With a Strategic Partnership Agreement signed in 2013, Singapore and Vietnam have seen outstanding bilateral relations with investment flowing into Vietnam at a rapid pace before the pandemic outbreak in 2020.

Economic connections are still strong, with bilateral commerce gradually increasing over the previous decade and the Vietnam-Singapore Industrial Parks are a symbol of strong economic cooperation.

The COVID-19 outbreak was challenging but it also provided a platform for both countries to strengthen their cooperation.

Former Singapore Ambassador to Vietnam Catherine Wong told Tuoi Tre News (Vietnam) that Vietnam has been a valuable partner and a friend to Singapore during the COVID-19 outbreak.

The pandemic is a testament to the close ties built over the years, Wong said. 

Singapore, on the other hand, continues to be a major investor in Vietnam through the VSIPs.

The first VSIP in Binh Duong celebrated its 25th anniversary in 2021, demonstrating how far both nations’ relationships have evolved.

Prior to the Strategic Partnership Agreement, in order to tighten the bilateral relations between the two countries, in 2006, Singapore’s Minister of Industry and Trade Lim Hng Kiang and his Vietnamese counterpart Truong Dinh Tuyen officially signed the Framework Agreement on Vietnam-Singapore Connectivity.

It covers six pivotal areas: finance, information technology, and communications, education and training, transport, investment, trade, and services.  This agreement is an annual platform that plays a significant part in strengthening the economic bilateral relations between the two nations.

Now, the two nations have strong relations in a variety of fields, including commerce, military, education, investment, finance, tourism, and aviation, and Singapore has expressed a desire to expand cooperation in these sectors.

Vietnam FDI

Despite the epidemic, Singapore remains Vietnam’s third-largest foreign investor. It has made a total investment of more than US$47 billion in over 2,000 projects.

Bilateral trade has also increased steadily, reaching $22.7 billion in 2019.

Furthermore, Vietnam’s rapid expansion has created new economic prospects for Singapore firms in areas such as infrastructure and urban solutions, innovation and startups, and e-commerce. This has sparked strong interest from Singapore firms to invest in Vietnam.

Singapore and Vietnam have agreed to expedite the formation of collaborative working groups to create bilateral digital economy agreements.

During a visit to Vietnam last year, Foreign Affairs Minister Vivian Balakrishnan met with his Vietnamese colleague, Bui Thanh Son.

While reaffirming bilateral and Asean collaboration, the two ministers underlined significant cooperation across a number of industries and vowed to expand it to new growth areas like digital economy, cybersecurity, clean energy, sustainable development, and smart cities.

During the visit, Dr Balakrishnan and Mr Son signed the renewed agreement on the Study Visit Programme and Executive Education Programme for Senior Communist Party of Vietnam (CPV) Officials from 2021 to 2023.

The agreement facilitates continued exchanges between Singapore and Vietnam through the participation of senior CPV officials in study visits and executive education programmes in Singapore on topics such as public administration, urban planning, transport management, and international issues.

Emergence of Vietnam

As Vietnam evolves into a global manufacturing powerhouse, it has emerged as a viable migration destination, sometimes known as the China plus one approach.

The benefits of international free trade agreements, as well as competitive labour prices, are major drivers driving business expansion and attracting investment. 

Despite its recent growth, Vietnam’s manufacturing industry might improve its human resources and harness its skills to increase competitiveness.

Singapore’s strength

Singapore has kept its growth prediction for this year at 3 to 5%, as statistics released on Thursday (Feb 17) suggested the economy begun to rebound in 2021.

According to a news statement from the Ministry of Trade and Industry (MTI), the country’s economy gained 7.6 percent last year, fueled mostly by the manufacturing, banking and insurance, and wholesale trade sectors.

This was the fastest full-year growth rate since 2010’s record of 14.5%.

MTI also increased the GDP calculation for the pandemic-hit 2020 to a fall of 4.1 percent, up from a contraction forecast of 5.4 percent previously.

Prospects for growth in export-oriented industries such as manufacturing and wholesale trade are expected to remain high as the global economy continues to improve.

Aviation and tourism-related industries are predicted to recover slowly, while consumer-facing industries such as retail and food and beverage services are expected to recover more “gradually over the course of the year.”

Recurring COVID-19 outbreaks and probable viral mutations might postpone the easing of worldwide travel restrictions in the aviation and tourist industries. It is also expected that travel demand will take some time to recover.

Vietnam President visit

Vietnamese President Nguyen Xuan Phuc’s visit, from February 24 to 26, will be the first state visit to Singapore since the epidemic began in 2020.

Mr Phuc and Singapore PM Lee Hsien Loong will also jointly witness the signing of bilateral agreements that “will further strengthen the multifaceted cooperation between Singapore and Vietnam”, the Singapore Ministry of Foreign Affairs said in a statement.

Mr Phuc will also deliver the keynote address at the Singapore-Vietnam Business Dialogue, organised by the Singapore Business Federation and Vietnam embassy.

“President Phuc’s state visit reaffirms Singapore’s excellent ties with Vietnam, as both countries prepare to commemorate the 50th anniversary of the establishment of diplomatic relations and the 10th anniversary of the establishment of the Strategic Partnership in 2023,” MFA said. 

The future

The Presidential visit could stress the importance of Asean centrality and unity to promote peace and stability in the region, which is dear to Singapore. Despite having their own views on international and regional developments, the two neighbours have agreed and shared their perspectives on ASEAN among other concerned topics of mutual interests.

To position Singapore-Vietnam relations for the long term, both nations could focus more on strengthening people-to-people ties, especially amongst the youth.

The young people are engaged in online business and developing ties between both countries in e-commerce, in particular, could spark more investment and trade between the two countries.

More could be done by the two countries to showcase, for example, their push in the Artificial Intelligence business.

Vietnam and Singapore are accelerating investment in Artificial Intelligence. Governments and corporate entities are investing extensively in R&D for new AI-driven products, services, and solutions. 

In Vietnam, it is part of the country’s technological advancement. Vietnam’s national policy for AI research, development, and application has for aim the progressive transformation of Vietnam into an innovation and AI hub in ASEAN and throughout the world. 

Singapore is increasing its use of data analytics, artificial intelligence (AI), and sensors to make people’s lives simpler, safer and smarter.

The new efforts come on the heels of the National AI Strategy’s release outlining how the country will develop and deploy artificial intelligence technologies to alter the economy and enhance people’s lives.

All these could be examples set by the two countries to inspire the Asean members to look forward to a brighter future as well as for a prosperous region.

Photo Credit: The Diplomat