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Int'l Cooperation

Last updated: Monday, September 24, 2018


Bright Prospects in Vietnam-U.S Economic Relations Ahead

Posted: Friday, November 03, 2017

Trade and investment relations between Vietnam and the United States in recent years are gaining great achievements and expected to continue to be the foundation and good driving force for bilateral relations.

US President Donald Trump expressed his support for Vietnam's successful hosting of the APEC 2017 Summit, and said he expected to visit Vietnam and attend the APEC Summit this November, expressing the US's special interest in promoting further comprehensive economic cooperation with Vietnam.

Many results of impressive economic cooperation

Following Prime Minister Nguyen Xuan Phuc's official visit to the U.S in May 2017, the Prime Minister and President Donald Trump agreed that the Vietnamese and American economies are more complementary than competing. President Trump welcomed the settlement of a number of priority trade issues, including opening up markets for agricultural products, industrial goods, and information technology services of the two countries. The two sides were looking forward to the trade balance for mutual benefits. During the visit, 19 agreements, cooperation documents were signed by enterprises of two sides worth about US$12 billion.

According to US Ambassador to Vietnam, Ted Osius, twenty-two years ago, the U.S and Vietnam embarked on a journey that many doubted could lead to meaningful cooperation and exchange. “US businesses are investing more and more capital in Vietnam while Vietnamese producers are sending more of their goods to appreciative American consumers, and the ties we enjoy today would have been unimaginable two decades ago.”

“The American business community is proud of its contributions to the development of Vietnam’s economy, said Adam Sitkoff, Executive Director of the American Chamber of Commerce in Hanoi (Amcham). “In 1995, bilateral trade was just US$451 million. Last year’s bilateral trade number surpassed US$52 billion and Vietnam exports more goods to the United States than to any other country. The past two decades have also seen Vietnamese people’s incomes quadruple. American companies have invested billions of dollars here, integrating Vietnam into the global supply chain, creating quality jobs for Vietnamese workers, and opening a new market for US goods and services. US exports to Vietnam rose 77 percent in the two-year period from 2015-2016. The future is bright in Vietnam and I am confident that the rapid expansion of trade and investment relations between the US and Vietnam will continue and become dynamically stronger.”

According to the General Department of Customs, import turnover from the US to Vietnam in the first nine months of 2017 reached more than US$6.84 billion, with items of high import value such as computers, electronic products food processing, soybean, cotton, animal feed and raw materials, chemical products, vehicles and spare parts, plastic materials ...

Export value of Vietnam’s products to the US market in the first nine months of this year reached nearly US$31 billion, up 9.4 percent over the same period last year, and the US continues to be the market where Vietnam has the biggest surplus trade worth US$24.1 billion, according to the General Department of Customs. In 2016, total export turnover of Vietnam to this market was US$38.45 billion, up 14.9 percent over 2015 and accounted for 21.8 percent of the country’s total export value. However, this figure is very modest compared to the total value of US imports of goods around the world with a value of US$2,450 billion in 2016, according to the United Nations Statistics Division (UNSD). Therefore, the US remains a potential market for Vietnamese goods.

In the first nine months of 2017, Vietnam has had a number of commodities with over US$1 billion worth of exports to the US market, including textiles, footwear, telephones and components, wood and wood products, computers, electronic products and components, machinery, equipment, spare parts, seafood, handbags, purses, suitcases and umbrellas.

American businesses are feeling positive about the investment environment and business of Vietnam. In 2016, Vietnam is the leading destination for US companies planning to expand investment in ASEAN. According to AmCham figures released at the conference on the future of bilateral economic relations between Vietnam and the US organized recently by AmCham and the Vietnam Chamber of Commerce and Industry (VCCI), 87 percent of US companies surveyed in Vietnam expect a profit increase in 2017, and 72 percent of surveyed respondents said that Vietnam’s business environment is improving.

As of the end of the first quarter of 2017, the US had 834 investment projects in Vietnam with a total registered investment capital at US$10.22 billion and ranked ninth out of 116 countries and territories with investment projects in Vietnam, according to the Foreign Investment Agency under the Ministry of Planning and Investment. However, these numbers have not reflected the US direct investment flows in Vietnam due to the fact that some US companies such as Coca Cola, Procter & Gamble, Cheveron, Conoco and others have invested in Vietnam through its subsidiaries, subsidiaries registered in other countries and territories such as British Virgin Islands, Singapore, Hong Kong (China), and others.

US investment focused on residential and food services with 20 projects worth US$4.3 billion, accounting for 42.9 percent of total registered capital), manufacturing and processing industries ranked second with 335 projects and total investment capital of US$ 2.8 billion, the real estate business ranked third with 12 projects having registered capital of over US$1 billion. A typical example of recent bilateral economic cooperation is that the US energy giant Exxon Mobil and state-owned PetroVietnam agreed this month to develop Vietnam’s largest natural gas-fired power generation project, a US$10 billion joint venture known as ‘Blue Whale’ (Ca Voi Xanh). The deal is expected to make the US become one of the leading investors in Vietnam.

Solid foundation for breakthrough of economic relations

Vietnam and the US have reached a consensus in raising the economic relationship in recent years, from the State leaders to the business communities of the two countries.

State President Tran Dai Quang emphasized at the conference on the future of bilateral economic relations between Vietnam and the US: “Development cooperation continues to be a driving force of bilateral relations to promote trade and investment, science and technology, human resources training and response to climate change. This is the foundation, creating new opportunities for Vietnamese and US businesses to increase investment, business cooperation and sustainable development.”

"We always appreciate investment projects of US businesses in Vietnam. Governments at all levels from central to local levels in Vietnam will create favorable conditions and ensure commitments to foreign investors in general, US investors in particular, to invest successfully and sustainability in our country."

Ambassador Ted Osius commented: "The trade relations between the two countries will be very bright in the future as we commit to expand and strengthen economic cooperation. Although we face challenges and are still working together to reduce barriers to trade and make our markets more accessible to one another, we look forward to sustaining this type of momentum and unlocking future drivers of economic growth for our economies."

Vietnam and the US also share the same view on the role and importance of the private sector, especially small and medium-sized enterprises, in the Vietnamese economy over the years, and are actively collaborating to find appropriate solutions to support the private sector’s development. "The private sector has been an engine of change in Vietnam’s economy and it will continue to be a measure of its success," Ambassador Ted Osius said.

According to Dr. Vu Tien Loc, VCCI President, and President of APEC CEO Summit 2017, President Donald Trump’s early confirmation to attend and have dialogue with the APEC business community at the Summit shows a strong commitment and special attention of the US to Vietnam. This is a strong impetus for the two countries' businesses to further strengthen their trade and investment cooperation, creating a new wave of US business investment in Vietnam in the near future.

The active participation and support for APEC CEO Summit 2017 from many leading US corporations, including PricewaterhouseCoopers, Abbott, ExxonMobil, Facebook, Fedex, Johnson & Johnson, UPS, Citi, DHL, Dow, GE, JPMorgan, Pfizer , Walmart, and others, is also a witness to the strong commitment of the American business community to the potential Vietnamese market.

Finding solutions together to strengthen economic relations

VCCI President Vu Tien Loc noted: "The Vietnamese business community always wants to cooperate with US businesses. In the strategic orientation of promoting and restructuring the economy, Vietnam is moving towards a more efficient economy, promoting the creation and development of transport and energy infrastructure, implementing e-government, high technology development and biotechnology. All these orientations are in the trend that the leading companies of the two countries are expected.”

Ms. Tami Overby, Vice President Asia, US Chamber of Commerce, said: “Given the United States’ withdraw from the TPP, we need to find new and creative ways to address the market access issues and other challenges that U.S companies face in Vietnam. We are working hard to find concrete ways to strengthen the bilateral trading relationship, including the possibility of a bilateral free trade agreement.”

Mr. Adam Sitkoff proposes: "We regret that the US withdrew from participating in TPP Agreement. However, AmCham believes there are other constructive paths forward to increase trade and investment between our two countries. Among other things, we support a path leading to a FTA between our two countries. For a FTA to move forward, it will need to be viewed as beneficial and fair by all parties. The American business community in Vietnam stands ready to do our part to make this goal a reality. The first step was the signing earlier this year of a Memorandum of Understanding with VCCI to create a US-Vietnam Business Leadership Committee that will advocate for the FTA.

With almost unimaginable results of bilateral economic relations after 20 years, along with consensus, strong commitment from senior leaders and efforts by the business community of the two countries to find the solution. We are confident that we will continue to achieve more impressive economic cooperation in the future.

Ba Thi

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