Vietnam and Singapore both play important roles in moving Southeast Asia towards the 2015 goal of the formation of an ASEAN Economic Community (AEC). It is thus extremely opportune that the Vietnam-Singapore Business Forum (VSBF) will be hosted by the Vietnam Chamber of Commerce and Industry (VCCI) in cooperation with trade and investment organisations from Singapore from 30 November to 2 December 2011 at the Crowne Plaza Hotel in Hanoi, Vietnam. On this occasion, the Vietnam Business Forum interviewed Singapore Ambassador to Vietnam Mr Simon Wong Wie Kuen, to learn about the trade and investment cooperation between the two countries.
How do you think Vietnamese and Singaporean companies will benefit from the VSBF?
The three-day VSBF event will serve as a focal point for Vietnamese and Singaporean businessmen to meet, network and forge closer links with one another, especially those with common business interests. The event will also be an opportunity for interested parties to engage in pertinent discussions on broader issues such as the global and regional economic situation, as well as specific issues relating to Vietnam-Singapore bilateral trade and investment cooperation.
Despite the global economic uncertainty, Singapore’s private sector players remain keen to contribute to Vietnam’s growth and development, and are confident of its long term economic potential. Vietnam’s favourable geographical location at the crossroads of mainland Southeast Asia and East Asia, its young and dynamic population, as well as its abundant natural resources means that Vietnam will continue to be one of the key drivers of Asia’s economic growth in the next few decades. The VSBF provides a wonderful opportunity for Singapore businessmen, Vietnamese businessmen and government officials to interact and find new opportunities to work together to tap the great economic potential and opportunities offered by Vietnam.
What are, in your opinion, some of the notable achievements made by both countries in economic cooperation after the implementation of the Connectivity Framework Agreement?
The Connectivity Framework Agreement has spurred progress in many sectors of economic cooperation. Since its implementation in early 2006, the Connectivity Framework has contributed effectively to the bilateral trade and investment flows of both countries. For the first 9 months of 2011, bilateral trade rose 14 percent year-on-year to reach US$8.4 billion. In terms of investment, the Connectivity Framework has facilitated many private sector projects in Vietnam, and directly or indirectly contributed to Singapore’s nearly US$14 billion of registered investments into Vietnam. As of August 2011, Singapore is Vietnam’s third largest foreign investor with registered cumulative investments of US$23.2 billion in 945 projects. These achievements speak well of the strength and depth of our bilateral economic relations, despite the size of Singapore’s economy.
On the ground, with Connectivity as the overarching platform to promote and facilitate economic engagement, several important private-sector led projects have taken off successfully. Some examples of notable private sector initiatives include the development of the Vietnam-Singapore Industrial Parks (VSIP) I-IV, the Port of Singapore (PSA)’s joint venture project with Saigon Port to build and operate a deep-sea container terminal in Ba Ria-Vung Tau province, and the establishment of branch offices by our banks (DBS, UOB and OCBC) in Vietnam. Most recently, a Memorandum of Understanding (MoU) was signed between the VSIP Group and Quang Ngai People’s Committee to explore a 5th VSIP in Quang Ngai province. This was co-witnessed by Singapore’s Prime Minister Lee Hsien Loong and Vietnamese President Truong Tan Sang during President Sang’s state visit to Singapore in September 2011.
Singapore companies are actively involved in many other projects, across a wide range of sectors in various provinces in Vietnam. Other key investments are in industrial/tech parks (e.g. Ascenda-Protrade’s 500 hectare Tech Park in Binh Duong), real estate (e.g. Keppel Land, Ascott Group, and CapitaLand), healthcare (e.g. Parkway Health’s US$770 million hospital project in Ho Chi Minh City, and Thomson Medical Centre’s project for Protrade’s Hanh Phuc International Women and Children Hospital), and hospitality (e.g. Banyan Tree’s investment in a world-class hospitality project in Thua Thien-Hue) sectors.
Besides facilitating private sector projects by Singapore companies and contributing to Vietnam’s economic development, Connectivity has also enabled the strengthening of public sector cooperation through tourism exchange, school twinning programmes, English language courses, student exchange programmes, sharing expertise on urban development, courses on e-Government and information sharing on financial issues. For instance, the Singapore Ministry of Transport provided training for a total of 144 Vietnamese officials in 2010 and 2011, while an English language training programme was launched for 300 Vietnamese teachers.
In the coming years, what business areas of Vietnam do you think Singapore companies will be interested in?
Going forward, there are three major sectors where I can foresee great potential for Vietnam and Singapore companies to work together, in line with Vietnam’s growth needs. They are (i) urban and infrastructure development; (ii) trade and services; and (iii) the consumer sector.
Urban and infrastructure development
Populations in Vietnam’s three largest urban areas, Hanoi, Ho Chi Minh City, and Hai Phong, are expected to triple by 2020. This will increase demand for urban solutions to accommodate the growing needs of these future populations in a sustainable manner. An area that Singapore companies have established a track record in is the provision of water and wastewater management solutions. In addition, as Vietnam’s rapid industrialisation continues to drive economic growth, connectivity through its logistics infrastructure will become more important. There is an opportunity for Singapore companies to provide a full range of services, from the planning stages of the country’s transport system, to the building and management of such infrastructure projects.
Trade and services
Vietnam’s agricultural exports are a major part of its economic growth. Vietnamese agriculture exporters can leverage Singapore’s position as a major trade and finance hub in Asia to increase the penetration of Vietnamese agricultural exports on the global market. In this regard, Vietnamese exporters can partner with Singapore-based companies who can contribute their expertise in supply chain management and market access. Growers and exporters can also tap on the futures trading community in Singapore to hedge the risk of volatile commodity price movements in coffee and black pepper, which helps them to better plan their growing and harvesting activities.
Consumption
With Vietnam’s large and fast-growing consumer market, especially among the middle income group, there will be rising demand for products and services as the population seeks greater consumer options and higher standards of living. With the growth in Vietnam’s retail market projected at an average value of 4 percent per annum till 2015, there is great potential for Singapore-based companies to invest and work with Vietnamese companies to offer consumer products and services including food, retail, healthcare and more.
How have Vietnam and Singapore worked together towards the common goal of forming the ASEAN Economic Community by 2015?
All ASEAN Member States (AMS) have been working towards the realisation of the ASEAN Economic Community (AEC) by 2015. The end-goal is the realisation of a single market and production base, along with equitable economic development and reduced poverty and socio-economic disparities. There are 4 key pillars in the AEC Blueprint: (i) a single market and production base; (ii) a highly competitive economic region; (iii) a region of equitable economic development; and (iv) a region fully integrated into the global economy. Progress towards the AEC 2015 is tracked through the AEC Scorecard. Singapore, as a member of ASEAN, has been working closely with Vietnam and the other AMS to ensure that the measures in the AEC Blueprint are implemented in a timely manner. Some notable achievements in 2010 include the coming into force of the ASEAN Trade in Goods Agreement and the completion of the 7th Package of commitments under the ASEAN Framework Agreement on Services (AFAS). This year, ASEAN is working on the 8th AFAS Package. The ASEAN Comprehensive Investment Agreement was also recently ratified by all AMS, and will enter into force in early 2012.
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