Multifaceted Cooperation

Vietnam Business Forum has an interview with Dr Bui Tat Thang, Director of the Development Strategy Institute under the Ministry of Planning and Investment, on the multifaceted cooperation between Vietnam and Singapore. Anh Phuong reports.

 

Since Vietnam and Singapore established diplomatic ties in 1973, especially since Vietnam became an official member of the Association of Southeast Asian Nations (ASEAN) in 1995, the bilateral relationship has kept thriving in many areas like politics, economics, culture, society, defence and security.

 

Politically, the two countries have maintained frequent visits and high-level exchanges, which express the agreements on many aspects concerning peace and stability of the region and the world, especially on the importance of peace, stability and security and maritime safety in the East Sea or South China Sea, and on the implementation of the ASEAN Foreign Ministers’ Six-point Declaration on the East Sea. In 2013, in commemoration of the 40^th anniversary of diplomatic relations establishment, the two countries are actively stepping up their relations in both lateral and multilateral aspects towards the formation of Vietnam - Singapore strategic partnerships.

 

As regards economic, trade and investment cooperation, in December 2005, the two sides signed the Framework Agreement on Connecting Two Economies and Connecting Six Economic Sectors, investment, trade - services, transportation, information technology, finance, education and training. Singapore is always a key investment and business partner of Vietnam. The two-way trade turnover soared steadily to US$9 billion in 2012, representing an increase of US$1.3 billion over 2011. The successful model of Vietnam - Singapore Industrial Parks (VSIP) is considered the symbol of bilateral economic cooperation. As of March 20, 2013, Singapore was the third largest investors out of roughly 100 countries and territories with investment capital in Vietnam with 1,139 projects and a total registered capital of over US$27 billion. In the first quarter of 2013, as many as 31 countries and territories had investment projects in Vietnam and Singapore ranked second in value with US$2.278 billion, accounting for 37.8 per cent of total investment. As of March 20, 2013, Vietnamese companies have invested over US$1 billion in 46 projects in Singapore.

 

Education and cultural relations are also intensified and expanded. Singapore actively helps Vietnam in science, engineering, human resources development, finance, tourism and banking and shares experience with Vietnam in market economy, regional and international integration. Some 12,000 Vietnamese people are now residing, studying and working in Singapore. The two countries also expressed their positive views in building the ASEAN Community by 2015.

 

To draw more investment capital from Singapore, we need to pay special attention to two areas. First, we need to consider the structural complementarity of two economies to identify prominent advantages and drawbacks. Singapore is a newly industrialised country with high living standard. Its infrastructure and industries are very developed, with some on the top of Asia and the world like seaport, shipbuilding and repairing, oil refining, processing, electronics, and sophisticated machinery assembly. Trading and services contribute most to the country’s GDP. However, as a very small country with a natural land area of 692 square kilometres, as big as Phu Quoc Island or Mong Cai City of Vietnam, Singapore does not have natural resources. It has to import almost everything from other countries, including food. In contrary, Vietnam is strong at many aspects Singapore is weak. Therefore, the two economies are mutually complementary in attracting development investment. Not only that, Singapore is also home to many multinational corporations (MNCs). Many world-leading corporations from the US, Japan, South Korea and the EU also set up their branches, subsidiaries or representative offices in the country, making it a stepping stone for them to expand investment to regional countries, including ASEAN countries. Therefore, attracting capital sources from international financial institutions based in Singapore and attracting large investors with advanced technology and source technology is the strategic direction of Vietnam. In the future, Vietnam needs to focus on luring investment from fields Singapore holds the right to transfer modern, environment-friendly technologies, creating competitive products and products qualified for global value chains. Sectors Singapore has advantages include high technology, land management planning, urban management, support industries, oil and gas services, maritime transport services, etc.

 

Nevertheless, in the context of globalisation and the highly competitive FDI attraction, the second and most important note is the construction of an attractive business and business environment. In this regard, in recent years, efforts for institutional building and administrative reform in Vietnam are highly appreciated by international business community, making Vietnam an attractive destination for investors in the region and in the world.

 

In 2013, the two countries will celebrate the 40^th founding anniversary of diplomatic relations (August 1, 1973-2013). The elevation of the bilateral relationship to a strategic partnership is considered an important milestone to the marks the opening of chapter in the two-side relation. With this milestone, we believe that economic, trade and investment relations between the two countries will be expanded. The coordination of the countries in issues of common concern like peace and stability in the region and the formation of ASEAN Community by 2015 will be strengthened.