CanCham, VCCI Need to Bolster Ties to Funnel Opportunities to Members

 

Vietnam is an increasingly important commercial partner for Canada. A foundation of solid diplomatic relations has facilitated growing trade and investment relationships. The 40th anniversary of Canada-Vietnam diplomatic relations has seen a recent increase in high-level engagement, including visits in 2011 by the Governor General and Commander-in-Chief of Canada, the Right Honorable David Johnston the Minister of International Trade, Ed Fast, in August 2012 and the Minister of Foreign Affairs, John Baird, in March 2013.

 

Bilateral trade between Canada and Vietnam has grown dramatically, reaching a new record of approximately US$2 billion in 2012, following US$1.67 billion in 2011 and US$1.4 billion in 2010. Currently, Canada ranks 20^th according to various trade reports. This picture can be largely improved as Canada has a lot to offer Vietnam’s business market. Canada’s Global Commerce Strategy identifies Southeast Asia as a priority market where Vietnam is a rapidly emerging and developing economy. An increasing number of Canadian companies are finding a home in Vietnam, especially among growing sectors such as Agriculture and Agri-Food, Education and Training, Forest Industries, Oil & Gas as well as Information and Communication Technologies (ICT). A number of world renowned Canadian companies that are successfully doing business in Vietnam include Talisman, Manulife, SNC-Lavalin and CAE. 

Education is a key opportunity for both Canadian and Vietnamese companies. With one of the very best public education systems in the world, Canada is an increasingly attractive choice destination for Vietnamese families who are looking for a world class education for their children. In 2011, over 1,000 students in Vietnam received permits for Canada and, in October 2012, almost 70 Canadian institutions participated in the 4th Canada Education Week. Several Canadian academic institutions have developed programmes with local partners in Vietnam, including most recently the University of British Columbia (which established an oral health research centre) and the Université du Québec à Montréal (offering the first Canadian Executive Masters of Business Administration programme delivered in Vietnam).

In 2009, Vietnam became a country of focus for Canada’s development assistance programme. This year, the Canadian International Development Agency (CIDA) is actively involved in over 27 development projects aimed at providing multi-level support to Vietnam, including the following:  increasing agricultural productivity and competitiveness; creating an enabling environment for investment and institutional changes needed for market-driven growth; supporting legal and policy reform; strengthening small and medium scale enterprise (SME); and increasing employment skills by improving access to vocational training and education systems.

 

One example of these projects is the Banking Regulation and Supervision Support Project (BRASS), which began this past December with the signing of a Memorandum of Understanding between CIDA and the Government of Vietnam. This is a US$14 million, five- year project aimed at improving the banking regulatory and supervisory framework, tools and methods in accordance with international standards.

 

Canada and Vietnam share similarities as both countries are relatively small in size and have large trading partners in their hemisphere. Canada and the U.S., have a very close relationship. However, Canada also has had to ensure that it’s political, social, cultural, and economic interests remain protected from U.S. interests. Canada has often accomplished this through national programmes, such as our national health care system, but also through bilateral and multilateral agreements, such as the U.S. Canada Free Trade Agreement (later, the North American FTA) and now, through the Trans Pacific Partnership (TPP). Vietnam, as a signatory to the TPP, has the potential to establish substantive cooperation between our two countries and to extend this further to all other countries who are members, or signatories to the TPP. This is an important step and signal for both countries that should be part of a continuing dialogue between governments, but also advocated and supported by SMEs in both Vietnam and Canada. CanCham and VCCI are both formally supporting and engaged in the TPP dialogue. Refining and working together on common TPP statements of support would be very useful for both Governments. TPP is an enormous opportunity for Vietnam and Canada.

 

Furthermore Canada's needs and advantages match well with Vietnam's needs and advantages. Key potential areas between the two countries include Public Private Partnership where Canadian governments and private sector are global leaders in structuring and designing PPPs for infrastructure, health and education projects); manufacturing and trade; natural resources, with advanced technical advantages (mining/ oil and gas industry/ financial markets (TSX); education; agriculture and agribusiness, trade and transportation advantages of Canada – with access potential to the entire North American market via the proximity and cost competitiveness of Canadian infrastructure.

 

Relative to overall FDI in Vietnam, Canada and Vietnam’s trade of almost US$2 billion is still a small share of total potential investment. Considering that Canada is one of the world’s largest and healthiest economies. The two countries’ key synergies in the near term are that Vietnam can provide much needed quality and reasonably priced exports, while Canada can offer high end project management, education, technology transfer in multiple industries such as mining and forestry, skills and access to the North American market.

 

In terms of bilateral promotion, first and foremost, CanCham and VCCI need to bolster stronger ties with each other and identify how each organization can support one another’s members and identify specific sector opportunities for dual promotion and advancement. By identifying member company needs with cross country opportunities, both organizations should be able to funnel opportunities to its membership base.

CanCham is working hard to establish itself further amongst Vietnamese SME partners thus enhancing our representation between Vietnamese and Canadian SMEs. Canadian businesses and CanCham must enhance these channels for accessing opportunities in Vietnam. VCCI should also recognise the current and historically important role and position Canada plays not only for Canadian markets, but as a bridge to the North American markets, including the largest trading block in the World, the North American Free Trade Area.

 

As per key potential areas for Canadian business in Vietnam, Financial Services certainly come to mind. Canada is recognized as having the most resilient and strongest banking system in the world, regulated successfully to allow for the banks to both flourish as well as limit their risk exposure. In fact, Canada was the only G7 country that did not bail out its banks during the 2008-2009 great financial debacle. The Financial Services industry is currently an area of key importance for Vietnam at present, with for the next five years being a critical period, given the presently weak regulatory oversight and critical levels of NPLs that have put a liquidity squeeze on the entire economy.

 

When it comes to mining and natural resources, Canada is one of the top two or three countries, not only for engineering and geology, but also for financing; the Toronto Stock Exchange (TSX) is the largest capital market in the world for resource-based industries It was a Canadian company, Tiberon Resources, that founded the largest tungsten mine in Vietnam., Another Canadian success story in Vietnam is Besra (previously Olympus Pacific); Besra is a Canadian publicly listed company and the largest gold producer in Vietnam. It is important to note that Canadian companies, unlike others, must also follow rigorous environmental rules and standards that help to protect Vietnam from environmental damage.

 

Canada is also a vast country with first class transportation and logistics, including major international ports on the Pacific and Atlantic, a national rail transport system with two major carriers Canadian National (CN) and Canadian Pacific (CP), which ensure that natural resources and other commodities can be shipped anywhere domestically or internationally efficiently at minimal costs.

 

Agriculture and agri-business is a key advantage for both Vietnam and Canada. With one of the highest system for standardising production, for ensuring food safety, and for agriculture marketing and pricing, Canada is a natural opportunity for any country's products. As Vietnam moves up along the agriculture industrialisation process over the next decade, it should prove worthwhile for all to have closer Canada-Vietnamese trade relations.

 

Understanding more about each other is a first step. Vietnam has only a general idea of Canada – and Canada must do better at informing Vietnam about the outstanding advantages, opportunities and character of Canada. Canada is an extraordinarily advanced country that is diverse and dynamic. Canadians have differentiated themselves for decades from the obvious comparison of the United States – with our inclusive social policy, our respect and treatment of immigrants, our diversity across our provinces, our community approach and our strong urban centres. We have had the best public education system anywhere in the world for decades, as measured independently. We have outstanding health care and infrastructure – from out-ports and transportation system, to our sports and cultural centres.

 

CanCham continues to work on amplifying and expressing Canada’s economic advantages, as they are not fully understood in Vietnam. This is understandable. By understanding Canada’s strengths, smart Vietnamese companies and investors have been able to take advantage of niche opportunities. In terms of helping Vietnam’s economic growth and trade ties, the Vietnamese government could benefit from establishing stronger trade missions, with the relevant ministries and sectors to Canada to promote the bilateral synergies that exist. Inversely, Vietnam needs to promote its areas of expertise, product excellence and opportunities in Canada, including via trade fares, cultural exchanges, links with Vietnamese families that have their children educated in Canada, and tourism to drive its exports into Canada.

 

As members, alongside Canada and other nations, of Trans-Pacific Partnership (TPP) free trade negotiations, Vietnam has become a strong partner for Canada, and this is reflected in the excellent ties and strong relationship between the two nations.

 

Canada and Vietnam have excellent bilateral relations but there is potential for expansion and both countries have committed to further deepen cooperation, both bilaterally and multilaterally.  This will be achieved through further dialogue and capacity-building, especially with regards to Vietnam’s market access measures and investment climate.