Partnering with Stakeholders to Invest in Vietnam’s Vision

10:21:39 AM | 28/10/2020

Vietnam Business Forum recently had an interview with Ms. Ann Marie Yastishock, Mission Director of the United States Agency for International Development in Vietnam. While a donor institution may not be the first organization that comes to mind for most of our readership to keep an eye on, we think this article could change your mind. USAID’s continuing work to improve the legal and regulatory environment for business, to build public and private sector institutional capacity, and to invest in human capital to prepare a rising workforce for the demands of tomorrow clearly positions USAID as a prime partner for the business minded.

Impressed by Vietnam’s multi-decade GDP growth of 7% annualized since the launching of economic and political reforms under Đổi Mới in 1986, she remarked that the combination of market based systems and inclusive governance can be a powerful transformative force for an economy. Vietnam’s management of Covid-19 is a commendable example of inclusive and transparent governance. According to her, with the swift action by leaders and the trust of citizens, Vietnam minimized the endogenous impact of the pandemic and again remains a standout in the region for the low caseload, mortality rate, and rebounding economy.

Vietnam has not lost its laser focus on achieving upper-middle income status by 2035. Ms. Yastishock pointed to Resolution 10 of the Party Central Committee as Vietnam’s crucial pivot towards developing the private economic sector into a key driver of a market economy. While there is more ground to cover, recent successes in the passage of Vietnam’s first ever public-private partnership law, with support from USAID she was quick to add, heralded an opening for realizing a more sustainable approach to partnering with the private sector to meet public infrastructure needs, such as port upgrades, multimodal transport & logistics, energy transmission and renewable energy generation. Without such investments, Vietnam’s heavily utilized infrastructure complex could become a drag on growth as the demand outstrips capacity. She cautioned that maintaining competitiveness demands an unwavering commitment to tackle difficult and politically sensitive policy reforms, transparent processes and inclusive systems.

Ms. Yastishock emphasized that 2020 marks the 25th anniversary of bilateral relations between Vietnam and the United States, an auspicious year for her to arrive in Vietnam. Nearly two decades of development assistance are a testament to the deepening relationship between the United States and Vietnam. She reiterated that the United States is committed to supporting the development of a strong and prosperous private sector that bolsters Vietnam’s economic growth. Working hand-in-hand with the Government of Vietnam, she noted, helps remove constraints to and build the competitiveness of Vietnam, which stands as a bulwark against other countries in the region who may wish to impose their will upon Vietnam.

Given USAID’s long history in Vietnam, Vietnam Business Forum inquired about the organization’s track record on supporting entrepreneurship and businesses. Ms. Yastishock highlighted a near universal principle that trade is the lifeblood of an economy. By reducing the time and cost of trade, both sides of the trading relationship benefit. USAID embarked on a series of trade-centric projects, from 2001 to 2013, under the Support for Trade Acceleration (STAR) banner. STAR is noteworthy because it was the first major U.S. technical assistance in Vietnam after the war and the first major USAID project worldwide designed in collaboration with the office of the U.S. Trade Representative (USTR) in support of a trade agreement, specifically, the U.S.-Vietnam Bilateral Trade Agreement (BTA), which normalized bilateral trade relations. The BTA paved the way for the U.S.-Vietnam Trade and Investment Framework and Agreement (TIFA) in 2007 and Vietnam’s accession to the World Trade Organization in that same year deepening the commitments outlined in the BTA. According to Ms. Yastishock, the statistics speak for themselves. STAR supported more than 150 enabling laws and regulations, paving the way for most favored nation status reducing tariffs by 40%, expanding Vietnamese exports to the U.S. substantially, and raising Vietnam as a sizable export market for the United States (U.S. exports to Vietnam: US$367 million in 2000; US$1.1 billion in 2006; and to over US$10 billion by 2019). The United States was Vietnam’s second largest trading partner in 2019.

Another pivotal project for USAID, she noted, was the Governance for Inclusive Growth (GIG) project which supported legislative and regulatory reforms, expanded USAID’s direct engagement with the private sector, and is credited with contributing to Vietnam’s improvement in multiple competitiveness rankings. Ms. Yastishock stressed that USAID funded multiple programs over the years working in concert to support Vietnam, but would be remiss in not highlighting USAID’s longest running cooperation with Vietnam through a strong and productive partnership with the Vietnam Chamber of Commerce and Industry (VCCI), the Provincial Competitiveness Index (PCI). PCI, driven by private sector survey responses on the provincial government performance, spurred healthy competition across Vietnam’s 63 provinces generating a virtuous cycle of business ecosystem reforms reducing barriers, paperwork, and administrative processes. PCI’s success translates to Vietnam’s success as 73% of government officials reportedly rely on PCI as a tool to engage with and address the needs of the private sector regarding economic governance.

In the context of Covid-19 and the global economic slowdown, USAID’s economic programming focused on boosting private sector competitiveness and improving the business enabling environment. Vietnam has been growing so quickly for decades that the legal and regulatory frameworks and physical infrastructure underpinning the economy are straining to keep up, an envious position for any economy, she quipped. Clean, affordable, secure, and reliable energy is something that many take for granted, even in Vietnam. Electricity demand is outpacing GDP growth and USAID’s programs such as the Vietnam Low Emission Energy Program, Vietnam Urban Energy Security, and USAID INVEST are tools to mobilize private sector resources to address Vietnam’s critical energy needs. Energy is not the only factor that the private sector looks to when assessing how hospitable a potential investment destination may be. The cost of trading across borders and supply chain partners’ capacity are other facets that USAID is targeting with technical assistance. USAID’s Trade Facilitation Program is helping to reduce the time and cost of trading across borders while the Linkages for Small and Medium Enterprises project is enhancing and deepening supply chain connectivity.

Vietnam finds itself at an interesting crossroads. The gains from labor intensive industry have plateaued. Ms. Yastishock pointed out what is seemingly obvious: the Internet and the growing digital economy are not going away. This fact has profound implications for the Vietnamese economy. The Government of Vietnam’s strategic vision aspires to become a premiere digital hub by 2045 for the region and building a knowledge based economy where innovation and entrepreneurship thrive. Rapid digital adoption, beyond mere cell phone use, will be essential for businesses and the government to foster a self-sustaining digital economy. As USAID partners with Vietnam, it is mindful of the importance of equipping the innovators of tomorrow with the tools to allow them to be successful. USAID’s higher education and workforce development programming will do just that. Future entrepreneurship and small and growing business projects will accelerate technology adoption to expand the digital footprint in Vietnam. Getting resources to innovators who invest in their own growth is imperative. By deepening financial markets, financing options are expanded for Vietnam’s entrepreneurs. Ms. Yastishock expects USAID will continue to work on legal and regulatory reform, pushing out the frontier on policy reforms that create space for Vietnam’s growth and digital transformation.

Ms. Yastishock closed by sharing that USAID invests in the future and in building long-lasting and sustainable partnerships, with the private sector, and with sovereign partners, such as Vietnam. USAID’s presence in Vietnam is a signal of our commitment to further deepening our relationship with a valued partner in the Indo-Pacific region. Vietnam has much to be proud of and its economy is a reflection of the government’s willingness to embrace change. Future growth will require continued investment, human capital building, and policy reforms. USAID is open to partnering with stakeholders that are willing to invest in Vietnam’s vision.

We welcome you to Vietnam Ms. Ann Marie Yastishock! Let’s do business!

USAID/Vietnam Mission Director Ann Marie Yastishock leads the United States’ portfolio of development assistance and technical support to Vietnam spanning health, education, energy, environment, disabilities, trade facilitation, business development, and more. With an annual budget of approximately US$130 million, she oversees an impressive basket of resources to tackle development challenges in Vietnam.

As a career member of the Senior Foreign Service, Ms. Yastishock served in overseas leadership roles in Eastern Europe, Eurasia, Afghanistan, and Myanmar. Her experience as a lawyer and her time in post-Soviet countries helped inform her governance and rule of law advocacy. To this day, she remains a self-described champion for governance and market orientation.

Source: Vietnam Business Forum