AmCham predicts trade bump post-TPP

Is it accurate to say that the major impetus for US-Vietnam trade and investment co-operation in the time to come will be the Trans-Pacific Partnership (TPP)?

The TPP represents the next step in Vietnam’s integration into the global economy, and the agreement will bring great opportunities for Vietnamese and American companies and investors as trade barriers fall.

AmCham views the TPP as extremely important to the bilateral economic relationship and to US-Vietnam relations overall. I expect the TPP to have a transformative effect on Vietnam’s business environment, and that it will offer new opportunities to help Vietnam’s strategic drive to industrialise, modernise, and globalise.

The TPP, once implemented, will give the private sector greater access to key markets, will stimulate competition, attract additional foreign investment, and will help build key supply chain infrastructure – thus creating significant opportunities for Vietnamese businesses, as well as jobs and higher income for Vietnamese workers. In the meantime, Vietnam should make every effort to entice foreign investment and resources to help create a stable and modern economy.

US Ambassador Ted Osius once said that “With Vietnam in the TPP, and with its continued progress toward greater transparency and respect for rule of law, the United States could become Vietnam’s number-one investor, as it is in ASEAN as a whole.” What can be done to make the US Vietnam’s top investor, in your view?

It is important to look at the full picture of the economy’s activity, not just simplistic foreign direct investment statistics. The US is already the number one buyer of Vietnamese goods. We are also one of the top sources of foreign investment in Vietnam.

It is important to understand that US tax laws and business considerations related to the relatively small size of the Vietnamese domestic market encourage many US companies to invest in Vietnam from regional headquarters, most commonly Singapore and Hong Kong, as well as to some degree from other countries with more favourable tax reporting requirements.

For these reasons, many significant American investments in Vietnam have been credited as coming from other countries. In fact, some of the largest US investments made in Vietnam are not officially listed as being from the US.

I look at the real investment situation in Vietnam and I can see the US is already one of the top investors. 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.

As Vietnam implements needed reforms, reduces administrative burdens and creates a more attractive business environment, it is very possible that the US will become the number-one investor in Vietnam.

In the context that Vietnam has already joined and will join many free trade agreements (FTA), how important is Vietnam’s market in US firms’ business strategies?

The US has a developed and diversified economy with millions of businesses. Most of these businesses don’t seek opportunities abroad. However, many do, and while some of America’s most successful companies already operate in Vietnam, there are many more that are looking towards a bright future here. We see the TPP as the next step, and are hopeful that a better business environment in Vietnam will be a catalyst for many more US companies doing business here.

What policy recommendations can you make, in order to drive US-Vietnam trade co-operation forward?

It is a competitive world, and there is no time for Vietnam’s contentment with past successes. AmCham will continue to encourage the government to make further efforts to improve governance and transparency, change the behaviour of state-owned enterprises, strengthen intellectual property rights, and ensure that legislation enables and facilitates rather than restricts business opportunities for our members.

We believe that the business climate can best be helped by actions that increase productivity and reduce the costs and risks of doing business in Vietnam.