Doors continue to swing open for bilateral interests

How have economic ties strengthened in recent years?

Jane Lim, Deputy Secretary for Trade of the Singapore Ministry of Trade and Industry

Singapore and Vietnam share robust economic ties across a wide range of sectors. Bilateral economic cooperation is underpinned by the Singapore-Vietnam Connectivity Framework Agreement (CFA). Since it came into force in 2006, the agreement has rendered good progress across all six pillars of education and training, finance, IT, transportation, investment and trade, and services.

The programmes and initiatives under each of these pillars have expanded to address new collaboration opportunities, including on smart city solutions, renewable energy development, Industry 4.0 adoption, and startup growth.

Singapore is also the third-largest cumulative investor into Vietnam (behind Japan and South Korea), with around 2,600 approved projects totalling $56.6 billion to date. Bilateral trade between both countries has also risen 70 per cent over the past decade.

What are the sectors of interest to Singaporean businesses, and what are the prospects for them?

Beyond the flexible investment incentives implemented by Vietnam, the various tax and labour reforms undertaken to improve the business environment bolstered the country’s attractiveness as an investment destination. Additionally, Vietnam’s growing number of trade agreements and favourable geographical location strengthened its supply chain networks and trade connectivity regionally and globally.

These initiatives provide growth opportunities for Singaporean companies, particularly in manufacturing, urban solutions and smart cities, innovation and startups, and consumer and lifestyle.

In manufacturing, Vietnam has become one of the top investment destinations for multinational corporations looking to diversify their supply chains. This has also attracted investors in supporting sectors such as transportation and logistics.

To support its rapid urbanisation, Vietnam is increasingly looking to diversify its energy mix, especially in cleaner energy sources such as solar and liquefied natural gas. Plans are already under way for the government to grow the renewable sector to $74 billion by 2025 to support sustainable development. Singaporean companies can offer end-to-end solutions to provide distributed power systems that integrate multiple solutions across the value chain.

The Vietnamese government’s strong support for the innovation sector, including efforts led by the Ministry of Planning and Investment and the Ministry of Science and Technology to establish a network of innovation centres among ASEAN member states, has boosted confidence among investors. There are now at least 50 Singaporean startups in Vietnam.

In consumer goods and lifestyle, Vietnam’s fast-growing middle class continues to attract consumer brands from Singapore. Even amidst COVID-19, popular Singaporean brands found success in venturing into Vietnam for the first time last year. The pandemic has also highlighted the importance of technology in ensuring business continuity and resilience.

The Vietnamese government has been deploying several programmes to improve the business climate. Do Singaporean businesses meet with any particular issues here?

Each country has its unique characteristics and business environment, which will pose a challenge for new investors. This is similarly the case for Singaporean businesses venturing into Vietnam. Enterprise Singapore’s overseas centres in Hanoi and Ho Chi Minh City, as well as the Singapore Business

Federation’s Singapore Enterprise Centre in Ho Chi Minh City help to match Singaporean businesses with the right local partners to better navigate the market. These partners include both public and private enterprises that have complementary interests.

I am confident that the economic partnership between Singapore and Vietnam will continue to grow from strength to strength, with our companies collaborating with one another to seize new opportunities.

Looking ahead, how can Singapore and Vietnam continue to strengthen economic cooperation?

Singaporean companies continue to see Vietnam as an attractive investment destination. Our companies have been able to continue working together even as international travel has been curtailed. In November, for example, Singapore’s YCH Group and Vietnam’s T&T Group launched the Vinh Phuc Inland Container Depot Logistics Centre (meaning Hanoi SuperPort). This was the first project in the ASEAN Smart Logistics Network launched under Vietnam’s 2020 ASEAN Chairmanship.

Singapore looks forward to working closely with Vietnam and the rest of the region to steer our economies towards post-pandemic recovery and growth. COVID-19 has accelerated key shifts towards digitalisation, supply chain diversification, and climate change mitigation and adaptation. This has opened up new opportunities for cooperation in areas such as the digital economy, supply chain connectivity, and clean and renewable energy.

Singapore and Vietnam can also continue to tap on the Connectivity Ministerial Meetings under the CFA to advance their existing areas of cooperation, while also identifying and facilitating new initiatives.