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|UK Prime Minister Boris Johnson (right) greets Vietnam’s Prime Minister Pham Minh Chinh at COP26|
At last week’s dialogue with Standard Chartered Bank and his reception for its chairman José Vinals in the UK, Prime Minister Pham Minh Chinh reaffirmed that the Vietnamese government and agencies will continue creating favourable conditions for foreign investors to do business successfully in the country.
According to Standard Chartered, the combined private investment sector in Vietnam to 2030 for clean water, clean energy, industry, innovation, and infrastructure is estimated to be $45.8 billion.
“As part of a global effort, we are committed to investing in Vietnam to finance the country’s sustainable development and securing its prosperity. I am excited that today you will be witnessing a combined $8 billion worth of financing commitments for various sustainable projects across Vietnam,” Vinals said.
The fresh commitment by Standard Chartered was not the only one made during PM Chinh’s trip to the UK last week to attend the COP26 climate summit, before his trip to France. PM Chinh met with PM Boris Johnson, together with another 50 heads of state before COP26 took place.
The Vietnamese leader witnessed a ceremony to sign 26 cooperation agreements between ministries and businesses of Vietnam and the UK.
The agreements cover a wide range of sectors from trade, agriculture, energy, education, and training to environmental protection and sports.
The deals included a letter of intent to join the Lowering Emissions by Accelerating Forest Finance Coalition; developing an action plan to strengthen links between the two countries’ higher education institutions; an MoU on enhancing cooperation in education through exchange of experiences and best strategic aspects; and an agreement to develop human resource training programmes for the Ministry of Planning and Investment and support startups of Vietnam.
Vietjet and Rolls-Royce Group also signed an agreement to provide engines and engine services for the wide-body fleet with a total value of $400 million. SOVICO Group and Oxford University signed an MoU to cooperate and finance investment in educational research and development (R&D) with a total value of $212 million, while Affinity Investment Fund and HDBank reached a grant of $300 million for the programme on sustainable development and also climate change combat.
Meanwhile in France where PM Chinh met with French leaders, 29 deals worth billions of US dollars were also inked between both nations’ agencies and enterprises, focusing on justice, education, aviation, flood prevention, space, telecommunications, and energy.
Vietjet and Safran, an international high-tech group, signed a comprehensive strategic partnership agreement, which adds to the two parties’ existing $10-billion cooperation. Vietjet and Safran will extend their cooperation to a long-term strategic partnership to cover more aircraft engine deals and a variety of other aspects such as aircraft seats and interiors supply.
Safran also inked an MoU with Bamboo Airways with a total amount of €2 billion euros ($2.3 billion). Bamboo Airways will select engines and aircraft equipment for an order of 50 A321NEOs and 30 Boeing 787-9s from Safran.
Moreover, Viettel and Rapid Space International signed a deal on 5G R&D; while T&T and Total clinched a strategic deal on renewable energy development in Vietnam, with an expected capacity of at least 2,000MW and total investment capital of $3 billion.
In another case, Bertrand Walckenaer, deputy general director of the Agence Française de Développement (AFD), and Vietnamese Ambassador to France Dinh Toan Thang signed two financing agreements for a 2022-2026 project aiming at enhancing the flood risk management capacity of Vietnam’s northern city of Dien Bien Phu.
The financial support includes a loan of €24.65 million ($28.47 million) from AFD for infrastructure development and a €1.5 million ($1.73 million) grant for technical assistance through the Water and Natural Resources Management Facility funded by the European Union.
Such cooperation agreements mean more business and investment opportunities in the near future, especially as the EU-Vietnam Free Trade Agreement (EVFTA) came into force since August 2020. The EVFTA is believed to help Vietnam attract more high-quality investment from Europe.
Opening up sectors
According to the European Commission’s figures, the EVFTA could boost Vietnam’s booming economy by 15 per cent of GDP, with Vietnamese exports to Europe growing by over one third. For the EU, the agreement is an important stepping stone to a wider EU-Southeast Asia trade deal.
After the agreement’s entry into force in August 2020, regarding EU exports to Vietnam, 65 per cent of duties have disappeared, and the remainder to be phased out gradually over a period of up 10 years. For example, to protect the Vietnamese motor sector from European competition, duties on cars will remain for the full 10 years.
As for Vietnamese exports to the EU, 71 per cent of duties have been removed after the deal takes effect, and the remainder will be removed over a period of seven years.
Such boons will also likely help Vietnam woo more EU investments into this country. The European Parliament stated that the EVFTA will make it easier for EU companies to provide services in Vietnam, for example in the postal, banking, insurance, maritime transport, and environmental sectors.
The EVFTA will also open up various Vietnamese manufacturing sectors to EU investment, for example food and beverages, tyres, ceramics, and construction materials.
In a specific case, Denmark’s SiccaDania Company is seeking to take roots in Vietnam where it sees great potential in coffee planting, processing, and exports.
In Vietnam, SiccaDania cooperates with Germany’s DEVEX to provide process equipment that turn extracts from local coffee beans into instant coffee powder.
“Vietnam is a strong, growing economy in Southeast Asia, with more than 98 million consumers. For SiccaDania, this represents an important market to cement the company’s presence in the region, following the establishment of its Singapore office,” said Christine Holt, director of Global Sales and Marketing at SiccaDania.
According to Vietnam’s Ministry of Planning and Investment, as of October 20, Vietnam had 2,242 valid investment projects from the EU, registered at $22.24 billion, accounting for 5.58 per cent of all registered foreign investment capital in Vietnam. Since the EVFTA took effect, Vietnam has attracted 164 projects with total committed capital of $483 million. The leading investors are the Netherlands, France, and Germany.
Last week, PM Chinh met with leaders of many big groups such as Pacific Land, AstraZeneca, Jardines, Enterprize Energy, Siemens Energy, JAKS Malaysia, InterContinental Hotel Group, Formula E, City Credit Capital, and OCA Global. All of them expressed their wish to expand investment in Vietnam in the near future.
Of these groups, some have been performing well in Vietnam already. For instance, Jardines has invested billions of US dollars in the country. It is now cooperating with Truong Hai Auto Corporation and Vinamilk, with its Fraser & Neave and Platinum Victory being a shareholder of the Vietnamese firm.
In another case, president of Pacific Land Group Patrick McKillen said his group is implementing some projects in Vietnam, especially Hanoi Biotech Park, which would help the country in coping with impacts of climate change and also emerging epidemics.
McKillen also revealed the group’s intention to build a major hub for biotechnology studies in Vietnam.
In his call for foreign investors into Vietnam, PM Chinh stated, “The stability and robust development of the Vietnamese economy offer numerous opportunities for investors worldwide. I call on investors to cooperate in safely resuming production to fulfil orders and maintain supply chains. I also kindly ask that you work closely with us in seizing the opportunities ushered in by the 17 FTAs that Vietnam has signed, including high-quality FTAs with major partners.”
The Vietnamese government will continue to provide every favourable condition for investment in prioritised sectors with preferential benefits in Vietnam, the PM added, such as advanced technology and IT, the supporting industries, smart agriculture, environmental protection, renewable energy, and infrastructure projects in service of social security.
This commitment promises a brighter future for Vietnam to attract foreign investment and has been highly appreciated by the foreign business community, as José Vinals from Standard Charter reaffirmed,
“We remain committed to Vietnam’s recovery and future sustainable growth. Vietnam is a key growth market in Standard Chartered’s Asia footprint, and we are committed to promoting Vietnam as a key destination for foreign investment,” he said.