Future shifts in Vietnam-Singapore investment

This aligns with Vietnam’s focus on manufacturing and exports, where robust infrastructure and sustainable practices are crucial. Additionally, a burgeoning middle class presents promising opportunities in commercial and residential real estate.

Kenneth Loh, vice president Singapore Chamber of Commerce Hanoi office

Beyond real estate investments, Singaporeans are increasingly attracted to the promising sectors such as technology and renewable energy. Vietnam’s rapidly evolving digital landscape, fuelled by a young, tech-savvy population, attracted investments in fintech, e-commerce, and software development. Meanwhile, Vietnam’s commitment to green energy resonated with Singaporeans, who saw potential in solar power, wind farms, and clean tech solutions.

While they are seeking out new areas, the traditional sectors retained their strong appeal. Manufacturing, a cornerstone of Vietnam’s economic success, received substantial Singaporean investments in areas such as electronics, textiles, and food processing. Infrastructure development, another key area, saw Singaporean firms involved in airports, seaports, and highways, bolstering Vietnam’s connectivity and accessibility.

Emerging areas piqued Singapore’s interest as well. Healthcare witnessed funding in hospitals, medical equipment manufacturing, and pharmaceuticals. Agriculture, undergoing modernisation and digitalisation, saw investments in precision farming and agro-processing.

Looking ahead, this sectoral interplay paints a fascinating picture of the Vietnam-Singapore economic partnership. Vietnam’s focus on manufacturing, infrastructure, and digitalisation, coupled with its commitment to sustainability and a growing middle class, creates a fertile ground for Singaporean investments. In turn, Singapore’s expertise in finance, technology, and green solutions can propel Vietnam’s growth and diversify its own economy.

Based on current trends albeit the uncertain global economy, the Singaporean funding in Vietnam in 2024 is expected to grow continuously, but with a shift in focus.

Overall volume is projected to rise, potentially exceeding 2023’s already impressive numbers. This optimism stems from Vietnam’s robust economic growth, strategic location, and ongoing efforts to improve the business climate.

While manufacturing will likely remain strong, Singaporeans are increasingly looking at high-growth sectors such as renewable energy, technology and innovation, and pharmaceuticals.

These investors will prioritise predictability and stability. This means a continued focus on legal reforms, streamlined regulations, and robust intellectual property (IP) protection.

Sustainability along with environmental, social, and governance considerations will gain prominence. Investors will seek projects that align with Vietnam’s green growth goals and responsible business practices.

Talent and skills will remain a key concern. Financiers will be looking for a skilled workforce to support their ventures, particularly in specialised fields like technology and renewable energy.

The strong historical and cultural ties between Singapore and Vietnam will continue to be a major advantage. The strategic partnership between the two countries provides a stable framework for economic cooperation and mutual benefit.

Active engagement and knowledge sharing initiatives will further strengthen the business climate and foster trust between businesses and policymakers.

Global uncertainties could pose challenges, but Vietnam’s relative resilience and strong fundamentals should provide some insulation. Competition from other regional and global players is likely to intensify, requiring Vietnam to stay ahead of the curve in terms of competitiveness and attractiveness.

Successfully navigating the shift towards higher-value sectors will require Vietnam to invest in talent development, infrastructure upgrades, and policy frameworks conducive to innovation.

The Vietnamese government’s efforts to improve the business climate in 2023 have met some, but not all, expectations from Singaporeans. Continued reforms are crucial to fully meet the expectations of Singaporean investors and attract even greater funding in the future.

There are positive measures recognised by Singaporean investors, such as streamlined regulations and administrative procedures, increased transparency and predictability, a focus on infrastructure development, and skilled workforce development. Some areas for improvement are also highlighted by Singaporeans. These include inconsistency in implementation, land access and ownership restrictions, IP protection, and labour market rigidities.

Looking forward, Singaporean businesses expect more legal reform. They include further streamlining regulations and bureaucracy; improving transparency and accessibility of land ownership, particularly for industrial projects; strengthening IP protection and enforcement; enhancing labour market flexibility by allowing for more dynamic contracts and facilitate movement of skilled workers across borders; and digitalising government services like streamlining online platforms for permits, licences, and tax payments.

Both Singapore and Vietnam have shared priorities and aligned investments in sustainable development and green growth. The Singapore’s Green Plan 2030 has set ambitious goals for reducing carbon emissions and developing a sustainable economy. Funding Vietnam’s renewable energy sector, such as solar and wind farms, aligns perfectly with these goals.

Vietnam, on the other hand, has committed to reducing its greenhouse gas emissions by 43 per cent by 2030 via its Nationally Determined Contributions through the United Nations. Singaporean expertise in clean technologies can play a crucial role in achieving this target.

The deepening cooperation between Singapore and Vietnam in sustainable development and green growth is poised to have a significant impact on Singaporean trends in Vietnam in the future. This shared commitment to a greener and more sustainable future is already influencing decisions across various sectors, and its influence is expected to intensify in the years to come.

By embracing this shift and capitalising on the opportunities it presents, both countries can secure a prosperous and sustainable future for their economies and their people.

Singapore-Vietnam relations in their heyday This time last year, I wrote that 2023 would be a momentous year for Vietnam and Singapore’s relationship. We were all ready to celebrate the 50 years anniversary of the establishment of diplomatic relationship and the 10 years since the establishment of a strategic partnership between the two countries.