Reflecting on solid Finnish tie-ups

January 23, 2023 | 00:28

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This year will be a special one for us as we celebrate 50 years of the Finland-Vietnam diplomatic relationship. After all that time, we are now witnessing strengthened relations and collaboration between the two countries expanded into several fields. The transition from development cooperation since the 2000s has also seen initial signals of success. It paved the way for more opportunities to promote sustainable trade and investment, consolidating the two economies while complementing bilateral relations and promoting cultural exchange.

Touko Piiparinen, Deputy head of mission Embassy of Finland to Vietnam

In the past 50 years, Finland’s cooperation with Vietnam has included over €500 million ($534 million) of official development assistance through several cooperation modalities and in various sectors like forestry, water and sanitation, sci-tech and innovation, energy and other clean tech solutions, and education.

Finland was one of the first countries to provide aid to Vietnam after the latter opened up to the world after the war. Many projects on poverty alleviation and socioeconomic development in Vietnam bear the imprint of Finland, such as Pha Rung shipyard repair in the northern port city of Haiphong, the Finnish water programme to improve the water supply and drainage system in Hanoi, the forest restoration in Bac Kan province, rural projects in Quang Tri and Thua Thien-Hue provinces, and so much more.

In the context of Vietnam becoming a middle-income country, Vietnam and Finland relations have been, in recent years, turning towards the growth in other types of cooperation by gradually shifting the emphasis from development cooperation into commercial cooperation. Among the top priorities are economic affairs and trade, clean and safe water, forest industry, science and technology, energy and clean tech, and education.

In order to facilitate the shift from grant-based development cooperation to increased trade and other mutually beneficial forms of cooperation in Vietnam, a number of new tools and platforms have been introduced, including the Innovation Partnership Programme 2009-2018. As a flagship of Finnish cooperation with Vietnam, the two phases of this initiative introduced partnership facilities. According to the evaluation report, the facilities have proven to be essential for transitioning towards new forms of partnerships.

In particular, the programme supported Vietnam in developing a national innovation ecosystem. Together with several impactful results, the essence of the scheme remains, opening up new opportunities for business cooperation base on a solid foundation of trust, knowledge, high skills, technology and especially effective partnerships of different actors of both countries.

Thanks to EU-Vietnam Free Trade Agreement (EVFTA), relations between Vietnam and Finland have seen impressive growth. Two-way trade turnover increased about 3.5 times in the past 15 years, reaching $337.5 million in 2020. Notably, only in the first half of 2021, bilateral trade turnover reached $285 million, a rise of 61.2 per cent over the same period of the year 2020, according to Vietnam’s Ministry of Industry and Trade. Vietnamese exports to Finland reached about €540 million ($576.2 million) in 2021, notes Finnish Customs.

Vietnam’s major products in the Finnish market are telecommunications equipment, metals, clothing and accessories, and footwear. Finland, meanwhile, exports electric machinery, metalliferous ores, paper, and wood to Vietnam. According to Finnish Customs, in 2021, exports to Vietnam increased 126 per cent to €242 million ($258.1 million).

The drop in tariffs implemented via the EVFTA has also opened up new opportunities for food exports to Vietnam. The prosperous middle class consumes more and more dairy, meat, and fish products, which are also available in premium quality from Finland. The visit of the Minister of Agriculture and Forestry of Finland, Antti Kurvinen, to Vietnam last October helped accelerate trading of the two countries’ agri-food products and technology transfer in forestries as well as the water sector.

Vietnam launched a national digitalisation programme in 2020, with the goal of transitioning to a digital society by 2030, when one-third of GDP would consist of the digital economy. The purpose of the Industry 4.0 plan, prepared to support structural change development, is to increase the share of industry in GDP and increase production efficiency.

Finnish companies working in the telecommunications sector, 5G technology and cybersecurity, smart construction, logistics, and edtech solutions can meet Vietnam’s growing demand of an advanced IT industry and digitalisation needs.

Meanwhile, due to its geographical location and its economy focused on agriculture and goods exports, Vietnam is particularly vulnerable to the effects of climate change, which is also recognised in the government’s policies and programmes. The government has defined the goal of achieving carbon neutrality by 2050 and is currently preparing the Power Development Plan VIII, which aims to increase the share of renewable energy sources.

As Vietnam made a commitment to achieve net-zero by 2050 by increasing renewable energy and reducing the use of coal, green, flexible, and climate smart solutions from Finland can offer a key to unlock the potential of Vietnam to catch up with the global sustainable development perspective.

Finland will support Vietnam’s green transition, especially in the fields of construction and production. Alternative solutions like waste treatment, waste to energy, energy efficiency, and circular economy technologies are also fields where Finland can provide global-leading expertise to Vietnam.

Lastly yet importantly, education has been a highlight for the Vietnamese market as Finland is renowned for its quality education from the basic to higher education. Finland continues accommodating Vietnamese people to pursuit their study and career in Finland. Vietnam is among the prioritised countries of a programme by the Ministry of Economic Affairs and Employment of Finland, which stimulates the mobility of skilled workers, students, and experts. Regarding the cooperation in basic education, Finnish educational players have been active in Vietnam and the perspective of edtech in Vietnam is promising.

The 50th anniversary of diplomatic relations between Finland and Vietnam is a precious opportunity to reflect on the continuing partnership over five decades. Given the changes in context, Finland is honoured to continue strengthening relations and exploring more ways to promote economic and cultural exchanges between the two countries.