Singapore and Vietnam enter new phase of relations

August 27, 2023 | 08:00
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Prime Minister of Singapore, Lee Hsien Loong, will pay an official visit to Vietnam this week. Tan See Leng, Singapore’s Minister for Manpower and Second Minister for Trade and Industry, writes about how both economies can bring their economic ties to greater heights.

This year is an especially significant one for Singapore and Vietnam’s bilateral relationship, as it marks the 50th anniversary of our diplomatic relations, and a decade since we established our strategic partnership.

Singapore and Vietnam enter new phase of relations
Tan See Leng, Singapore’s Minister for Manpower and Second Minister for Trade and Industry

This is marked by a series of high-level visits between both countries, Vietnam Prime Minister Pham Minh Chinh’s visit to Singapore on February 8-10, Vietnamese Minister of Foreign Affairs Bui Thanh Son’s visit on 17-18 July, and Singaporean Prime Minister Lee Hsien Loong’s visit to Vietnam on August 27-29.

I also had the opportunity to visit Hanoi in July, and met with my counterparts from various ministries. We had a substantive discussion on how the two nations can enhance our cooperation as Vietnam embraces opportunities brought about by the green economy and digital economy. I also discussed with Ministry of Planning and Investment Minister Nguyen Chi Dung to upgrade the Singapore-Vietnam Connectivity Framework Agreement and expand its scope to include new areas of energy, sustainability, and innovation.

During this visit, I attended the Seventh Singapore Regional Business Forum as a guest of honour, and witnessed the signing of 12 MoUs between our companies and institutions as well as the launch of a corporate social responsibility initiative by United Overseas Bank (UOB).

This was the first time the forum had been held outside of Singapore, and Vietnam was chosen as the location due to the strong business interest in Vietnam’s fast-growing economy. This is evident in the strong turnout of businesses from the two countries, as well as from other countries.

Over the years, the economic ties between Singapore and Vietnam have grown from strength to strength. Bilateral goods trade grew by around 11 per cent per annum from $15.45 billion in 2018 to $23.14 billion in 2022. Bilateral services trade grew by around 14 per cent per annum from $3.25 billion in 2017 to $5.47 billion.

In 2022, Vietnam was Singapore’s 11th largest trading partner. As at end-2022, Singapore was also Vietnam’s second-largest foreign investor, with a cumulative investment of $70.8 billion. The economic footprint of Singaporean companies can be found in sectors ranging from manufacturing, logistics to lifestyle and consumer services. Our cooperation is also marked by the flagship Vietnam-Singapore Industrial Park projects, present across Vietnam from north to south, bringing in quality investments and jobs for Vietnam.

During PM Chinh’s visit to Singapore in February this year, the two nations signed the Green-Digital Economic Partnership MoU. It serves as an umbrella framework to implement the four MoUs on energy, carbon credits, innovation, and digital economy signed by agencies in the past year. There is hence more that we can do and achieve together to seize the opportunities of the next decade, by riding on the strong foundation built through decades of close partnerships at both the government and business levels.

Singapore and Vietnam enter new phase of relations
Agreements signed with Singapore are leading to new partnerships in infrastructure, energy, and more - photo Le Toan

Innovative ventures

Singapore and Vietnam are among the top three startup ecosystems in Southeast Asia. With our common goal of driving further economic growth through technology and innovation, there is scope for us both to tap on each other’s innovation ecosystems for partners, funding, and talent. Our collaboration in innovation has gained momentum through BLOCK71 in Ho Chi Minh City, a collaboration between the National University of Singapore and Vietnam’s Becamex IDC, which is currently home to more than 1,000 startups, incubators, and accelerators.

There is also the Global Innovation Alliance node in the same city, where Enterprise Singapore partnered with the Saigon Innovation Hub and Quest Ventures to facilitate startup exchanges between both countries.

In December 2022, Singapore’s Ministry of Trade and Industry and Vietnam’s National Innovation Centre (NIC) signed an Innovation Work Group MoU to connect innovation ecosystems. Several partnerships between NIC and the Singapore Institute of Higher Learning with corporates such as Keppel and UOB have since been forged.

Energy and sustainability

Singapore and Vietnam share a common vision towards achieving net-zero by 2050. The scaling up of renewable energy and development of regional power grids will not only support our decarbonisation efforts, it will also promote greater infrastructure connectivity to help advance the region’s sustainable energy goals. This includes the Laos-Thailand-Malaysia-Singapore Power Integration Project, which serves as an important pathfinder project to advance regional interconnectivity, collaborations between our nations can contribute to the ASEAN Power Grid vision.

The Energy Cooperation MoU signed in October 2022 has paved the way for both sides to explore closer collaboration in areas such as renewable energy development, cross-border electricity trading, liquefied natural gas and electricity markets, and low-carbon and energy efficiency solutions. Singaporean firms are also participating in the development of Vietnam’s energy sector, especially with the opportunities presented with the approval of the Power Development Plan VIII in May.

In green and renewable energy, the Singapore Power Group entered Vietnam in 2020 and established its presence in Hanoi and Ho Chi Minh City. It has recently acquired two utility-scale solar farms in Phu Yen province that can provide 130GWh of clean electricity annually, in turn supporting Vietnam’s reduction of its carbon emissions by up to 105,000 tonnes per year.

Singapore and Vietnam urgently need to accelerate climate action to meet the goals of the Paris Agreement. Carbon markets can play a critical role in supporting countries to decarbonise, particularly in hard-to-abate sectors. In October 2022, an MoU was signed to collaborate on carbon credits, aligned with Article 6 of the Paris Agreement. This puts both Singapore and Vietnam in excellent positions to capture the opportunities generated by carbon markets. We look forward to jointly implementing carbon credit generating projects in the coming years ahead. Our projects can help spur a more vibrant carbon market in the region.

The progress we have made in recent years, between governments and between private sectors, have been very encouraging. There remains much room for us to strengthen existing partnerships and seek out new opportunities in the emerging areas in Vietnam’s next bound of growth.

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By Tan See Leng

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