Singapore and Vietnam ties on track

February 13, 2023 | 09:57
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Vietnam and Singapore are intensifying their bilateral ties in new fields, focusing on digital economy and innovation, infrastructure, and energy, which will help businesses in both economies to benefit from new forms of cooperation.
Singapore and Vietnam ties on track
PM Pham Minh Chinh (left) met with his Singaporean counterpart Lee Hsien Loong last week,photo VNA

As Vietnam and Singapore get ready to mark the 50th anniversary of diplomatic relations and 10 years of a strategic partnership in 2023, the outlook for bilateral ties looks greater than ever.

Jaya Ratnam, Singaporean Ambassador to Vietnam, told VIR that looking forward to 2023 and beyond, Singapore and Vietnam would look to deepen their economic cooperation in many sectors including digital economy and innovation, infrastructure, energy, sustainability, and multi-faceted connectivity in trade and investment, finance, and tourism.

During the official visit by Vietnamese Prime Minister Pham Minh Chinh to Singapore last week, both nations ink an MoU on green-digital economic partnership, which lays firm groundwork for them to develop digital and clean energy cooperation with concrete projects to be advanced. It also forms an overarching framework that builds on four MoUs signed last year and covers energy, sustainability, infrastructure, digital and innovation, and connectivity.

“Singapore and Vietnam are among the top three startup ecosystems in Southeast Asia. As of December 2021, Vietnam had more than 3,800 startups and was home to four unicorns. The total startup funding to Vietnam in 2021 reached a new high of over $1.3 billion, with Singapore as the top source,” Ratnam said.

Joint work in innovation has gained momentum through BLOCK71 Saigon, a collaboration between the National University of Singapore and Vietnam’s Becamex IDC, which is home to a growing number of startups, incubators, and accelerators; and via the Global Innovation Alliance where EnterpriseSG has partnered with Quest Ventures to facilitate 2-way exchanges of startups between both countries.

“With our common goal of driving further economic growth through technology and innovation, there is scope for Singapore and Vietnam to tap on each other’s innovation ecosystems for partners, funding, and talent,” Ratnam said.

One year ago, the two countries signed an MoU on digital economy cooperation, and a joint working group has been tasked with implementing digital economy collaborations between both nations. The working group will explore new areas of cooperation such as cross-border data flows, cybersecurity, AI governance, and electronic payments, including with regulatory sandboxes.

Infrastructure ties

Vietnam and Singapore have also been working to cement their ties in infrastructure development. Arising from the former’s rapid urbanisation, its infrastructure sector is expected to grow at a compound annual growth rate of approximately 4 per cent between 2020 and 2025.

It is projected that Vietnam’s sustainable infrastructure will require investments of up to $25 billion per year to develop ports, expressways, urban areas, and green energy.

“There is potential for Singapore-based companies to work with Vietnamese corporates to provide financing, technology, and operating expertise for projects in the areas of green energy, smart cities, waste management, and wastewater treatment infrastructure,” Ratnam said.

Singapore and Vietnam ties on track

Last week, Vietnam and Singapore also agreed that bilateral ties would be tightened in digital economy and innovation, infrastructure, energy, sustainability, trade and investment, defence, security, education, and human resource development. Authorised agencies from Vietnam and Singapore will soon work with each other to formulate mechanisms and incentives to facilitate businesses from both sides to engage in new cooperation fields. In addition, Vietnam is also seeking experiences from Singapore in the development of smart cities. The city state’s Smart Nation initiative was launched in 2014 by Prime Minister Lee Hsien Loong, and three years later benefited from a government injection of S$2.4 billion (then equivalent to $1.73 billion). The aim is to create a city powered by digital innovation and technology that responds to citizens’ ever-changing needs.

Last week, Sembcorp Industries announced an MoU with its long-standing partner, Becamex IDC Corporation, to co-establish five Vietnam Singapore Industrial Parks (VSIPs) in Vietnam valued at about $1 billion. Featuring decarbonisation solutions such as rooftop solar systems, solar farms (where feasible) and green certified buildings, the VSIPs are envisioned to be smart and sustainable industrial parks with a low carbon footprint. Real-time tracking devices will remotely monitor and manage energy, water and waste use, as well as traffic and security, to allow for enhanced visibility over operations. Vietnam’s government also presented Sembcorp and Becamex with an investment licence to develop a 500ha VSIP in the central province of Nghe An (park II). The licence is an expansion of the successful 750ha VSIP Nghe An (park I) established in 2015.

Energy cooperation

An MoU on energy cooperation has also been inked, embracing the development and financing of renewable energy for increased grid resilience, stability, and cross-border electricity trading.

It also paves the way for cooperation in liquefied natural gas and electricity markets, research and development and low-carbon energy technologies, such as hydrogen, ammonia, energy storage systems, smart grids and related infrastructure.

Vietnam’s PTSC Services and Singapore’s Sembcorp Utilities last week exchanged a deal on joint development in offshore wind power for exports to Singapore. Both nations are now discussing a plan on building a power transmission line through the East Sea based on harmonious benefits and shared risks.

Ambassador Ratnam that Singapore and Vietnam had a common vision of achieving net-zero emissions by 2050. The scaling up of renewable energy and development of regional power grids will not only support both nations’ decarbonisation efforts, but also promote greater infrastructural connectivity to help advance the region’s sustainable energy goals.

Like an official power integration project between Laos, Thailand, Malaysia, and Singapore, which serves as an important pathfinder project to advance regional energy interconnectivity, collaborations between Vietnam and Singapore can contribute to the ASEAN Power Grid vision.

“The energy cooperation MoU signed between Singapore’s Ministry of Trade and Industry and Vietnam’s Ministry of Industry and Trade 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, low-carbon solutions, and demand-side management,” Ratnam said.

The Vietnam-Singapore cooperation on carbon markets is in line with Article 6 of the Paris Agreement, which allows countries to transfer carbon credits earned from reducing greenhouse gas emissions to help them meet climate targets. Currently, Singapore targets net-zero emissions by or around mid-century, and Vietnam in November 2021 declared that it will make efforts to achieve net-zero emissions by 2050 with its own resources and international support.

Singapore is Vietnam’s second-largest foreign investor (after South Korea), with registered capital of $71.85 billion. Bilateral trade turnover hit $8.3 billion in 2022, up 23 per cent on-year, and over $9 billion last year – with Vietnam’s exports worth $4.2 billion, up 7.7 per cent, and imports of $4.8 billion, up 12.3 per cent. Vietnam and Singapore last week also signed an MoU for a plan on trade and economic cooperation, which will help both countries to boost bilateral trade activities.

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