Singaporean high-tech ties intensify

The Vietnamese government has made strong efforts to improve the investment climate to facilitate businesses in 2019. How have Singaporean investors in particular performed in Vietnam?

Shanmuga Retman, vice chairman of the Singapore Business Association in Vietnam

Singapore has a long-standing people-to-people relationship with Vietnam and this is going to play an important role in accelerating the deepening of this relationship in the coming years.

The largest international alumni from both the Civil Service College and National University of Singapore since the late 1980’s has been Vietnamese public servants and students. Many of them today are successful entrepreneurs, technocrats, and bureaucrats in Hanoi, Ho Chi Minh City, and the central city of Danang.

This human relationship component will play a valuable role in facilitating trade development from a cross-cultural perspective, understanding the way business is conducted between both countries. Singapore is highly efficient and pragmatic while the Vietnamese business culture is deeply rooted in valuing family, social interaction, and cultivating a personal bond.

Singapore is the third-largest investor in Vietnam, and in 2019 we witnessed significant investments focused in the north, from manufacturing to education. These groups have a long-term view to establish presence in the local market in anticipation of the divestment of state-owned enterprises to secure contracts to serve as a proof of concept to better understand a local partner.

In 2019, we saw a record number of trade delegations organised by the Singapore Food Manufacturers Federation, Enterprise Singapore, and other government-linked companies who have secured sustainable partnerships and projects in the main provinces of Vietnam. My company, MARA Vietnam Co., Ltd. has reported a double-digit increase of trade-related inquiries over the last six months from conducting due diligence to investment sourcing from our clients in Singapore and the rest of the ASEAN.

Some foreign investors have made moves in line with Vietnam’s strategy to focus on high-tech. Have you seen any movements in tech-related fields among Singaporean businesses in Vietnam?

It is encouraging to see the government making efforts to develop a nation with a highly-skilled workforce that understands technology and embraces innovation from agriculture to the environment.

Vietnamese high-tech groups can take advantage of the Jurong Innovation District, a 600-hectare development that is made up of five unique precincts, hosting a full value chain of manufacturing activities from prototyping and test bedding to production and distribution. The building, a hub-and-spoke model between Vietnam and Singapore, will play a vital role in the transfer of knowledge and facilitating the entry of Singapore based small- and medium-sized enterprises especially in fintech and clean tech.

Most Singaporean investors prefer to operate in Ho Chi Minh City, Can Tho, and Danang which offer ease of doing business with an adaptable English-speaking workforce. In 2019, the Singapore Business Association in Vietnam (SBAV) saw an increase in trade-related activities to explore opportunities in north Vietnam. One such initiative is the creation of the Central Business District-Innovation Valley by Fundacion Metropoli in the outskirts of Hanoi to create a technology playground and marketplace for Singaporean companies to operate seamlessly in Vietnam. The brainchild is Alfonso Vegara, who was part of One North – known as Singapore’s Silicon Valley.

The newly-launched Aquaculture Innovation Centre under Temasek Polytechnic is also studying the viability of establishing an agri-food innovation hub in Vietnam to support the development of Vietnam`s aquaculture industry. This will help farmers with deep tech to stay competitive and productive. Meanwhile, the successful $9 billion Vietnam Singapore Industrial Park, the brainchild of Philip Yeo, today remains the showcase of a successful urban economic integration blueprint with seven world-class industrial parks that have generated over 200,000 jobs in Vietnam.

How has the Vietnam-Singapore Connectivity Framework Agreement contributed to strengthening bilateral business and investment ties during 2019, and what are the next steps under the agreement?

Bilateral trade figures between Singapore and Vietnam have doubled over the past decade to reach $20.9 billion in 2018. Singapore’s investments in Vietnam are diversified in various geographical regions and sectors, including services, processing and manufacturing, and real estate. We need to see greater private sector engagement between both countries especially in the development of smart cities and clean energy, and also Industry 4.0 and startup partnerships which was recently witnessed during Danang’s Surf 2019.

In July 2020, to foster greater collaboration between cities and provinces, the Vietnam Cities Pavilion will be organised at the World Cities Summit in Singapore to encourage urban solutions and real estate development between both countries.

To leverage the Vietnam Singapore Connectivity Agreement, the SBAV in Hanoi will be hosting a Mergers and Acquisitions Talk on January 9, 2020 at Fortuna Hotel, with leading industry practitioners and experts.

We are taking the lead to encourage Singaporean companies to identify potential acquisition and investment opportunities in food and beverages, logistics, e-commerce, real estate, healthcare, and fintech.

January 2020 marks a year since enforcement of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). How has the deal impacted Singaporean investment in Vietnam?

Vietnam joined the CPTPP talks in 2008 and there were several strategic motivations behind Vietnam’s participation in this partnership. Thanks to tariff reductions, the country will be able to benefit from increased exports to CPTPP markets which Vietnam does not currently have free trade agreements with. Singaporean and ASEAN companies have recognised that by entering into production networks among CPTPP members, Vietnam can further integrate itself into the global production value chain and thereby promote economic growth and reduce poverty.

In particular, according to Ousmane Dione, the World Bank’s country director in Vietnam, even under conservative assumptions, the World Bank estimates that the CPTPP will increase Vietnam’s GDP by 1.1 per cent by 2030.

According to MARA, which advises Singaporean companies entering Vietnam, the country in 2020 can capitalise on its unique position to play the role of a hub that offers investors, services, and a production base for entry into the lucrative CPTPP market. Shanmuga Retnam from Singapore, a partner of MARA, participated in closed-door meetings chaired by the chairman of the Vietnam Chamber of Commerce and Industry to recommend that the government launches a law on public-private partnerships by May 2020 in order to accelerate foreign direct investment to support the creation of vertical global hubs in Vietnam.

Over the next five years, the country will become an increasingly attractive investment destination offering preferential access to the huge markets of the CPTPP for foreign investors, including non-CPTPP countries such as South Korea, China, and Thailand.