As ASEAN is increasingly growing in international prestige and economic strength, the bloc has been attracting the attention of many organisations, countries, territories, and partners including the United Kingdom, with many meetings and dialogues organised.
Since the UK left the European Union, it has actively been working with partners to expand relations, with a focus laid on trade and investment in a bid to create more added value to its economy and generate more employment for British people.
|British-based groups like Standard Chartered have made a mark in Vietnam for decades, Photo: Le Toan |
On August 4, both sides issued the first plan of action to implement the ASEAN-United Kingdom Dialogue Partnership from 2022 to 2026, underlining bilateral cooperation in politics and security, trade, investment, finance, energy, culture, the environment, and climate change, among many others.
Both sides have committed to explore opportunities to build on two-way trade and economic engagement, and in line with COP26 commitments, facilitate trade that promotes sustainable and inclusive development and a just transition, including by enhancing private sector engagement between ASEAN member states and the UK, and setting up appropriate frameworks for mutual prosperity through a deeper trade and investment relationship.
Both sides have also pledged to “continue regular dialogues and consultations between ASEAN economic ministers and the UK secretary of state for international trade and their senior officials to explore and realise ways to further deepen trade and investment ties in areas of mutual interest,” read the action plan.
They have also vowed to “exchange information on the investment environment and investment opportunities between ASEAN and the UK, and share experiences and best practices in investment promotion,” and “jointly work to maintain and strengthen trade links through the opening of our markets and facilitating the smooth flow of goods and services, including through the removal of unnecessary trade barriers that are inconsistent with World Trade Organization rules”.
Promoting trade and investment
From now until the year’s end, authorised agencies from the UK and Vietnam will work together more frequently to materialise this action plan via specific programmes and projects as part of their bigger efforts to deepen their trade and investment ties, currently backed by the UK-Vietnam Free Trade Agreement (UVFTA) which took effect in May 2021.
“I have already come into contact with British ventures that are willing to invest in Vietnam. The UK will continue to accompany and support Vietnam in its development, especially in the fields of climate change response and green and sustainable growth,” outgoing British Ambassador to Vietnam Gareth Ward told Prime Minister Pham Minh Chinh at a meeting on August 2.
Both sides highlighted the role of the UVFTA as the current largest tool to increase bilateral trade and investment. “The enforcement of the UVFTA has contributed to further promoting economic, trade, and investment relations, with two-way trade last year reaching nearly $6.6 billion, up 17.2 per cent on-year,” said PM Chinh. “Vietnam will continue creating the best conditions for all British investors to put money in its territory.”
In the first six months of 2022, the figure hit $3.3 billion.
The PM proposed that both nations continue to take advantage of preferences from the UVFTA to raise bilateral economic, trade, and investment cooperation. He also recommended that the UK increase imports of Vietnamese agricultural products and seasonal fruits, and invest more in such fields as green growth, digital transformation, startups and innovation, supply chain diversification, education and training, and pharmaceutical manufacturing in Vietnam.
Vietnam’s Ministry of Planning and Investment reported that accumulatively as of July 20, the UK’s total registered investment capital in Vietnam was $4.16 billion for 475 valid projects, including $62 million for the January-July 20 period.
Over a week ago, Shire Oak International, a division of developer of tidal power and solar power Shire Oak Energy, signed an MoU with Vietnamese design and construction company Reecons Engineering to develop rooftop solar systems for a customer in the commercial and industrial sectors in Vietnam.
Earlier in July, Shire Oak also inked an MoU with Bao Minh Industrial Park Infrastructure Investment JSC to develop rooftop solar projects at the park, located in the northern province of Nam Dinh.
“Our team have developed over $2 billion of renewable energy projects worldwide. In Vietnam, we are developing a broad portfolio of solar energy projects. By working with corporates and educational establishments, we are currently deploying about $450 million of equity funding to build out 650MW of Vietnamese rooftop solar installations,” said Son Bui, director of Marketing and PR at Shire Oak International.
Many British companies are currently operating in Vietnam, such as Prudential, Standard Chartered, Pacific Land, and Enterprize Energy.
Michele Wee, CEO of Standard Chartered Bank Vietnam, told VIR that the bank highly values the Vietnamese market, where it has many opportunities.
“Last November, Standard Chartered Bank Vietnam committed MoUs worth up to $8.5 billion in sustainable financing for three Vietnamese businesses to support their sustainability goals,” Wee said. “Investments like these will help Vietnam in its sustainable development journey and secure its prosperity.”
Vietnam and the UK have agreed to soon revise legal documents on access to market, simplifying import procedures, and removing all possible obstructions to trade and investment with the prohibition on the unfair treatment of investments into their respective territories.
According to the UK’s Department for International Trade, the UK rates Vietnam’s economy strongly. With a per capita income of about $3,700 last year, the country is a large consumer market with high potential. The country’s proportion of middle-income households is also growing – accounting for 13 per cent in 2020.
In its “Global Britain” strategy, the UK will use its trade deals including the UKFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as one of many effective tools to drive its economy forward.
The UVFTA deal locked in the elimination of 65 per cent of all tariffs since the EU-Vietnam FTA entered into force. This will increase to 99 per cent after a schedule of between 6-9 years. This secures import tariff elimination for products such as clothing, fabrics, and footwear, meaning customers and businesses may benefit from lower prices on these products.
Tariffs will be reduced per a schedule that stipulates equal annual reductions from entry into force of the agreement.
Vietnam is now working intensively with the UK on the latter’s plan to join the CPTPP which it hopes to gain trade and investment benefits from the deal’s member states including Vietnam.
“Accession could see 99.9 per cent of UK exports being eligible for tariff-free trade with CPTPP members. Joining could also, for example, greatly benefit our world-class services sector through advanced provisions that facilitate digital trade, and modern rules on data to enable more financial and professional services markets to be opened up,” said Anne-Marie Trevelyan, Secretary of State for International Trade.
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