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|Vietnamese Prime Minister Pham Minh Chinh (left) met with US President Joe Biden, VNA|
All eyes were focused on last week’s US-ASEAN Special Summit in Washington D.C., where both sides demonstrated their closer ties across many sectors including global health security, climate change, sustainable development, maritime cooperation, human capital development, and education, as well as connectivity and economic engagement, and especially digital development.
The US and ASEAN have reaffirmed their commitment to support digital development in the bloc so as to realise its vision “of a peaceful, secure, open, interoperable, reliable and resilient ICT environment”.
The US vows to “support development of ASEAN’s digital infrastructure to drive robust, inclusive economic growth and prosperity; and promote development of a secure, resilient, and innovative 5G ecosystem as well as exchange views and experiences on cyber threats and on the regulatory framework and technical standards that protect personal data in light of emerging technologies and their vulnerabilities,” said an ASEAN-US leaders statement on digital development.
Notably, the US is also supporting the ASEAN Single Window, a regional electronic platform that promotes ASEAN economic integration by enabling the electronic exchange of border trade-related documents among member states. Traders can exchange customs documentation through the platform, expediting cargo clearance and reducing paperwork.
The US will also advance digital development across Southeast Asia through a new $6 million regional initiative that will support innovation, strengthen digital economy rule-making, facilitate public-private connections, strengthen digital policymaking, and support the adoption of global standards in artificial intelligence.
Land of potential
According to Vietnam’s Ministry of Information and Communications, the digital economy created about $53 billion for the whole Vietnamese economy in the first quarter of 2022, including the platform-based economy hitting $8 billion in revenue – up 28 per cent on-year, and other types of digital economies such as ICT and specialised digital economy earning the rest – up 15 per cent on-year. The number of digital enterprises newly established as of late February was 65,330, up by nearly 500 enterprises from last year.
According to pan-Asia consulting firm Dezan Shira & Associates, Vietnam’s digital economy has seen significant growth over the last decade and is expected to be valued at $57 billion by 2025. The country’s digital transformation (DT) is well underway and accelerated by the pandemic as businesses consider the possibilities of a virtual world having experienced sudden and overwhelming restrictions on physical mobility. In response, the Vietnamese government is facilitating a regulatory and incentives-based environment to promote technological innovation.
DT has been prioritised across most sectors, impacting ICT infrastructure, cybersecurity, e-government, digital skills, Industry 4.0, and tax policies. Major industries driving the growth of Vietnam’s digital economy include e-commerce, fintech, ICT, and edtech, among others.
The United States Agency for International Development (USAID) is supporting Vietnam’s DT to ensure that opportunities are spread across Vietnam and that digital divides are minimised in the process, according to the agency.
To promote a deeper understanding of DT, the USAID Linkages for Small and Medium Enterprises (LinkSME) project, Vietnam’s Ministry of Planning and Investment’s (MPI) Agency for Enterprise Development, and the south-central province of Ninh Thuan a few weeks ago organised a workshop for more than 300 enterprises from the agricultural, manufacturing, tourism, and service sectors, among others.
The event showcased DT support offerings, along with a related support programme for local SMEs in the area that was recently approved by Ninh Thuan provincial authorities.
Expanding economic ties
The US is also expanding its cooperation with ASEAN and Vietnam in particular in improving corporate competitiveness.
On April 21, USAID and the MPI signed an amendment to their bilateral partnership agreement to expand USAID’s support to Vietnam to include local capacity development. The bilateral partnership agreement as amended will expand our joint efforts to strengthen private sector competitiveness, innovation and startup ecosystems, human capital, and local capacity building. Under this agreement, USAID’s contribution in these areas will increase from $42 million to $100 million, and will continue to the end of September 2028.
“This agreement reflects the US’ continued commitment to support Vietnam’s efforts to become a more open, innovative, and inclusive economy. Through close collaboration with the Vietnamese government, we can ensure that USAID’s development assistance will meet our two countries’ mutual vision for a prosperous and independent Vietnam,” said USAID mission director Ann Marie Yastishock.
Technical assistance under this agreement will enhance the capacity of Vietnamese small and growing businesses, including those led by vulnerable populations, by facilitating access to competitiveness-enhancing technology, business management skills, and capital.
The agreement will strengthen the high-quality human capital needed for a robust knowledge-based economy. USAID’s assistance will also help improve the capacity of participating local governments to effectively implement policies, as well as increase interaction between local governments, the private sector, and other stakeholders on issues of local socio-economic development.
Earlier in January, USAID and the MPI launched a 5-year, $36 million project focused on building the competitiveness of the country’s small and growing businesses. These businesses are key contributors to Vietnam’s economic growth, accounting for 40 per cent of GDP and 60 per cent of total employment.
“This new project is our flagship effort to help Vietnam harness its entrepreneurial spirit in facilitating a dynamic, Vietnam-led transformation of the private sector into one that can compete globally, and provide more equal opportunity for all,” Yastishock said.
Vietnam-US bilateral trade has witnessed a spectacular rise nearly 250 times over, from $450 million in 1995 to $111.56 billion last year, when the US was Vietnam’s largest export market, with an estimated turnover of $96.29 billion, up 24.9 per cent on-year. The US was also Vietnam’s sixth-largest import market, with an estimated turnover of $15.27 billion, up 11.4 per cent on-year. In the first four months of 2022, Vietnam’s export turnover from the US was estimated to be $35.7 billion.
Vietnam’s potential role as a robust partner, investment, and standards, was recently made clear by the eye-popping commitment by Vietnamese carmaker VinFast to construct a $4 billion electric vehicle manufacturing campus in North Carolina. The company plans to employ 7,500 American workers by 2027. Vietnam is also a considerable exporter of solar panels and cells to the US.
At the Center for Strategic and International Studies last week, PM Chinh stated, “The relationship between Vietnam and the US has borne fruits with the joint efforts of both countries in sincerity, trust, responsibility, understanding, sharing and mutual respect to achieve the goals that the two countries and the two peoples desire and aim for.”
He underlined three important sectors with a big potential for cooperation between both nations – green growth, technology innovation and DT, and supply chain diversification, which the US excels at.
“The combination of the US’ strength in these important sectors, along with the dynamism and active global integration of the Vietnamese economy, will usher in great opportunities for cooperation between the two countries and their businesses in the near future,” the PM said
Last week, he met with US President Joe Biden. They agreed to foster the comprehensive partnership between both nations, including bilateral cooperation in economic development, DT, addressing climate issues, and welcomed American businesses’ investment in green growth and sustainable development in Vietnam.