US launch ramps up regional pledge

Prime Minister Pham Minh Chinh (Photo: VNA)

US President Joe Biden last week launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with the initial partners of Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, the countries represent 40 per cent of global GDP.

The IPEF, which focuses on the four pillars of trade; supply chains; clean energy, decarbonisation, and infrastructure; and tax and anti-corruption (see box) is considered an alternative to what is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which the United States dropped out of in 2017.

“US foreign direct investment in the region totalled more than $969 billion in 2020 and has nearly doubled in the last decade, and we are the leading exporter of services to the region, helping fuel regional growth,” said the White House statement on the IPEF. “Trade with the Indo-Pacific supports more than three million American jobs and is the source of nearly $900 billion in foreign direct investment in the United States. With 60 per cent of the world’s population, the Indo-Pacific is projected to be the largest contributor to global growth over the next 30 years.”

Economic ministers from these nations will meet with one another to discuss concrete plans to implement the IPEF in the coming time, including how to boost investment ties from the US to the other 12 nations and vice versa.

Addressing the launch from Hanoi, Vietnamese Prime Minister Pham Minh Chinh said he expects the framework “will be truly beneficial” to all people.

“It should be an inclusive, open, and flexible process, balanced and pursuant to international laws, and serve the lawful and legitimate interests of all parties concerned,” PM Chinh said. “The IPEF will be best harnessed when it complements the existing economic connectivity initiatives.”

At the US-ASEAN Special Summit held two weeks ago in the US, PM Chinh described the bilateral relationship between Vietnam and the US as a “special relationship”, while President Biden reaffirmed the commitment of his administration to cooperate with Vietnam across many sectors including the economy, trade and investment, sustainable development, climate change, and more.

During meetings on the sidelines of the summit with leaders of major US technology corporations such as Intel, PM Chinh expressed his wish that Intel would continue expanding investment in localities outside Ho Chi Minh City. Last year, Intel invested an additional $475 million in Vietnam, bringing the total investment in the country to over $1.5 billion. Intel has also committed to investing an additional $2.6 billion in Ho Chi Minh City Hi-Tech Park.

While meeting with Apple CEO Tim Cook, PM Chinh suggested that the tech giant focuses on investing in developing business activities in Vietnam. Apple’s main manufacturing partner, Foxconn, has invested $270 million in the northern province of Bac Giang.

A survey on business investment in 2021 by the American Chamber of Commerce in Vietnam showed that nearly 80 per cent of its members saw very positive medium and long-term prospects in the Vietnamese market.

Michael W. Michalak, senior vice president and regional managing director of the US-ASEAN Business Council, told VIR that the council is working with Vietnam on how to support the nation to attract US high-quality funding.

“Many US companies are exploring opportunities to invest billions of US dollars in Vietnam in the coming time,” said Michalak, who was US Ambassador to Vietnam during 2007-2011. “Many of them are applying state-of-the-art technologies for many projects in agriculture, healthcare, and renewable energy, among others.”

Vietnam-US bilateral trade has witnessed a spectacular rise, 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.

Accumulatively as of April 20, total US registered investment capital in Vietnam reached $10.47 billion for 1,158 valid projects, making the US the 11th biggest foreign investor in Vietnam.

Vietnam’s potential role as a robust investment partner was recently made clear by the eye-popping commitment by 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.