US-Vietnam economic ties ready to intensify

US-Vietnam economic ties ready to intensify, photo: Internet

President Donald Trump last week authorised his administration to begin working with Joe Biden on presidential transition, with the inauguration date set for January 20.

Eric Johnson, senior associate at the Vietnam offices of international law firm Freshfields Bruckhaus Deringer LLP, stated that while Trump and Biden could not be more different, Biden’s success will not lead to drastic change of the ongoing interest of US companies and financial investors in Vietnam.

Johnson explained that the clear trend of strengthening economic, political, and security ties which has continued under four US administrations will continue under the next one.

“It is true that the Biden/Harris administration will most likely take a less-overtly aggressive approach on trade issues, and it will hopefully move away from the current administration’s one-dimensional view of commercial relationships with US trading partners through the lens of trade deficits alone,” Johnson said.

He noted that it is worth remembering that the US democrats have historically been the side with the strongest resistance against free trade agreements.

Johnson stated that the factors that drive foreign investment into Vietnam – namely, its stable economic and political environment, emerging urban middle class, young and dynamic population, and high internet and mobile device penetration, will not be affected by the outcome of the US election.

Meanwhile, US conglomerate General Electric (GE) on November 21 signed an MoU with EVN Genco3 to develop an liquefied natural gas (LNG)-fired power plant in the southern province of Ba Ria-Vung Tau, in the presence of US National Security Adviser Robert O’Brien. GE will be contracted to install gas turbine technology and some other equipment, and will take an equity stake in the project, according to White House officials accompanying O’Brien.

“GE will look to supply gas turbines and associated equipment and services for the project estimated at more than $1 billion over the lifetime of the project,” a company spokesperson said.

GE and Genco3 have been carrying out feasibility studies for two years to find a location for the LNG-to-power project. If Ba Ria-Vung Tau approves the project, the consortium will start the first phase with a goal of being operational by 2025.

Millennium Group, also from the US, also recently proposed to build a 9,600MW power plant and storage complex for $15 billion in Van Phong Economic Zone in the south-central province of Khanh Hoa. In addition, it will invest in a dock warehouse system to provide gas to the power plant and to Southeast Asia as well. This system may be located in either Ninh Phuoc or Ninh Hoa commune.

“Once Khanh Hoa province’s leaders approve, the project will be guaranteed by the US government and we will work with the Vietnamese government to discuss implementation plans. Millennium expects to make the dock warehouse in South Van Phong the energy centre of Southeast Asia,” said Sam Chan, chairman of Millennium Vietnam Group.

According to Marie C. Damour, US consul-general for Ho Chi Minh City, the two countries can be proud of what has been achieved in recent decades. “As we approach the end of our 25th anniversary year, the statistics on our bilateral trade should now be familiar: what started with $450 million in annual trade has grown to roughly $77 billion today. That’s an extraordinary success,” she said.

In 1994, Vietnam was America’s 95th largest source of imports but today it ranks seventh, Damour pointed out. The US is also now Vietnam’s largest export market, and Vietnam is one of America’s fastest-growing markets worldwide.

The US-Vietnam economic relationship continues to grow and expand. Last month’s Indo-Pacific Business Forum in Hanoi witnessed the signing of major commercial deals between US and Vietnamese firms worth a combined $11.5 billion. These included deals for major LNG projects throughout Vietnam, as well as deals in agriculture and smart city development.

“As we look to the next 25 years and beyond in our relationship with Vietnam, our goal is to seize upon that momentum and take it to the next level,” Damour said. “With Vietnam’s remarkable growth trajectory, there are tremendous opportunities to deepen our economic and commercial ties across numerous sectors including energy, infrastructure, the digital economy, and manufacturing.”

“Vietnam’s impressive economic growth means that it will need many billions of US dollars in infrastructure investment in the coming years. This creates opportunities for American to bring their high-quality services and equipment, innovative technologies, and transparent business practices to Vietnam,” Damour explained.