Vietnam and the US seeing a surge in bilateral ties

Vietnam and the United States are expecting a surge in bilateral ties

Though having worked in Vietnam for many years, Adam Sitkoff, executive director of the American Chamber of Commerce (AmCham), could not imagine that the country would receive state visits by two American presidents in just a few short years.

“Today, the United States and Vietnam are partners and that is something once thought unimaginable,” Sitkoff told VIR. “American companies and investors are now active in almost every sector of Vietnam’s economy, helping to integrate the country into the global supply chains, creating quality jobs, and making the country more productive, safer, and cleaner.”

“It is a credit to the people of both nations that we have been able to move beyond the tragedies of our shared past to build such a strong and vibrant relationship. Trade has ultimately become the cornerstone of the US-Vietnam relations.”

Yesterday US President Donald Trump held bilateral talks with Vietnam’s Party General Secretary Nguyen Phu Trong and Prime Minister Nguyen Xuan Phuc, within the framework of the historic Hanoi summit between the US and North Korea.

Both Vietnam and the US agreed that they will further economic, trade, and investment ties, with the facilitation of firms from both sides to conduct business and investment in their respective markets.

“Coming in from the airport, seeing everything that’s been happening and been built, even since last year when we were spending time together during my second trip. You’ve made tremendous progress and it’s a great thing for the world to see. And now the world is actually watching and they’re looking at Vietnam,” President Trump said.

He added that since his last meeting in Vietnam just over a year ago, the two nations had been conducting numerous trade negotiations, with more deals to be made in the future.

“Since that meeting, we’ve done a lot of trade, and whether it’s Boeing or a couple of others, we’re going to be signing some very big deals where you’re buying a lot of different products from the United States, which we greatly appreciate,” Trump said.

Yesterday, Vietnam and the US signed a number of co-operation deals on aviation co-operation (see box).

During Trump’s first state visit to Vietnam in November 2017, the two countries signed a series of co-operation deals worth a total of more than $12 billion.

At the time, Trump stated that in the early 1990s, nearly half of Vietnam survived on just a few dollars a day, and one in four did not have any electricity.

“Today, an opening Vietnamese economy is one of the fastest-growing on Earth. It has already increased more than 30 times over, and Vietnamese students rank among the best in the world, and that is very impressive. This is the same story of incredible transformation that we have seen across the region,” he stressed.

In 2016 former president Barack Obama also paid a state visit to Vietnam. The trip helped widen the doors for more of Vietnam’s goods, further strengthening firm groundwork for the two nations to boost bilateral co-operation, especially in agriculture.

Specifically, the US allowed the importation of fresh mango from Vietnam into the continental US, effective from the end of 2017. Today, Vietnam can export dragon fruit, rambutan, litchi, longan, and star apples to the States.

Strong interest in Vietnam

Sitkoff of AmCham said that American businesses and investors have had a transformative role in the development of Vietnam over the last 25 years. From managerial practices and technologies to service standards and ethics, the US business community has affected Vietnam in many positive ways and overseas investment has helped to promote both economic and social development.

Last month, US-based Pfizer Group, one of the world’s premier biopharmaceutical firms, inked a deal on transferring pharmaceutical production technology to Vietnamese enterprises, with the first products scheduled to be manufactured next year.

According to the group’s regional president for Asia and Emerging Markets, Pierre Gaudreault, Pfizer decided to invest in Vietnam as it sees potential in the market and its surrounding areas, as well as the country’s open investment policies.

A few months ago, US-backed Cargill Vietnam opened a new $28 million feed mill in the southern province of Binh Duong to better serve livestock farmers in southern Vietnam.

The mill is Cargill’s 12th animal nutrition facility in the country, and its largest and most technologically-advanced. The 48,000 square metre mill produces a wide portfolio of poultry and swine feed, and has an annual capacity of 240,000 tonnes.

“Vietnam is a key animal nutrition market for Cargill and we are committed to long-term and sustainable investment in the country,” Philippa Purser, group director of Cargill Feed and Nutrition, told VIR.

According to AmCham, many American companies are operating across the spectrum of economic activities here, including efforts to help Vietnam become more productive and efficient.

“It is important to know that while Vietnam’s official investment statistics rank the US quite low, the truth is that the United States is one of the top investors in Vietnam. The misunderstanding comes from complicated US tax laws and corporate structures that utilise global supply chains and systems,” Sitkoff said.

For example, Intel’s $1 billion assembly facility in Saigon High-Tech Park is an investment made through Intel Hong Kong, and therefore classified as a Hong Kong deal, despite Intel being an American company.

Another example is Proctor & Gamble’s $100 million factory in Binh Duong, an investment made through P&G Singapore, even though Proctor & Gamble is a famous US corporation.

“There are many examples like this,” Sitkoff added. “We believe the United States is one of the top five investors here, and they are here selling cosmetics, soft drinks, and alcohol, cars, aircraft, software, industrial goods, educational services, financial and legal services, agricultural products, and so much more.”

President of the National Centre for APEC Monica Whaley told Prime Minister Nguyen Xuan Phuc that leaders from US businesses highly appraised Vietnam’s business environment and expressed the desire to launch long-term operations in the country, as well as play a role in attracting more American firms to pour investment into the country.

Big names such as General Electric, Boeing, Coca-Cola, Nike, Microsoft, Metlife, UPS, and Exxon Mobil have set up shop in Vietnam. According to the Vietnamese Ministry of Planning and Investment’s (MPI) Foreign Investment Agency, most of the key business sectors have seen the presence of big US investors, such as oil and gas with ExxonMobil and AES; aviation with Boeing and ADC-HAS; and IT with Microsoft, Intel, and HP.

According to the MPI, as of January 20, the US was the 11th-largest foreign investor in Vietnam with 908 projects, registered at over $9 billion.

Bilateral trade turnover between the two nations soared 120 times between 1994 and 2018, from $450 million to over $60 billion, according to Vietnam’s Ministry of Industry and Trade.

Last month Vietnamese exports to the US reached $5.15 billion, up 42.1 per cent on-year.