Long-term ties fuel British presence
Since they forged their bilateral strategic partnership in 2010, Vietnam and the United Kingdom have been enjoying a strong increase in trade and investment ties.
|Ambassador Tran Ngoc An|
Tran Ngoc An, Vietnamese Ambassador to the United Kingdom and Ireland, writes about this co-operation against the background of Brexit, and the changes that the event will bring.
In recent years the Vietnam-UK relationship has witnessed rapid development in a broad range of areas, including politics, trade and investment, education, security, defence, and co-operation on the international stage.
Last year the two countries celebrated 45 years of diplomatic relations, culminating in the official visit to the UK by a high-level delegation headed by Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh, and the visit to Vietnam by His Royal Highness the Duke of York, with the high expectations from both sides for a shared prosperous future based on effective co-operation in all fields, especially in trade and investment.
Over the decades, relations have been increasingly broadened and deepened. The establishment of the strategic partnership in 2010 ushered in a new chapter in bilateral relations which has brought closer and effective co-operation in seven key areas.
These include political, global, and regional issues; trade and investment; sustainable socio-economic development; education and training; science and technology; security and defence; and people-to-people links.
Two-way trade has also seen a rapid increase, especially in recent years, even in light of the UK’s imminent exit from the European Union. A decade ago the trade volume was about $2 billion, last year it soared to $6.75 billion, up 9.6 per cent from 2017 with exports from Vietnam mounting to $5.78 billion.
The first five months of 2019 saw two-way trade volume of $2.6 billion, in which exports from Vietnam were $2.32 billion and imports from the UK were $329 million. Vietnam’s key export products include seafood, wood products, garments and textiles, leather and footwear, electronic products and components, and phones and their components.
The main imports from the UK consist of pharmaceutical products, iron and steel scrap, chemicals, machinery, and other equipment.
In terms of investment, British businesses began to invest in Vietnam in the late 1980s, firstly in oil and gas (with 70 per cent of total investment) and gradually expanding to various areas including finance and banking, services, garments and textiles, education, and real estate. Many big names started to run successful businesses in Vietnam such as Jardine, JarDragon Capital, Standard Chartered Bank, HSBC, Prudential, and GlaxoSmithKline.
As of 2018, the UK had more than 340 valid investment projects in Vietnam. Total investment from the UK and the two British overseas territories of the British Virgin Islands and the Cayman Islands reached $31.4 billion ($3.5 billion from the UK, $20.8 billion from the British Virgin Islands, and $7.1 billion from the Cayman Islands).
In recent years, many British investors have considered Vietnam as a very attractive market and started investing in large-scale projects. Last year, there were 92 newly registered investment projects from the UK with the total capital of about $380 million.
In the first four months of 2019, new investment from the UK reached $841 million, including $140 million from the UK, $556 million from the British Virgin Islands and $145 million from the Cayman Islands. The UK has strengths in the areas of services and hi-tech, and often promotes indirect investments through regional investment funds.
The Vietnamese economy has enjoyed sustained growth of 7 per cent per annum over the past 30 years and attracted about $350.53 billion of foreign direct investment. In 2018, despite a lot of global uncertainties, Vietnam’s GDP continued to grow at 7.08 per cent, one of the fastest-growing in the world.
The reasons for this success story lie in its long-term socio-political stability, a market of almost 100 million people, a large pool of young, hardworking, people, a low-cost labour force, and a pro-business government.
The Vietnamese government has been resolutely carrying out many policies to improve national competitiveness, reform the economy, and focus on restructuring public investment, state-owned enterprises, and the financial-banking system.
Moreover, about 12,000 Vietnamese students currently studying at various universities across the UK would be very valuable human resources for British companies with the intention to do business in this country in the future.
According to some senior economists and investment experts, in the context of a trade war between the US and China, Vietnam is a favourite destination for foreign investors. Vietnam ranked number one across seven emerging economies in Asia in terms of processing-manufacturing destinations, and it is still consolidating the region’s leading position in manufacturing and exporting, with various commodities ranging from footwear to smartphones.
Vietnam and the UK have established mechanisms to boost trade and investment, notably the Joint Economic and Trade Committee. Its 11th meeting will be held in the northeastern province of Quang Ninh this October.
Recently, in the context of Brexit, the Working Group on Vietnam-UK Trade and Investment Dialogue has been formed to consider measures to further promote bilateral trade and investment, possibly leading to a post-Brexit bilateral free trade agreement between the two sides.
The signing of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement and their entry into force in the future will provide evidence that favourable conditions for reaching a similar agreement can occur between Vietnam and other countries such as the UK.
At the UK-Vietnam Business Forum on the occasion of 45 years of diplomatic relations last year, Baroness Fairhead, former UK Minister of State at the Department of International Trade, expressed her belief that Vietnam would be a “connected and innovative nation.”
As the second-largest exporter of services, with world-renowned financial and legal services capabilities and as a top place for research-intensive sectors, there would be more opportunities to work with each other.
At present, the UK government provides funding to support businesses wanting to export to Vietnam, and also development funding in areas such as green finance, future cities, and trade facilitation with a sum of up to £2 billion ($2.53 billion) to help export financing.
In 2018 and the first half of this year, the UK and Vietnam signed a number of co-operation agreements in the fields of clean energy, smart cities, infrastructure development, and education.
During the visit by Vietnamese Minister of Education and Training Phung Xuan Nha in January, the two countries signed more than 40 memoranda of understanding on English language assessments, publications, student and teacher exchanges, and co-operation among universities.
Given the complementarity between the two economies and the strength of UK businesses and the new momentum of diplomatic relations development in recent years, I strongly believe that there are abundant opportunities in many sectors for British businesses such as finance, insurance, banking, hi-tech, and renewable energy.
Given the need of economic growth, there is also huge demand in Vietnam to upgrade infrastructure. British engineering consultancy firms could participate in big projects such as airports, railways, highways, and the metro system.
Vietnam’s fast-growing stock market is another opportunity for investors. Furthermore, as a member of a global network of 15 bilateral and multilateral free trade agreements, Vietnam is a big and attractive market for foreign investors, especially British backers in clean and green energy, hi-tech, and education.
In 2020,as the two countries prepare to celebrate the 10th anniversary of their strategic partnership, there will be even greater opportunities for trade and investment co-operation to prosper, bringing practical benefits to the two peoples of Vietnam and the UK. VIR
Tran Ngoc An