US companies are pinning high hopes on the Vietnamese market, with investments expected to be bolstered following the official trip of US Vice President Kamala Harris this week.
Chad Ovel, chairman of the American Chamber of Commerce (AmCham) in Vietnam explained to VIR, “Kamala Harris has chosen Vietnam as a priority country to visit on her first trip to Asia expected to take place during August 24-26. This is clear evidence that the US values both security cooperation and a strong economic partnership with Vietnam.”
“The strong trade and investment ties between the United States and Vietnam, that both countries now enjoy, have been built on the foundation of over 25 years of deliberate effort and leadership from individuals on both sides,” he said. “Over the past two decades the efforts to continuously nurture and build the relationship has been passed from one leader to the next, and from the first generation of private sector entrepreneurs in Vietnam to today’s generation.”
He also stressed that Vice President Harris’ visit to Vietnam is a continuation of this well-proven practice both countries share, by boldly declaring new shared commitments and doing the hard work to build the regulatory and policy framework necessary to enable that shared future.
Several multinational US corporations, such as Pfizer, Abbott Laboratories, Intel, Qualcomm, UPS, and Mastercard are also seeing successes in Vietnam. Many of these companies are upbeat about the outlook of the market and committed to long-term investments in the country.
Russell Reed, managing director of UPS Thailand and Vietnam said, “As one of the fastest-growing economies in the region, Vietnam presents exciting opportunities, especially with the rise of the digital economy and cross-border e-commerce. The Vietnamese government has been supportive of international trade and foreign direct investment as seen by the major trade agreements inked in the last two years.”
Together with the Regional Comprehensive Economic Partnership which is expected to come into force by the end of this year, these agreements are vital for Vietnam’s growth and its access to global markets and would enable UPS to better connect Vietnamese businesses to key trading destinations around the world.
“UPS is proud to have served Vietnam for more than 25 years. We celebrated UPS Vietnam’s 25th anniversary last year, which coincided nicely with the 25th year of the Vietnam-US normalisation of relations,” he added. “Vietnam is a key hub in our smart global logistics network, and we are fully committed to the business here. It is a challenging time for all businesses, and our priority right now is to support our customers in ensuring business continuity while adhering to government mandates to curb the spread of infections.”
Meanwhile, Winnie Wong, country manager for Vietnam, Cambodia, and Laos at Mastercard said, “All over the world, including in Vietnam, the pandemic has seen the adoption of cashless and digital payments at never before seen rates. As Vietnam prepares for a digital-first future, Mastercard is committed to bringing world class payments technologies, solutions, and resources, that can propel a cashless society here. We’re continuously investing in efforts that support the government agendas in creating an inclusive and digital future for the people in Vietnam – a must for the post-COVID world.”
She also added that despite the remarkable economic and digital progress Vietnam has made, more work needs to be done to ensure uninterrupted and equal access to financial servicesand products. Hence, Mastercard has been working closely with financial institutions, merchants, governments, startups, and non-governmental organizations to create opportunities to bring the unbanked population into the formal financial system and also benefit from the country’s progress.
She pointed out that despite the remarkable economic progress, many people in Vietnam are still unbanked, or do not have access to financial services and products. To support the government’s agenda of creating a financially inclusive society, Mastercard has been working closely with financial institutions, merchants, governments, and non-governmental organisations to leverage technologies, resources, and insights.
According to the latest data by Ministry of Planning and Investment, the US is now Vietnam’s 11th-largest investor with the total investment capital of $9.68 billion across 1,150 valid projects.
Beside greenfield investment, US companies are also cementing their ties with Vietnamese counterparts. One of the remarkable partnerships between the US and Vietnamese businesses is in the vaccine field. The US-based Arcturus Therapeutics Holdings Inc. entered a partnership with Vingroup’s Vinbiocare Biotechnology JSC to establish a manufacturing facility in Vietnam for COVID-19 vaccines. Arcturus will provide Vinbiocare with an exclusive licence to manufacture the vaccines in Vietnam at the facility solely for distribution in the country. Vinbiocare will make an upfront payment of $40 million and be responsible for costs associated with the technology transfer.
Commenting on this partnership, Joseph Payne, president and CEO of Arcturus, said, “We are very pleased to announce this relationship with Vingroup, and this contract with its subsidiary Vinbiocare, to help establish a manufacturing facility for our COVID-19 vaccine, targeting a capacity of up to 200 million doses per year. We are looking forward to a meaningful role in providing effective and safe vaccines to Vietnam as well as other countries around the world.”
The global response to the pandemic is one of the issues Harris will discuss with the leaders of Vietnam and Singapore on her trip.
According to Stephen Olson, research fellow at the Hinrich Foundation, Vice President Harris’ visit to Vietnam is likely primarily symbolic. Through its recent flurry of high-level visits to ASEAN, the Biden administration is trying to signal that it is committed to the region and willing to engage with its regional partners. This is part of its overall foreign policy strategy of demonstrating that America is back after four years of Trump’s inward-looking, America-first policies.
However, Olson noted that it is not anticipated that there will be any substantive trade policy achievements. The practical impact for businesses will therefore be limited. The fact that the US vice president spent a short amount of time in Vietnam will not substantially affect the economic and commercial calculations that companies in Vietnam or the US are making.
Vietnam is now on the list of alternative investment destinations for US investors. A report by the Center For Strategic and International Studies revealed that the US trade war with China that started in 2017 lured some manufacturing out of China as US companies sought to diversify supply chains. Vietnam’s proximity to China, alongside its improving business environment, young and highly educated workforce, and entrepreneurial mindset helped make it one of the few beneficiaries of the US-China trade tensions.
Vietnam plays an increasingly important role in the US’ global supply chain. Most recently, the American Apparel and Footwear Association – representing over 1,000 world-famous brands, retailers, and manufacturers – also sent a letter to President Biden to increase vaccine distribution and support safety protocols in Vietnam.
In addition, AmCham in Vietnam has been very active to advocate the Biden administration to make the country a priority beneficiary of vaccine donations worldwide. As a result, the Biden administration chose to donate five million doses of COVID-19 vaccines to Vietnam.
“AmCham Vietnam will continue to seek additional support from the Biden administration in order to support Vietnam to overcome the ongoing challenges,” Ovel said. “Over the long term, we have the expectation that the Biden administration will dedicate sufficient resources and attention to upgrading the existing trade agreements with Vietnam to ones that reflect 21st-century operating principles.”