Viet Nam has drawn up policies to attract high-quality foreign investment. Viet Nam News talked to Oliver Todd, British Consul General in Viet Nam, about Viet Nam’s advantages in attracting global investors, including companies from the UK.
How do you assess the growth of trade and investment between the UK and Viet Nam in recent years?
The growth of the bilateral trade relationship between the UK and Viet Nam has been profound over the last 10 years. In fact, I was recently reading statistics that show that over the last decade, Viet Nam has been the fastest growing provider of UK imports globally. This of course has been driven by Viet Nam’s strengths in agriculture, manufacturing and consumer goods.
In total, our bilateral trade is valued at £5.7 billion (US$6.6 billion) per annum, including over £900m in UK exports in return to Viet Nam in everything from pharmaceuticals and chemicals to high-end consumer goods and of course our strengths in services provision from companies such as Unilever, AstraZeneca and GSK.
There is plenty more I believe UK companies can bring to Viet Nam, particularly in fin-tech, innovation and education, and I am confident that we will see continued growth in the years ahead.
The UK-Viet Nam free trade agreement (UKVFTA) has been in effect for more than a year. While the bilateral trade has been increasing, foreign investment from the UK in Viet Nam is still modest compared to its potential. What are the reasons for this?
The implementation of the UKVFTA in early 2021 was a significant milestone in our ever-improving trade relationship. We almost immediately saw UK-Viet Nam trade increase by 16 per cent during the first nine months of 2021 compared to the same period in 2020 despite the challenges of the COVID-19 pandemic.
The foundations of the agreement and our shared trade policy mean that we will see this continue. 65 per cent of all tariffs have already been eliminated on UK-Viet Nam trade, with the number increasing to 99 per cent by full implementation of the UKVFTA in 2029.
In relative terms, direct UK investment into Viet Nam is not as significant as some peers from across the region. The UK invests £1.7 trillion globally, but only £932 million of that came into Viet Nam last year according to our statistics. It is worth noting that these figures probably undersell the impact of UK financial institutions in providing global finance and investment to Viet Nam, for example, HSBC and Standard Chartered, which are providing the capital needed for Viet Nam’s energy transition. We would want to see this grow with more regulatory reform to allow greater investment flows, particularly in energy and infrastructure.
AstraZeneca COVID-19 vaccine donated by the UK government to Viet Nam in August last year. — VNA/VNS Photo
Multinational corporations are relocating their investments to diversify their supply chains and Viet Nam is emerging as the world’s new factory. What attracts foreign investors and what more does Viet Nam need to do to attract big corporations, especially businesses from the UK?
The attraction for investors in Viet Nam, including UK ones, are many. Well located in one of the world’s most dynamic growth regions, Viet Nam has a large, well-educated workforce and is undertaking the necessary reforms to its institutions, economic management and infrastructure to continue to attract capital.
I think we all agree it has been a success following the large public announcements of companies such as Apple investing in the last year and I don’t believe the current geopolitical atmosphere will affect the underlying strengths of Viet Nam’s economy which drive its attractiveness as an investment destination.
I think to continue to attract businesses from the UK and around the globe, Viet Nam needs to think carefully about how it makes regulation as business-friendly as possible from establishing companies in the country to licensing their operations and much more besides. This is already underway and we work closely with our Vietnamese counterparts to monitor and improve these conditions in our annual trade dialogues.
How do you appraise the quality of Vietnamese companies and human resources in collaborating with foreign partners?
In my short time in Viet Nam, I would say I have been impressed by the positive, inquisitive nature of Vietnamese businesses as they look to source the right partners and solutions for their challenges from around the globe. This covers not only their approach to business but how they manage their workforces to ensure they have the skills they need to be successful in the longer term.
UK education provision is especially important in helping Vietnamese businesses in this way and my team and I work constantly to bring more UK education providers to Viet Nam to offer training and higher education opportunities to build on existing provisions from companies such as Pearson, the Institute of Chartered Accountants of England and Wales (ICAEW) and more.
Viet Nam is gearing up for sustainable development. What do you think Viet Nam should focus on in the future?
We were delighted by Prime Minister Pham Minh Chinh’s ambitious commitments at COP26 for Viet Nam to transition away from coal and towards renewables, and to achieve an economy-wide transition to net zero by 2050. Through these pledges, Viet Nam has positioned itself both as a regional leader in sustainable development, and as an attractive destination for green investment.
Viet Nam’s success over the last few years in developing its solar sector, now one of the largest in the region, is testament to its ambition and capability in adding renewables to the energy mix.
We know, however, from our experience in the UK, the challenges in building a viable renewable energy sector. I am confident that we have relevant expertise to share in building robust regulatory frameworks, key to enabling a viable offshore wind sector, as well as in ensuring that power transmission infrastructure is capable of absorbing renewable energy capacity.
It is exciting that Viet Nam continues to consider new and innovative means of diversifying its energy supply, including investment in new technologies such as battery storage and green hydrogen. We look forward to continuing our close co-operation and to supporting the realisation of Viet Nam’s ambitious COP26 targets. — VNS