VIETNAM: A RISING STAR IN EAST ASIA
This is the first in a new series of Global Business Briefings looking in more detail at some of the international markets we’re visiting in the Clipper 2015-16 Race. We felt Asia was a good place to start, given its high performance in recent years, the attraction of doing business there, combined with the need to understand the ‘slow down’ in growth being experienced in parts of the continent. This report takes a closer look at Vietnam following our first visit to the country and the ambitious central city of Da Nang.
Vietnam is performing very strongly at the moment in contrast to the slow down being experienced in traditional powerhouses from Singapore to China. The potential trade, investment and business opportunities with the country have been recognised by the UK Government which has strengthened its relationship, demonstrated by the first visit of a British Prime Minister when David Cameron toured the region in July 2015.
“This is a country that has transformed itself in recent years, which is still on the rise, with a vibrant young population and an expanding middle class,” said Cameron. “There will be opportunities for Britain and British businesses particularly in advanced engineering, infrastructure development, banking and financial services. Just a decade ago, our relationship was one built on aid, now it is one of trade. Last year UK exports were up 10%.”
The Clipper Race announced its new partnership with Da Nang during the Prime Minister’s historic visit, and as part of the growing relationship with Vietnam, has worked with the UK Government to organise a number of trade promotion and networking events. During our visit to Da Nang in February these events, hosted in partnership with the GREAT Britain campaign, were attended by senior officials and business leaders in key sectors.
The British Ambassador to Vietnam, Mr Giles Lever, travelled from the embassy in Hanoi to attend. He told us how the Vietnamese economy is growing and creating new trade and investment opportunities in the process. He said: “Vietnam is one of the most dynamic emerging economies in South East Asia. It’s had GDP per-capita growth that was the second fastest in the world after China and it’s a country that’s going places.
“There’s a population of 90 million people who are well educated with a government that’s committed to greater economic opening and what they call international integration. GDP growth here last year was 6.8 per cent which puts Vietnam in a very strong position compared to other regional economies.
“Da Nang is a city that is working very hard to put itself on the international map through events such as hosting the Clipper Race and we have the British expertise and British partnership to help them do that. Although some countries in East Asia have been hitting some more difficult times recently, Vietnam, in contrast, has rebounded from a couple of tough years and strengthened its growth. Its import demand is projected to be one of the most fast growing in East Asia.”
This perspective was endorsed by another Clipper Race partner and Team Sponsor PSP Logistics, which has been the Official Logistics Partner to the race for eight years. Its Chief Executive Frank Dixie attended the networking event and is developing a long term interest in the region. He explained: “We see Vietnam, amongst all the countries that the Clipper Race has gone to, as probably the most exciting; it’s an emerging nation and, as such, intra-Asia trade is about to explode, as well as outside and into Europe.
“For us it’s a great opportunity to network with all sorts of people around the world, it’s something we would never miss. I’ve been coming here for the last ten years, so I’ve seen so many changes and they’re all for the better. So for me it’s a great area to start trading in and to get to know people. We’re going to pick up some great contacts while we’re here. We already know that. So it’s created a lot of interest from all of our clients, suppliers and everyone.
“My advice to anyone interested in new business opportunities is just to get out here, because places like Vietnam are the places to be.”
The British Ambassador emphasised this advice. He added: “I hope the combination of the rapidly growing Vietnamese economy, a very good bilateral relationship between our two governments and the advent of the EU Vietnam free trade agreement, which is being negotiated and will come into force in 18 months or so, will contribute to significantly strengthening the British presence here.
“We have a lot of what the Vietnamese want in terms of education and training, science, innovation, professional and financial services, infrastructure and high quality retail – these are all areas where the market is expanding rapidly in Vietnam.”
The Director of the Department of Foreign Affairs Mr Lam Quang Minh, told us: “Because Da Nang is a small city not many people know about us. We are a very young and dynamic city in the centre of Vietnam and now we are trying to attract more and more investors to the city. We also want to promote tourism and attract environmentally friendly industry so we can develop a stable economy.
“We are prioritising IT and we want to develop a hi-tech park and an international university, or an international hospital, so we can serve the foreign community in Da Nang and central Vietnam. We’re also located strategically on a major trade corridor.”
Opportunities in Da Nang
Da Nang commands a strong strategic position along the central coast of Vietnam on the eastern edge of a new 1450 km road and East-West Economic Corridor (EWEC) which links access to the Indian and Pacific Oceans, between Mawlamyine in Myanmar, through Thailand and Laos to Da Nang. This can represent saving considerable time at sea compared to traditional routes travelling around the southern coast of Thailand, Cambodia and Vietnam for trade with Korea, Japan, Taiwan and Hong Kong. The city also has good north-south road and rail links within Vietnam and is developing more international routes with its airport.
The aim is to develop a new deep-water port and attract businesses to the Da Nang City/region in port operations, logistics and associated services and supply chains; plus in environmentally friendly industries such as hi-tech and IT plus service sectors. Da Nang aims to be regarded as an environmental city. A hi-tech business park has already been developed.
Interestingly, Da Nang sees tourism as a major enabler for the city in not only developing a strong tourism economy, generating jobs and economic impact, but also in raising the city’s international profile as a business investment location and trade hub.
UK-Vietnam Strategic Dialogue
As a footnote, the fifth UK-Vietnam Strategic Dialogue meeting took place in the UK in March as part of the bilateral Strategic Partnership signed in 2010.
Both sides welcomed the impressive growth in bilateral trade and investment in 2015, during which bilateral trade reached $5.4 billion USD in 2015, an increase of 25% compared to 2014. UK investment into Vietnam reached $4.7 billion USD, ranking second among EU member states. Both sides agreed to continue cooperation in economics, trade and investment; enabling companies from both countries to access investment and business market potential in each country. The two sides reiterated their support for the signing and ratification of EU-Vietnam Free Trade Agreement (FTA) and realising the opportunities this offered. Vietnam welcomed the launch of the new Prosperity Fund.