Bilateral economic engagement is well established with trade and investment flows on upward trend.
Australian businesses have been advised to consider Vietnam as the next phase of their growth strategy for one reason is that the Southeast Asian country is “a perfect economic partner for Australia.”
|Australia’s Prime Minister Scott Morrison and Vietnam’s Prime Minister Nguyen Xuan Phuc. Photo: Asianews|
Vietnam is “one of Australia’s fastest growing trading partnerships”, Asia Society Australia and The Australian APEC Study Centre at RMIT University have said in a report that is aimed to raise awareness of business opportunities and show pathways for Australian companies to succeed in the country.
The findings from the report showed Vietnam is a standout option for Australian businesses for the following reasons.
First of all, both nations have complimentary economic systems and seek diversification of their trading partnerships, amidst weakening global economy and geopolitical tensions.
Vietnam has emerged from the Covid-19 crisis better than most countries in the world and has maintained positive economic growth as a result of proactive management of the pandemic.
Australia and Vietnam have elevated their government-to-government relationship to the highest level creating a favorable environment for businesses in both nations to engage and generate commercial outcomes.
Vietnam has a unique and fast-paced market, and a vastly different political system requiring businesses to have comprehensive, long-term and tailored entry strategies, based on local knowledge, competitive advantage and due diligence.
Significant opportunities for Australian businesses exist in agriculture, mining and resources, education and ICT services, and Industry 4.0.
The last but not least, Australian businesses can leverage a thriving bilateral eco-system of relationships to support their efforts in Vietnam.
“Existing competitive advantages, reform of the investment environment and increasing international position, and positive and effective anti-Covid-19 measures, Vietnam has been highly appreciated by the world community, becoming an attractive and safe investment destination for foreign investors,” Vietnam’s Minister of Planning and Investment Nguyen Chi Dung said.
Meanwhile, the close partnership has greatly supported the investment of Australian companies in Vietnam as Australia’s Prime Minister Scott Morrison affirmed. “We’re at a sweet spot in our partnership.” He said the capacity for Australia and Vietnam to work even more closely together is enormous with increasing Australian investment in Vietnam.
Australia is Vietnam’s 14th largest trading partner and Vietnam is 14th largest for Australia. The two-way trade in 2019-20 was valued at US$15.5 billion.
Almost 500 Australian financed projects with capital totaling more than US$2 billion were reported by Vietnam, involving larger Australian subsidiaries as well as smaller enterprises.
Vietnam and Australian engagement will deepen in coming years, buttressed by government to government cooperation, shared interests in regional institutions and alignment globally, the report showed.
The strong bilateral relationship is poised to deepen through new bilateral commitments to enhance economic, security and innovation engagement.
Australia has three free trade agreements (FTAs) with Vietnam including the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), and the recently-signed Regional Comprehensive Economic Partnership (RCEP).
These agreements have delivered market access advantages for Australian goods and services to Vietnam, in some cases creating measurable advantage over competitors.
Since the 2018 ASEAN-Australia Special Summit in Sydney, both countries have been working to elevate the bilateral relationship to a Comprehensive Strategic Partnership, enhancing economic engagement, security and innovation collaboration.