Mutual merit in Australian investment

As Australia looks to diversify its economic and supply chains, Vietnam is a perfect partner for trade and investment opportunities. Dr. Craig Emerson, director of the Australian APEC Study Centre, explains how Australian businesses will enable Vietnam to become a cornerstone of their Asia growth strategy. 

australia, investment, Australian businesses, supply chains, Australia, investment, Australian businesses, supply chains
Dr. Craig Emerson, director of the Australian APEC Study Centre

Vietnam’s success in containing COVID-19 with minimal economic fallout compared to other nations has improved its already-strong reputation for competent governance. The government has been liberalising Vietnam’s economy for decades and is now reaping the benefits of rapid growth.

Vietnam has stood to gain from the recent US-China trade conflict with many companies relocating at least some of their production facilities there. Vietnam is also rapidly adopting digital technologies to deploy automation, smart manufacturing, and big data analytics. Competent economic management, consistent reforms, swift digital uptake, and effective COVID-19 containment make Vietnam a very attractive destination for trade and investment in 2021 and beyond.

Economically, Vietnam is becoming a manufacturing powerhouse, particularly for electronics and apparel. It is also becoming a focal point for regional value chains with preferential access through free trade agreements (FTAs).

It has taken up trade deal commitments and accepted assistance to develop the institutional and regulatory environment, infrastructure, and facilitation to attract investment. The country is also actively working on non-tariff barriers to trade including intellectual property protection, food safety regulations, restrictions on the internet and digital economy, and other governance issues to accelerate the absorption of investment.

Vietnam needs to be considered in terms of its unique qualities and context. It is following its own development path in a new time, with different conditions, drivers, and realities. Comparisons can be made to Japan with its appreciation of tradition; to Singapore with its open trade policies and architecture; China’s southern Guangdong province in population scale and economic activity; and Indonesia in terms of benefits from a demographic dividend.

Vietnam has a web of FTAs that make it a strategic location for foreign investment as it offers preferential access to several markets. Vietnam continues to attract high levels of such funding from Japan, South Korea, Singapore, China, the United States, and other countries.

Vietnam maintains an ASEAN-first policy but is drawing attention from global investors, particularly due to its economic growth despite COVID-19 and attracted projects from more than 100 countries into its industrial zones during 2020.

australia, investment, Australian businesses, supply chains, Australia, investment, Australian businesses, supply chains
Enterprises from Australia are being encouraged to look into new business prospects in Asia. Photo: Le Tien

Approaching the market

The drivers of growth in Vietnam create attractive conditions and opportunities for Australian business in the post-pandemic environment. There is scope for manufacturing, agriculture, resources, and services businesses to expand engagement with Vietnam, now and into the medium term. The country’s rapid evolution will continue creating further chances as the economy and consumption mature.

There can be an increase in trade in goods where Australia has proven export capacity and readiness to meet demand in Vietnam. There are also possible increases in the value-added contribution of Australian content in Vietnam’s exports of manufactured products.

In addition, there are prospects to increase services trade in existing and new areas, particularly around education, healthcare, insurance, and environmental services. Both governments have prioritised these sectors under the expanding bilateral economic framework. Investment opportunities exist across the manufacturing, agriculture, services, and resources sectors and there are also those in relation to Vietnam’s digital transformation.

Globally, Vietnam is a major exporter of electronic equipment, apparel, and footwear. In terms of the Vietnam-Australia bilateral relationship, there are prospects for expanding Australian exports of beef, wheat and barley, cotton, horticultural products and processed food. There is also scope to expand exports of services in the education, ICT, mining technology, insurance, and environmental and healthcare sectors.

Australian businesses should also be aware of new prospects emerging in relation to Vietnam’s digital transformation and efforts to modernise economic activity through automation, AI, the Internet of Things, and big data.

Vietnam’s top merchandise imports from Australia are coal, iron ore, cotton, live animals, scrap iron, wheat, aluminium, copper, zinc, fruit, and nuts. The proportion of raw materials in the trade flows has steadily increased this century and now represents around half of all Australian merchandise exports.

Trade opportunities for Australia are supported by policy settings in Vietnam that are generally encouraging of foreign investment to advance the country’s position as a major regional trader. Australia’s exports show that businesses are already participating in value chains to which Vietnam belongs.

When semi-processed metals and fibre are shipped from Australia, it is likely they are being sourced by Vietnamese factories as inputs for final products, many of which are exported again for sale.

Vietnam is a promising market for company investment as a densely populated, developing, and urbanising country which is transitioning to an industrial and market-based economy through trade and investment and making great strides to position itself for Industry 4.0. Australia is currently a relatively small investor, but stock has doubled since 2015 and is growing faster than Australian investment into other ASEAN economies.

Most of Australia’s investment in Vietnam is in manufacturing (47 per cent) with lower levels in hospitality (8 per cent), construction/real estate (7 per cent), agribusiness (6 per cent), and healthcare (6 per cent).

Vietnam has historically had some state-owned enterprises (SOEs) with monopolies in particular sectors, some of which continue to operate. Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam has committed to providing member countries with a level playing field for their companies competing with SOEs and ensuring any state-designated monopolies do not abuse their market power. Vietnam has also introduced legislation to equitise and divest SOEs and monopolies and ensure that they are offered only limited state preferences.

The CPTPP provides preferential access for Australian businesses to invest in Vietnam. It has the most liberal conditions for any foreign investors in Vietnam and these conditions are also available to other CPTPP members, including two of Vietnam’s largest investors, Japan and Singapore.

Australian movement

Australian businesses are being urged to expand engagement with Asia to capitalise on economic complementarities, diversify supply chains, and benefit from regional growth and integration. As an advanced and globally connected economy in the region, Australia is well placed to benefit from engagement with neighbouring Asian economies to build trade, investment, and innovation networks.

Even before the pandemic, heightened geopolitical tensions in the region driven by a more competitive relationship between the United States and China had highlighted the need for Australia to have a broad and diverse network of trading partners. Many companies in the US and Australia began to adopt a China+1 strategy, with Vietnam emerging as a preferred option.

As the pandemic struck and brought many supply chains to a standstill, first in China and then around the world, businesses and governments soon became painfully aware of their exposure to policy changes overseas. In some cases, this led to calls in Australia to re-shore supply chains, especially for essential medical supplies. More generally, although trade with Vietnam and other economies will not replace trade with China, it may help build resilience.

Australia is generally well-regarded in Vietnam. It is a considered a high-income, advanced economy with much to offer in terms of technology, managerial know-how, and skills. Brand Australia has a strong reputation for being high-quality, safe, and reliable. Exports of goods such as baby products, food, vitamins, and supplements are testament to this reputation.

As the business culture in Vietnam is strongly governed by relationships, Australian businesses should draw on the thriving Australia-Vietnam ecosystem already in place. Onshore and offshore resources are available from national and state governments, industry bodies, academia, students, alumni, diaspora, and locals. The insights and connections of Vietnamese diaspora in Australia, Australian expatriates in Vietnam, and Australian-educated Vietnamese students and graduates will prove invaluable to prospective businesses.

There are a lot of economic complementarities underpinning trade and investment between Australia and Vietnam, as well as traded sectors with the most potential for growth. Besides these, numerous opportunities are arising from the rapid digital transformation of both economies with the adoption of smart manufacturing, digital technologies, and data analytics.

Both governments are equally open about their support for a rules-based security and economic order in Asia, continued trade liberalisation and the centrality of ASEAN in maintaining regional stability.

There has been no better time for Australian businesses to engage in Vietnam. Despite pandemic-related challenges, its economy grew by nearly 3 per cent in 2020 while many of its regional peers, including Australia, fell into recession. Opportunities will continue to unfold for Australian businesses which are willing to engage and adapt to local market conditions, cultural realities, and leverage Australia’s unique assets in the burgeoning eco-system.

News Related


Brewing up change with modern strategy

During the most difficult period of 2020 that was plagued by COVID-19 and tough new local drink-driving rules, Neo Gim Siong Bennett, who is the general director of SABECO, kept the faith in… Read more »

Securities judgment April 12: There could be another derivative maturity week

April derivative maturity week (Neutral) Next week, the market is expected to continue moving in the direction of struggling with strong differentiation according to business results of each specific enterprise. VN-Index will continue… Read more »

Stock market from April 12-16: It is possible to regain a positive position

According to securities companies, cash flow has not shown signs of withdrawing from the market, is circulating among stock groups and helping to balance the market under short-term profit-taking pressure. (Source: The… Read more »

Foreign investors net buying of VND 2,400 billion in week of 5-9 / 4 due to sudden change in put-through transactions

Foreign investors on HoSE net sold 235 billion dong by matching method. VHM was bought the most by foreign investors with 2,320 billion dong, of which over 2,170 billion dong came from put-through… Read more »

Dragon Capital bought 1.2 million HPG shares

Dragon Capital group owns nearly 200 million HPG shares, equivalent to 9,900 billion dong. HPG shares closed on April 9 at the price of 49,550 dong / share, up 10% from the end… Read more »

Approving the policy of investment in infrastructure of Hoa Lu Industrial zone

Hoa Lu border-gate industrial park covers an area of ​​348.32 hectares in two communes Loc Tan, Loc Thanh (Loc Ninh district), with an investment of 1,119.29 billion dong, of which the investor’s capital… Read more »

Gender Lens Investing a treasure trove of economic momentum

If women’s economic empowerment is improved, Vietnam’s GDP gain $40 billion a year by 2025 At the event titled Gender Lens Investing in Practice – Driving Value for Investors in Vietnam, Australian Consul General… Read more »

First-quarter growth fairly impressive

  Pham The Anh- chief economist Institute for Economic and Policy Research Economic growth was below the expectations of Resolution 01, and it was not much higher than in the same period of… Read more »

Vietnam's beer production fell 14 per cent in 2020 

The VBA Congress discussed objectives for the next five years The Vietnam Beer Alcohol Beverage Association (VBA) on April 8 held the 2021-2025 Congress to review the 2020 performance and discuss new tasks… Read more »

PetroVietnam outperforms business targets in first quarter

PetroVietnam’s first-quarter online meeting connected different locations On April 7, 2021 PetroVietnam hosted a periodical online meeting with leaders of its member units to review production and business activities in March and the… Read more »

YSVN – Banking group can lead VN-Index towards region of 1,283 – 1,300 points in April

YSVN estimates that GDP in the second quarter will increase by 6.4% and for the whole year to increase by 6.57%. The VN-Index might continue its mid-term uptrend and move towards the zone… Read more »

Apple to pay $3.4-m over iPhone obsolescence in Chile

Apple to pay $3.4-m over iPhone obsolescence in Chile (Source: Apple is accused of having programmed a limited lifespan into some products to force users to replace their phones sooner than necessary,… Read more »

Long road ahead for buyout offer, Toshiba board chair warns

The logo of Japanese industrial group Toshiba is seen at the company’s headquarters in Tokyo on April 7, 2021.(Kazuhiro NOGI / AFP) CVC Capital Partners is reportedly considering a 30 percent premium over… Read more »

Robust growth trends projected for investment in healthcare

Robust growth trends projected for investment in healthcare. Source: Kim Dental, Vietnam’s largest private dental care platform, has recently raised $24 million in a series B round. The investment was led by… Read more »

Data protection receives draft fillip

Minh Nguyen, senior associate of ACSV Legal The entry into force of the European Union’s General Data Protection Regulation (GDPR) in May 2018 was a wake-up call for companies in Vietnam which have… Read more »

Local mergers and acquisitions portray businesses’ confidence

Local mergers and acquisitions portray businesses’ confidence In January, seafood processing company Vinh Hoan Corporation scooped up 51.29 per cent stake in Sa Giang Import Export Corporation. The company spent nearly $15.2 million… Read more »

Growth indicators to ensure an optimistic scenario

Processing has been a key driver for strong recovery. Photo: Le Toan Deputy Minister of Planning and Investment Tran Quoc Phuong said, “The growth rate of the first quarter at 4.48 per cent… Read more »

Warrant market April 9, 2021: Continued adjustment?

The warrant market ended on April 8, 2021 with 49 stocks down, 11 stocks unchanged and 29 stocks increasing. Foreign investors turned to be net buyers again with a total net buying of… Read more »

25 occupations foreign investors do not have access to investment

Decree 31/2021 detailing and guiding a number of articles of the Investment Law has just been issued. In which, specifying a list of 25 occupations that foreign investors have not yet had access… Read more »

Market commentary on April 9: Cash flow remains in the market

Securities company Positive Neutral Negative AseanSC X BSC X BVSC  X MBS  X VDSC  X Shake can take place at high price zones (Asean Securities Company – AseanSC) The phenomenon of order congestion… Read more »

Many large-cap codes reversed, VN-Index dropped slightly

9:40 At the opening, VN-Index once increased by more than 4 points but then fell back. After 45 minutes of trading, the index officially reversed to decrease. Banking stocks were quite differentiated when… Read more »

Works on Hanoi-based Ecopark floating trade center to kick off in 2022

Work on a mega trade center on water is expected to begin in early next year in Ecopark, a housing development in the northern province of Hung Yen’s Van Giang district, with an… Read more »

Vietnamese cloud computing market appeals suppliers

The Vietnamese cloud service market is projected to grow from $181 million in 2019 to $427 million by 2025, exhibiting a healthy compound annual growth rate (CAGR) of over 15 per cent during… Read more »

Lack of raw materials threaten wood prices

Vietnamese exporters of wood products have been struggling with rising transport and material costs. Photo: Le Toan As global supply chains were affected by the Suez Canal incident, the supply issues for raw… Read more »

Airlines catch glimpse of light at the end of tunnel

Vietjet’s forced focus on the domestic arena last year has in part paid off financially. Photo: Duc Thanh In total, the Vietnamese aviation sector reported losses of VND18 trillion ($782.6 million) from their… Read more »

Economy growing strongly on back of COVID-19 endgame

State-owned Vietnam Oil and Gas Group (PetroVietnam) last week reported that its total revenue in the first three months of the year is estimated to be over VND113 trillion ($4.91 billion), down 6… Read more »

Hospitals struggling for autonomy

Bach Mai Hospital decided against introducing new fees after a rebuke from the MoH Taking over 60 minutes to transport her father from the northern province of Thai Binh to Bach Mai Hospital,… Read more »

A new food-brewery manufacturing complex inaugurated in Hau Giang

A food – brewery manufacturing complex with an investment of VND1.6 trillion (US$69.1 million) was inaugurated in the southern province of Hau Giang on March 20.  Masan Consumer’s US$69.1-million food-brewery manufacturing complex is… Read more »

The reason Vietnam has the most billionaires ever

According to the 2021 World Billionaire list just announced by Forbes, Vietnam has 6 businessmen in the group of super-rich people, owning assets of $ 1 billion or more. Vietnamese billionaires include Vingroup… Read more »

SCB implements a plan to offer shares to the public

Saigon Bank (SCB) has just announced the implementation of a plan to offer SCB shares to the public. Accordingly, SCB plans to increase its charter capital by VND 15,000 billion in the period… Read more »

Pegasus inks agreement with Banyan Tree to manage Dhawa Quy Nhon Resort

Aiming to create an international tourist destination with beautiful landscape and architectural design, Dhawa Quy Nhon Vietnam will be managed by highly-acclaimed and deeply experienced Singapore hotel operator – Banyan Tree Hotels &… Read more »

Prime Minister gives green light to Quang Tri airport project

The government has authorized the central province People’s Committee Quang Tri to conduct a pre-feasibility study for the construction of Quang Tri Airport under the public-private partnership (PPP) financing mechanism.  Perspective of the… Read more »

After Pha Lai Thermal Power, another subsidiary of Genco 2 pays a record dividend

Hai Phong Thermal Power wants to deduct nearly 1,213 billion dong to pay 25.25% dividend for 2020 The company has advanced 10% cash dividend in the previous 2 times. 18% and profit down… Read more »

Banking and securities group surged, SSIAM VNFin Lead ETF became the best growth fund in the first quarter

Vietnam’s stock market has just ended the first quarter with quite positive developments despite the significant influence from the Covid-19 translation. Ending the session on March 31, the VN-Index stopped at 1,191.44 points,… Read more »

Improving the investment environment: Need a breakthrough

The difficulty bundle the wisdom Currently, 90% of enterprises nationwide have small and even micro-scale production. Therefore, businesses that want to access commercial loans or budget support are not easy. Le Nguyen Duy… Read more »

Busy days ahead for deal-making

Van Duc Phu – Senior expert Investment Promotion Centre, North Vietnam The upcoming days are expected to be a dynamic of investment promotion along with new unveilings and the presence of some huge… Read more »

Blame game begins as Suez blockage dents trade routes

Blame game begins as Suez blockage dents trade routes The combination of two high-power tugboats and a tide that swelled to its highest point in months with the full moon helped to finally… Read more »

Thoughts return to stronger rail options

Thoughts return to stronger rail options. Source: Although the Ever Given container ship was rescued one week after being stranded in the Suez Canal in Egypt, the trading world remains rocked as… Read more »

Suez Canal fiasco adding to prolonged trade difficulties

The blockage at the Suez Canal could have been much worse were it not for a successful dredging operation. Photo: AFP The exports of Tien Dat Wood Technology JSC to Europe are suffering… Read more »

Incident shows need for logistics resilience

What role does the Suez Canal play when it comes to Vietnamese trade? Tran Thanh Hai, deputy director of the Ministry of Industry and Trade’s Agency of Foreign Trade The Suez is the… Read more »

Danang promotes investment in string of big projects

Danang is poised to step into a new development chapter With the goal of becoming one of the major socio-economic centres of the country and Southeast Asia, Danang will focus on finishing key… Read more »

Dulux from AkzoNobel launches innovative paints solutions

The Dulux Weathershield portfolio from AkzoNobel helps enhance the protective performance for houses against harsh weather Dulux Weathershield Colour Protect compliments the Dulux Weathershield portfolio to enhance the protective performance for houses against… Read more »

Handling customer complaints and resolution failures

For more complicated conflicts, arbitration or courts are deemed the next routes to a possible solution, Photo: Shutterstock   Almost a decade ago, the Law on the Protection of Consumers’ Rights took effect.… Read more »

Glass half empty for unhappy consumers?

Major companies can sometimes be at reputational risk if they get into squabbles with consumers over often hard-to-prove allegations, Photo: Shutterstock Saigon Beer Alcohol Beverage Corporation this month is being dragged into Vietnamese… Read more »

SABECO at great pains to ensure protection of consumers’ interests

SABECO is due to hear announcement of the case result this month The representative for SABECO shared with VIR that the company is maintaining its utmost efforts to attempt to solve the issue… Read more »

Forbes publishes the 2021 Rich List: Vietnam has 6 billionaires

Vietnam has 6 billionaires recognized by Forbes, an increase of 2 compared to 2020, and Vingroup Chairman Pham Nhat Vuong is still the richest person in Vietnam. Forbes magazine has just published a… Read more »

Stock on April 7 through technical ‘prism’

Securities company Positive Neutral Negative AseanSC X BVSC X KBSV X PHS X SHS X VCSC X VDSC X VN-Index is in overbought zone, and could reverse at any time (Asean Securities Company… Read more »

QTP: Quang Ninh thermoelectricity and the chance to increase waves after REE divestments

The liquidity of QTP from the beginning of 2021 is very remarkable. This code turned out to be the complete opposite of the previous period which had almost no liquidity. Illustration. Stock is… Read more »

Cash flow was still ‘massively’ entering the market, HoSE continued to block orders from the morning session

15:00 The HoSE continued to have almost no transactions in the afternoon session when the congestion happened in the morning session. At the end of the session, the VN-Index rose 3.91 points (0.32%)… Read more »

Prudential Vietnam reaffirms sustainable growth goals in 2020

Prudential secured sustainable growth and efficient business operation in 2020 In 2020, Prudential achieved a total revenue of VND33.97 trillion ($1.48 billion), of which net revenue from insurance activities reached VND24.71 trillion ($1.1… Read more »