- Green Growth
- Your Consultant
|Singaporean Ambassador to Vietnam Catherine Wong Siow Ping|
The ASEAN has made tremendous progress over the last five decades. Notwithstanding their political, economic, and cultural differences, ASEAN member states have worked together to build the regional peace, stability, and prosperity they enjoy today. Indeed, the ASEAN has come to be regarded as one of the most successful regional groupings in the world. Now the world’s sixth-largest economy, the ASEAN registered a combined GDP of $2.8 trillion in 2017.
Regional economic growth has been strong, posting 5.3 per cent in 2018, ahead of the global average of 3.3 per cent. Analysts project that the ASEAN will become the fourth-largest economy by 2030 after the US, China, and the European Union. In recent years Southeast Asia has become increasingly synonymous with vitality, dynamism, and opportunity. A key factor of this success has been the ongoing pursuit of regional economic integration, allowing the ASEAN to achieve something greater than the sum of its parts.
The prospect of seamless access to over 640 million consumers, half of them under 30 years of age, holds immense promise. In addition to the economic dividends, regional integration will enable the ASEAN to anchor its relevance on the global stage and compete for international trade, investment, and attention.
ONGOING INTEGRATION PURSUIT
The establishment of the ASEAN Economic Community (AEC) in 2015 was a significant milestone in regional integration. The AEC aims to create a single ASEAN market and production base, and liberalise the movement of goods, investment, labour, and capital flows. The ASEAN has since embarked on the AEC 2025 Blueprint, which sets a higher ambition for integration and focuses on current and emerging issues connected to the digital economy such as e-commerce, innovation, technological change and its impact on global value chains, and business models. A host of mutually reinforcing frameworks support this vision, including the ASEAN Single Window, agreements on e-commerce and trade in services, and the ASEAN Smart Cities Network.
While the ASEAN has made significant strides toward regional integration, more work lies ahead. This is particularly salient as the region battles the headwinds of a growing global trend of protectionism and disruption in labour mobility, fuelled by burgeoning nationalist sentiment.
The ASEAN has done well to stand against the tide. For instance, it continues to make progress on the Regional Comprehensive Economic Partnership (RCEP), which encapsulates the 10 ASEAN countries and their free trade agreement partners.
ASEAN leaders have committed to concluding the RCEP this year, a particularly significant pledge against the backdrop of anti-globalisation sentiment and zero sum mentalities. The proposed pact captures a third of the world’s economic output, and demonstrates the ASEAN’s leadership in upholding the multilateral and global trading system.
JOINT ECONOMIC TIES
Economic relations between Singapore and Vietnam have benefited from regional economic integration and the gradual lowering of trade barriers. As of last year, Singapore was Vietnam’s third-largest foreign investor and top ASEAN investor, with investments across geographical regions and sectors including services, processing, manufacturing, and real estate totalling some $49 billion in over 2,200 projects.
Bilateral trade figures have doubled over the past decade to reach S$20.9 billion ($15.2 billion) in 2018. Our seven Vietnam-Singapore Industrial Parks across Vietnam have become a symbol of our bilateral co-operation, drawing more than $12 billion in investment and creating over 240,000 jobs.
Despite our firm economic footing in Vietnam, Singaporean companies are keen to expand into new fields beyond our traditional sectors of investment. During Prime Minister Nguyen Xuan Phuc’s visit to Singapore last year, Singapore and Vietnam signed six memorandums of understanding to boost co-operation in water and waste management, trade standards, fintech, liquefied natural gas (LNG) development, banking supervision, and renewable energy.
Just last month, Enterprise Singapore and the Singapore Business Federation led one of the largest Singaporean business missions in recent years to Vietnam to seek new opportunities. The visit also marked the launch of the Singapore-Vietnam Business Council, which will serve as a platform for our respective business communities to further deepen their ties.
Going forward, sustained regional integration efforts will also dismantle seemingly daunting barriers such as language and culture, and encourage our peoples to seek opportunities to live, work, and do business across our two borders.
EMERGING AREAS OF CO-OPERATION
There is immense potential to broaden and rejuvenate Singapore-Vietnam economic ties. We can do much more together in emerging areas such as technology and innovation, air and maritime connectivity, food, agriculture, and trade and investment.
In particular, there are three promising new areas. The first area is innovation and startups. Vietnam is brimming with creative young minds. This year, Vietnam placed 42nd on the Global Innovation Index, a laudable improvement of 17 spots since 2016.
This has borne fruit in the form of a bustling startup scene that has drawn a wave of interest. Singapore is keen to invest in Vietnam’s creative potential. Last month, we launched the Global Innovation Alliance (GIA) in Ho Chi Minh City, which will facilitate closer interactions between the startup and innovation systems in both Singapore and Vietnam.
The GIA will see us working together to nurture a culture of creativity and entrepreneurship in both our societies. Separately, Vietnam’s fintech startup ecosystem has also witnessed significant growth, and now includes some 120 companies and brands covering digital payments, alternative finance, wealth management, and blockchain. Singapore companies are keen to develop e-services and e-payment solutions to bolster Vietnam’s financial ecosystem.
The second area is in smart cities. The ASEAN Smart Cities Network (ASCN) that was established during Singapore’s ASEAN chairmanship last year presented new opportunities for Singapore to share our experiences in building our smart nation with our Vietnamese friends, particularly those from Vietnam’s ASCN pilot cities Hanoi, Danang, and Ho Chi Minh City. Singaporean firms are excited to plug into new opportunities to contribute to Vietnam’s smart city agenda, from urban solutions to e-government, to bolster public service delivery, convenience, and quality of life for Vietnamese people.
The third area is in urban solutions. Vietnam is urbanising rapidly – with 819 cities and 38 per cent of the population living in urban areas as of 2018. This presents opportunities in three key areas.
The first is urban solutions - including master-planning, traffic management, and waste and water management. Singaporean companies with experience in these areas can customise solutions to meet these needs. Earlier this year Sakae Corporate Advisory, together with Surbana Jurong, engaged as consultants on the Danang City Conceptual Master Plan 2030 and its related urban and infrastructure works.
The second is infrastructure development. Last year, Singapore established a new government agency, Infrastructure Asia (IA), which aims to support Asia’s social and economic growth through infrastructure development by leveraging Singapore’s ecosystem of public and private sector actors including developers, engineering, procurement and construction companies, professional services firms, and financial institutions. IA is keen to work with Vietnam to help plug its infrastructure needs.
The third area is, as Vietnam develops, its demand for clean energy sources which will indeed grow. Singaporean companies can work with Vietnam to establish new sources such as LNG and renewable energy.
Singapore stands ready to progress with Vietnam as it seeks to reinvigorate its economy and embark on an exciting new chapter of growth. Regional economic integration will facilitate our pursuit of new fields of bilateral economic co-operation.
Countries cannot grow in silos especially amidst the growing isolationist and protectionist policies around the world. Hence, the ASEAN must continue to work hard to bring our economies together. In doing so, we can unlock the potential of our economies and create opportunities for our people. Singapore looks forward to supporting Vietnam chairing the ASEAN in 2020, and its ongoing efforts to pursue regional economic integration.