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Do Thi Thu Ha, senior partner at KPMG Vietnam and governor board member of Amcham Hanoi, talked to VIR’s Hong Anh about the implications of this deepening relationship.
How is US President Obama’s visit to Vietnam different in terms of a historical context from the visits of former US presidents Bill Clinton and George W. Bush?
President Obama’s visit to Vietnam was a logical step after the previous visits by his two predecessors. Back in late 2000/early 2001, the two nations had just a few years of contacts built up after a 20-year hiatus. Therefore, the purpose of former US president Bill Clinton’s visit was to establish a normal relationship between the two nations.
Throughout the years, and especially during the Bush administration, that relationship was strengthened as the US supported Vietnam in its integration into world trade, particularly when the US granted Vietnam permanent normal trade relations as part of Vietnam’s accession to the World Trade Organization (WTO) in 2007.
As we can see, Vietnam today is very different from what it was a decade ago. In recent years the Vietnamese government has been boosting economic integration through participation in many free trade agreements and communities including agreements with the Eurasian Economic Union, the European Union, and South Korea, and membership in the ASEAN Economic Community (AEC) as well as the Trans-Pacific Partnership (TPP). Within this context, I believe Obama’s trip will take the bilateral relationship to another level. We have gone through the normalisation and facilitation stages, and it is now time for a partnership to accelerate the implementation of signed agreements, increase trade and economic co-operation, enhance mutual understanding, and narrow any remaining differences.
How will this historical visit impact the bilateral trade and investment?
President Obama’s visit will boost this co-operation further. The visit saw $16 billion in deals being signed and it also served to re-confirm the US’ strategic commitments to Vietnam. The president’s delegation involved different governmental bodies and organisations, including the US Department of Agriculture, the US Department of Commerce, the Pentagon, and the American Chamber of Commerce in Vietnam. The trip will facilitate the implementation of the TPP agreement in Vietnam, assist Vietnam in developing the strong infrastructure required for economic modernisation, and support the Vietnamese government in several economic and regulatory reforms.
Vietnam’s textile and garment sector is often claimed to be the one to benefit most from the signed TPP. In your opinion, besides this sector, which others will be remarkably affected by the TPP, and in what ways?
The TPP agreement, once it comes into effect, will open a sizeable market to Vietnamese exporters, not only in the textile and garment sector, but also in many other sectors. In addition, the TPP will boost foreign investment to Vietnam, and international investors will likely move their capital to the country in order to enjoy easy access to other TPP members.
Last but not least, in order to comply with the requirements of international trade agreements, Vietnam will need to implement many economic and regulatory reforms that will ultimately impact the economy and society as a whole.
In a scenario where Vietnam or the US does not join the TPP as planned, how will this affect trade and investment between the two countries?
For some time now, the Asia-Pacific region has been playing an important role in the policies of the Obama administration. For years, we have seen their efforts to penetrate deeper into Asian markets, and re-balance the economic background in the region. Vietnam is the centrepiece of this policy and a bridge for US exporters and investors to access the very promising market of Asia.
Therefore, with or without the TPP agreement, Vietnam and the US will continue to foster bilateral relations. A productive bilateral commercial relationship between the US and Vietnam will offer businesses and workers of both nations substantial opportunities for expanded trade and investment, promoting economic growth and development. It is an opportunity that no one wants to ignore.
What should the Vietnamese government do to make Vietnam a more attractive destination to high quality US investors?
We have seen many US giants investing in Vietnam to enjoy a stable political environment, a continually improving legal framework, a relatively low cost base, and a large pool of labour, not to mention preferential policies, modern infrastructure, and greater access to utility services.
However, to become a hub for US investors, Vietnam will need to provide more than preferential policies, tax or tariff rates. The Vietnamese government will be asked to consider revising certain current economic regulations which are inconsistent with the terms of international agreements, especially in topics such as sanitary and phytosanitary measures, working conditions, and the status of state-owned enterprises.