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Vietnam seconds ASEAN driving intra-bloc cooperation

by NDO31 March 2022 Last updated at 15:57 PM

Vietnam is implementing digital transformation in line with ASEAN's shared commitments in favour of businesses and investors
Vietnam is implementing digital transformation in line with ASEAN's shared commitments in favour of businesses and investors

VTV.vn - Vietnam is offering windfalls for digital transformation and development in favour of businesses and individuals.

2022 is forecast to be a big year for Vietnam in terms of its ability to woo more foreign direct investment (FDI). Nguyen Thanh Van, a representative from the representative office in Ho Chi Minh City of a leading retailer in China, said that his company has big plans to pour money into developing a chain of supermarkets in Vietnam. Notably, the firm is also specialising in logistics, with data-driven delivery technologies.

“It is expected that the company’s fresh investments in the near future in Vietnam will create even more competition in this lucrative market,” Van said.

In another case, Thailand’s Central Retail Vietnam is expected to put into operation in April 2022 a commercial centre named Go! Lao Cai in Lao Cai province in the north, with total registered investment capital of more than 12 million USD.

This 30,000 square-metre centre will be the 39th project of Central Retail in Vietnam. About one year ago, the group revealed a scheme investing as much as 1.1 billion USD into the Vietnamese market by 2025. By late last year, Central Retail had poured about 211 million USD into Vietnam.

Goods at Central Retail’s supermarkets in Vietnam are both produced domestically and imported, including items sourced from regional nations, Europe and the US.

One of the key reasons why the Chinese retailer and Central Retail want to set firm niches in Vietnam is that the country is home to a population of nearly 100 million people, of whom more than 60 percent having middle class purchasing power. Vietnam’s average per capita income stood at 2,973 USD last year, and is expected to rise to 3,900 USD by 2025, according to the General Statistics Office.

In addition, Vietnam and other regional countries have been cementing their digital cooperation, making it more convenient for businesses equipped with digital capacity to perform better throughout the region, which has a population of about 660 million people and average per capita income of 13,475 USD as of late 2021.

“This will enable our group to further cooperate with partners not only in Vietnam, but also in other regional nations,” said a representative of the Chinese retailer who declined to be named.

At present Vietnam is home to a series of big domestic and foreign platforms including Tiki, Thegioididong, Sendo, Dienmayxanh, Tokopedia, Chotot, Lazada, Meta, Shopee, and FPTshop.

Vietnam’s total revenue from retail and consumption services in the first quarter of 2022 has bounced back, at 57.3 billion USD, up 4.4 percent year-on-year.

According to Vietnam’s Ministry of Industry and Trade (MoIT), contributions from firms like these are increasing the trade and investment ties between Vietnam and other member regional states.

Southeast Asia is now Vietnam’s fourth-largest export market, with the nation’s export turnover to the region climbing from 25.3 billion USD in 2020 to 29.1 billion USD in 2021. Meanwhile, Southeast Asia is also Vietnam’s third-largest import market, with the country’s import turnover from other member states expanding from 32.1 billion USD in 2020 to 41.1 billion USD in 2021. In the first quarter of 2022, Vietnam saw a trade deficit of 3.3 billion USD from regional markets.

Expanding cooperation

At the 28th ASEAN Economic Ministers’ Retreat, organised online two weeks ago under the chair of Cambodia, ministers charted ASEAN’s Economic Work Plan for 2022, and notably the endorsement of ASEAN Priority Economic Deliverables 2022.

They also launched the ASEAN Trade in Goods Agreement (ATIGA) upgrade negotiations which are crucial to strengthening intraregional trade and promoting a more connected, inclusive, resilient, and competitive region.

“The ATIGA revision is needed to provide better support for businesses in taking advantage of the agreement, especially via lowering compliance costs and promoting trade facilitation measures,” said MoIT Deputy Minister Tran Quoc Khanh.

Under ATIGA’s commitments, all regional member states have vowed to phase out tariffs on up to 98.6 percent out of all goods in 2021. Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Malaysia have removed 99.3 percent of the tariffs and the remaining four (Cambodia, Laos, Myanmar, and Vietnam), 97.7 percent.

This has benefited businesses such as Vietnam’s TH Group as the import tariffs on foodstuff products into regional markets have been almost completely removed.

“TH Group has officially marketed more than 30 product lines in Singapore. We have a vision that in 2022-2023, our products will be sold at more than 1,000 retail stores and supermarkets in Singapore,” said Hoang Thi Thanh Thuy, director of International Marketing at TH Group.

On February 25, 2022, TH and HAO Mart, the leading retail supermarket system of Singapore, inked an MoU on strategic cooperation on consuming and promoting these products.

TH Group sees Singapore as a market with great potential in Southeast Asia. Over the past few years, it has conducted a series of trade promotion activities in Singapore. According to its business strategy, TH Group will continue to expand to other regional markets.

ASEAN economic ministers also agreed to extend the MoU on the implementation of non-tariff measures on essential goods until 2024 and to expand the present list of essential goods while emphasising the importance of conducting in-depth study on the trade flow of essential goods.

To create better conditions for intra-bloc investment flows, Vietnam has also approved the fourth protocol amending the ASEAN Comprehensive Investment Agreement. The protocol mentions a ban on performance requirements and fundamentals in the Agreement on Trade-Related Investment Measures, already agreed on by all members of the World Trade Organization.

This means that no member state is allowed to enforce regulations that discriminate against foreign goods from other regional member states or carry out any measure that might provoke obstructions for other member states to invest or conduct trade in the region.

Figures from Vietnam’s Ministry of Planning and Investment (MPI) show that as of March 20, 2022, Vietnam had wooed 94.64 billion USD in registered investment capital from ASEAN member states, including Singapore (67.5 billion USD), Thailand (13 billion USD), Malaysia (12.85 billion USD), the Philippines (615 million USD), Indonesia (611.7 million USD), and Laos (71.1 million USD).

Total registered FDI into Vietnam had reached 422.83 billion USD as of March 20, 2022. Despite the COVID-19 pandemic, in the January-March 20, 2022 period ,Vietnam attracted total registered capital of 8.9 billion USD.

Fostering the digital environment

ASEAN is the fastest growing Internet market in the world. With 125,000 new users coming online every day, the ASEAN digital economy is projected to grow significantly, adding an estimated 1 trillion USD to regional GDP over the next 10 years.

At the 28th ASEAN Economic Ministers Retreat, economic ministers also underscored the imperative to further intra-bloc ties in digital and green economy development, with the deployment of the Framework for Promoting the Growth of Digital Startup Ecosystem, and the establishment of technical committees on the digital and green economy towards greater collaboration on trade facilitation, fintech, digital identities, consumer trust, and circular economy.

All the ASEAN member states committed to consolidating regional digital integration and transformation by triggering negotiations for the ASEAN Digital Economy Framework Agreement by 2025 for a coherent, harmonised, and rules-based approach to progress ASEAN’s cooperation in the digital ecosystem.

According to the Asian Development Bank’s (ADB) “Southeast Asia Rising from the pandemic” report freshly released, promotion of digital transformation and connectivity among member states is one of the biggest solutions to drive the bloc’s economic growth forward. In this context, Vietnam boasts great potential.

The ADB highly values Vietnam’s digital infrastructure development which offers many opportunities to further develop its digital economy. Specifically, the government has proven to be an effective builder of modern digital infrastructure. In its own operations, a rapidly developing e-government has significantly reduced the number of administrative procedures and increased the number of digital public services tenfold between between February 2020 and April 2021.

“Compared to other ASEAN economies, Vietnam is leading the way in launching 5G technology. It also boasts the lowest internet access cost, third-largest number of internet users, second-highest mobile penetration, and second-fastest average mobile connectivity speed in the region,” said the ADB report. “With more than 50,000 IT enterprises, 955,000 IT employees, and 80,000 IT graduates per year, Vietnam has increasingly gained traction in technology investments and start-ups, moving the country from an IT outsourcing destination to one that can domestically produce technology products under its “Made in Vietnam” initiative,” said the ADB.

According to the World Bank, Vietnam’s human capital index in 2020 is in the high human development category, ranking 48th out of 157 countries and second in ASEAN (behind Singapore). The share of trained workers in the country increased from 51.6 percent in 2015 to about 64.5 percent in 2020.

Under the United Nations Department of Economic and Social Affairs’ newly-launched hallmark United Nations E-government Survey, Vietnam has climbed two places to rank 86th out of 193 countries. With this ranking, it has maintained its record of consecutive increases since 2014, climbing from 99 to 86 in this period.

Harvesting 0.6667 points in the survey’s E-Government Development Index (EGDI), Vietnam is among e-government developing countries with a high index, a score higher than the global EGDI average of 0.5988 points, the Asian average of 0.6373 points, and the Southeast Asian average of 0.6321 points.

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