Vietnam and Singapore are implementing a Connectivity Framework Agreement to strengthen bilateral economic relations. Do Nhat Hoang, director of the Ministry of Planning and Investment’s Foreign Investment Agency tells VIR’s Ninh Kieu how the agreement would benefit the island state’s investment in Vietnam.
Vietnam and Singapore signed a Connectivity Framework Agreement in 2005 to boost economic cooperation. How has the agreement been implemented?
The Vietnam-Singapore Connectivity Framework Agreement is a comprehensive cooperation agreement to strengthen partnerships in manufacturing, trade, consumption and investment.
Therefore, this creates a favourable environment for Singapore and Vietnam businesses. To reach this goal, the two sides established six working groups focusing on six sectors education and training, finance, telecommunication, investment, trade and service and transportation.
Could you elaborate on the connectivity agreement’s investment cooperation?
Investment cooperation is an important part of the agreement, focusing on the bilateral investment cooperation as well as encouraging investment from a third country to Vietnam or Singapore. To boost the investment between the two countries, the Ministry of Planning and Investment, especially Foreign Investment Agency, has worked closely with Singapore Economic Development Board and Singapore International Enterprise to exchange information, organise promotion conferences and study tours. We also discussed removing obstacles hindering investments from Singapore to Vietnam.
During the past years, Vietnam and Singapore have tried to create favourable conditions for enterprises from the two countries to invest in sectors such as urban development, financial service, telecommunication and food processing industry. More specifically, Singapore organised a two-year training course for Vietnam’s state officers. We also try to push the development of existing investment projects in Vietnam, especially industrial parks and urban projects invested by Sembcorp and Keppel. The Vietnam-Singapore Industrial Parks is considered a typical success of cooperation between Vietnam and Singapore.
At this moment, Singapore is one of the largest investing countries in Vietnam. How do you assess the quality of Singaporean investments?
Singapore is among the largest foreign direct investment (FDI) host countries and territories in Vietnam. Our statistics show that, till the end of July 2012, Singapore ranked fourth among the host countries and territories, following Japan, Korea and Taiwan.
With a huge registered investment capital of $23 billion, FDI from Singapore has positively affected our economic development. While FDI from other countries and territories including Japan, Korea, United States and European Union mostly focuses on manufacturing sector, investment from Singapore focuses on infrastructure, industrial parks and urban development.
This is very important to help balance the economic development in Vietnam. Many leading business groups in Singapore have been investing in Vietnam. Those include CapitaLand, Sembcorp, Keppel and PSA. They are operating very well here and we highly appreciate their contributions to the economy.
What opportunities will Vietnam offer to Singaporean investors?
Singaporean investors have been investing in Vietnam for long time and in many sectors. However, the rapid growth of Vietnam’s economy is requiring a huge investment demand in sectors that Singaporean investors have experience in. This will offer them big opportunities.
Firstly, the high rate of urbanisation in Vietnam leads to big demand for property projects. Many Singaporean investors have experience and strength in this sector. In fact, Singapore’s leading property developers like CapitaLand, Keppel Land and GoucoLand have invested in Vietnam and they continue expanding investment projects in Hanoi, Ho Chi Minh City and other provinces.
Another sector is infrastructure, including power and wastewater treatment. Some Singaporean companies begin studying possibility to investment in this sector in Vietnam. Sembcorp, for example, is studying feasibility for developing a 1,200 megawatt power plant in Quang Ngai province. We want more investors like Sembcorp to invest in this sector because Vietnam is thirsty for capital for developing infrastructure.
Finally, the growth of the retail industry shows the strong potential for investments and partnerships. Many foreign investors are eyeing to invest in this sector and this is also an opportunity for Singaporean ones. Actually, top Singaporean brands are already in the market including Charles & Keith, Pretty Fit and Heatwave. NTUC Fairprice joined hands with Saigon Co-op to establish hypermarkets in Vietnam, too.