Arindam Goswami
- The Deputy Prime Minister of Vietnam Tran Luu Quang will be attending the 10th Vibrant Gujarat Summit to be held from 10th-12th January 2024 at the invitation from the Chief Minister of Gujarat Bhupendra bhai Patel. Such visits encourage bilateral investments, promote trade and boost confidence among business communities, and increase better connect among the general citizenry.
- Exclusive Bilateral Investment Treaty, better logistical capabilities, direct connectivity through air, water and land,Indo-Vietnam partnership on emerging fintech and payment solution such as UPI will encourage Indian businesses to invest in Vietnam
Vietnam has emerged as one of the world’s most dynamic economies, captivating global attention with its impressive growth trajectory. From a humble beginning as a war-torn nation, Vietnam has transformed into a vibrant economic powerhouse, fuelled by a combination of strategic reforms, resilient people, and an advantageous position in the global market.Since the “ĐổiMới” reforms in 1986, Vietnam has consistently registered impressive GDP growth, averaging over 6.5% in the past three decades,putting Vietnam in the group of the fastest growing economies in the region and in the world.Policymakers in Vietnam have brought in regulatory reforms to tighten laws in the financial sector and are eyeing to upgrade Vietnam’s financial market from “frontier market”to “emerging market”statusby 2025.With the aimofmaintaining Vietnam’s growth, the 13thNational Congress of the Communist Party of Vietnam (CPV) outlined its ambitious goals for further reformsincluding sustaining robust economic growth driven by digital transformation and infrastructure,fostering social progress through inequality reduction and enhanced healthcare,ensuring political stability and internal unity, and navigating the global landscape through strong international relations thus charting a path for Vietnam to thrive as a modern socialist nation within the evolving world. The political leadershipalso decided a timeframe for this growth. First, Vietnam shall become a developing country with a modern industry base and graduate from lower-middle income status by 2025. Second, Vietnam shall be a developing economy with upper middle-income status by 2030, a landmark coinciding with the centenary of CPV. Third, Vietnam shall be a high-income developed economy by 2045 when the Socialist Republic of Vietnam (erstwhile Democratic Republic of Vietnam) celebrates its centenary.These ambitious goals, however, will depend much on how well Vietnam manages to balance its post-pandemic reforms alongsidepolitical stability and socio-economic growth.The time of 13th NationalCongress of CPVis also vitalas ithas determined the future trajectory of Vietnam by deciding the future leadership at the core of the power balance. This can be furtherattributed to the fact that the main candidates chosenfor the top four leadership positions in Vietnamcome from academia andwith advanced academic degrees.
The socio-economic growth in Vietnam has also had a net positive impact on India, creating new opportunities for trade, investment, and knowledge sharing.India and Vietnam have enjoyed warm and close ties for decades, rooted in their shared struggle for independence.In 2016, both countries elevated their relations to a “Comprehensive Strategic Partnership,” reflecting the breadth and depth of their cooperationin various fields.The current developments of India-Vietnam relations are guided by a “Joint Vision for Peace, Prosperity and People”and a Plan of Action for the period of 2021-2023 agreed and signed by the top political leadership of both nations in 2020. Vietnam has a free trade agreement with India through India-ASEAN Comprehensive Economic Cooperation Agreement in trade ofgoods, services and investment since November 2014.In the last three years, India and Vietnam have signed multiple intergovernmental agreements and treaties in the areas of trade and commerce, science and technology, exchange of education, culture and art, and development of partnership in critical sectors and industries.The most recent of thesebeing the Memorandum of Understanding (MoU) on Mutual Logistics Support and an MoU between the Indian Computer Emergency Response Team (CERT-In) of Ministry of Electronics and Information Technology (India) and the Vietnam Cyber Security Emergency Response team/Coordination Centre (VNCERT/CC) under Authority of Information (Vietnam) in the area of cyber security.India and Vietnam also work closely on countering terrorism, terror financing, trafficking of illegal arms, smuggling and many other maritime security related issues amid China’s aggressive stance in the Indo Pacific region. To promote people-to-people connect and cultural ties, the 3rd edition of the international North East India Festival was held in Ho Chi Minh City in October 2023.
The depth of the Indo-Vietnam relationship is further evident from the rapport shared by the political leadership of both countries at both official and personal level and the frequent high-level official visits undertaken by the dignitaries at major events from both countries. For example, the External Affairs Minister of India Dr S Jaishankar made an official visit to Vietnam from 15th-18th October 2023 at the invitation of Foreign Minister of the Socialist Republic of Vietnam Bui Thanh Son, to co-chair the 18th India-Vietnam Joint Commission Meeting on economic, trade, scientific and technological cooperation and reviewed progress on India-Vietnam Comprehensive Strategic Partnership including bilateral cooperation in various fields. Similarly, the Deputy Prime Minister of Vietnam Tran Luu Quang will be attending the 10th Vibrant Gujarat Summit to be held from 10th-12th January 2024 at the invitation from the Chief Minister of Gujarat Bhupendrabhai Patel.Such visits encourage bilateral investments, promote trade and boost confidence among business communities, and increase better connect among the general citizenry. It must be noted that as per statistics of the Indian Government, India has almost USD 1.9 billion invested in Vietnam, including investments through third party companies, while Vietnam has a total estimated investment of USD 28.55 million in India. Several Indian conglomerates including Adani Group, Tata Power, Tata Coffee, Sun Pharma, Mahindra & Mahindra, Tech Mahindra, HDC Technologies, and Apollo Tyres have set up shop in Vietnam in the recent past. In December 2023, Adani Group Chairman Gautam Adani during his meeting with the Prime Minister of Vietnam Pham Minh Chinh, announced his detailed plan of investing USD 10 billion in Vietnam over the next 10 years in major areas such as seaports, logistics, infrastructure, and renewable energy. Similarly, Vietnamese electric vehicle (EV) manufacturer VinFast has recently signed an agreement with the State Government of Tamil Nadu to set up an EV manufacturing plant in the State. It is to be also noted thatIndo-Vietnam bilateral trade grew by almost 4% between April 2022 and March 2023 (FY 2022-23),as compared to FY 2021-22, and reached USD 14.70 billion.
With a thriving economy and strategic location, Vietnam has created a favourable investment ecosystem, complimenting it with infrastructure development, technological advancement, skilled and educated workforce, ethical labour laws and most importantly a stable political climate. These provide Indian conglomerates an opportunity to capitalise on Vietnam’s industrial capability. Focussing on niche markets, promoting brand awareness, and offering quality innovations to Vietnamese consumers, can further help Indian firms in breaking the Chinese competition in certain sectors, whichhas the natural advantage of geographical proximity to Vietnam.To achieve this, Indian firms may also partner with established Vietnamese firms to understand the consumer trends, reduce compliance challenges and better engage with local administrations. Indian firms may also benefit if chambers of commerce and the Indian foreign mission in Vietnam undertake investment mapping for Indian companies in Vietnamand promote higher interactions between business delegates from both countries. These apart, both Governments should further focus on boosting bilateral trade and investments, and building more people-to-people connect. One of the major reasons for the rise in trade and investment betweenthe two countries is air connectivity between Vietnam and the North Eastern Region (NER) in India, where Guwahati airport being a prominent point of connectivity. To further promote bilateral investment and trade, both countries should work towards developing better logistical capabilities. Air cargo facilities and direct air connectivity with major industrial clusters should be developed, and major cargo ports in Vietnam and India should beconnected through direct shipping services and seaways. India should focus on extending the India-Myanmar-Thailand (IMT) Highway and multimodal transport through Myanmar up to Vietnam. India may look to partner with Vietnam on emerging fintech and payment solution such as UPI to enable transparent and faster cross border transactions. Both countries should also focus on an exclusive Bilateral Investment Treaty to circumvent the challenges and delay to the fruition of the multilateral FTA with ASEAN.
With continued focus on political dialogue, economic cooperation, and cultural exchange the India-Vietnam partnership holds immense potential to thrive in the Indo-Pacific region. At a timewhen global power shifts are taking place from the West to the East, Asia’s rise as economic power bloc seems inevitable. Like-minded nations like India and Vietnam must collaborate to propel Asia to a superpower status, to counter China’s monopoly in the region, through trade and diplomacy.By embracing cooperation, both economies can mutually flourish.
Views are personal. The author is a Co-founder and Partner at Policy Consensus Centre (PCC).
