Vietnam Briefing examines the Vietnam-US bilateral relationship, together with commerce ties, imports, exports, and as overseas coverage. We additionally have a look at why this relationship is simply anticipated to develop presenting alternatives for US companies within the Southeast Asian nation.
Vietnam and US’ shut ties and relationship have additional given impetus to robust financial progress and increasing commerce ties.
Bilateral commerce between each international locations has been on the excessive, with commerce hitting US$111.5 billion in 2021 as per Vietnam Customs. As well as, Vietnam’s exports to the US rose 25 % to succeed in US$96 billion in 2020 accounting for 28.6 % of the nation’s complete exports.
As Vietnam additional opens up its financial system, the American Chamber of Commerce (AmCham) notes that there are important alternatives for US companies in Vietnam. Regardless of the pandemic, the US was Vietnam’s largest purchaser of Vietnamese merchandise.
Vietnamese Deputy Ministry of Business and Commerce, Do Thang Hai additionally reiterated that the US is a vital associate of Vietnam, citing the rise in two-way commerce between each international locations. He additionally said that the pandemic has given alternatives for each Vietnamese and American corporations to coordinate and develop new provide chains and set up provide methods to make sure sustainability and continuity.
On March 8, on the Vietnam-US Enterprise Summit in Hanoi, Vietnam’s Prime Minister Pham Minh Chinh referred to as on companies of each international locations to strengthen partnerships and broaden on bilateral ties. US Particular Presidential Envoy for Local weather John Kerry additionally delivered a speech on the summit.
US companies have prioritized and recognized healthcare, digital commerce, power, and local weather change as areas of cooperation with Vietnam and have plans to convey US medical delegations for web site visits in addition to discover prospects within the power sector.
Vietnam – US commerce
It’s no shock then that enterprise ties and commerce between each international locations have been rising.
Vietnam is the 9th largest commerce associate of the US, up 5 locations from 2020. As of October 2021, the US ranked 11th amongst 138 international locations investing in Vietnam with 1,134 tasks value US$9.72 billion.
Vietnam exports to the US included electrical equipment, furnishings and bedding, knit attire, equipment, and footwear.
US exports to Vietnam in 2020 included electrical equipment, cotton, plastics, meals waste, animal feed, and equipment.
A number of US companies have invested into Vietnam, displaying their dedication to the nation. For instance, US-based Cargill operates 12 crops using round 1,600 workers throughout the nation. Equally, Apple, Qualcomm, Nike Morgan Stanley, ACORN Worldwide, Basic Dynamics, Hue Capital LLC, Intel, Lockheed Martin Worldwide, Google, and USTelecom preserve operations within the nation.
US-based Common Alloy Company (UAC), which manufactures electronics gadgets for airplanes constructed by Boeing and Airbus, has made an funding of US$170 million on the Da Nang Hello-Tech Park. The corporate plans additional enlargement within the coming years.
It also needs to be famous that a number of investments by US firms come from Singapore and Hong Kong. Examples embody Intel and P&G. Singapore leads and represents the lion’s share of FDI into Vietnam, whereas Hong Kong was fifth on the checklist.
In 2021, the US imported smartphones and equipment from Vietnam value round US$96.2 billion rising by 10 % 12 months on 12 months. The US was additionally Vietnam’s largest importer of computer systems and digital merchandise with a price of US$12.7 billion. Aside from this, the US imported equipment and gear and in addition took the lead in attire imports from Vietnam at US$16.1 billion contributing to Vietnam’s GDP.
Whereas Vietnam suffered a tough 2021, as a result of strict pandemic restrictions, the US donated a number of million COVID-19 vaccines. In 2020, when the US was in want of medical gear, Vietnam despatched PPEs, facemasks, and medical gear when the US confronted a critical shortfall.
Vietnam is ready to open for worldwide tourism on March 15. Whereas the federal government is but to launch particular particulars, it hopes to revive visa insurance policies as earlier than the pandemic. Lately, Vietnam Airways debuted its first business direct flight connecting San Francisco and Ho Chi Minh Metropolis. This direct common connection will additional assist folks to folks ties, enterprise, and tourism.
The place does Vietnam slot in US overseas coverage?
US overseas coverage below the Barack Obama administration targeted on establishing the Trans-Pacific Partnership (TPP), which was poised to turn out to be the world’s largest free commerce settlement (FTA) and canopy 40 % of the worldwide financial system. Vietnam was supposed to learn immensely with exports poised to develop by 15 % below the TPP. As a substitute on March 8, 2019, the remaining international locations signed the Complete and Progressive Settlement for Trans-Pacific Partnership (CPTPP) after the US pulled out
A number of American Chambers of Commerce organizations from Singapore, New Zealand, Malaysia, and Vietnam have urged the Biden administration to start the method of becoming a member of the CPTPP, arguing that the US enterprise group is at an obstacle for the reason that US pulled out.
They argue that the CPTPP is likely one of the highest-standard multilateral agreements in existence — attributed to the US’ function as a lead negotiator throughout its preliminary draft. Certainly, on the occasion in Hanoi, AmCham hoped that the US would be a part of the CPTPP to additional enterprise alternatives.
Whereas US President Biden has to this point, proven a lukewarm response to commerce and free commerce agreements with Asia, Vietnam’s reference within the Biden administration’s Interim Nationwide Safety Strategic Steering exhibits that Vietnam is an all-important associate of the US. Each international locations’ strategic relationship stays on an upward trajectory. It’s on this hope that analysts count on a US-Vietnam FTA within the close to future.
Underneath the Biden administration, US Vice President Kamala Harris initiated a go to to Hanoi, the primary by a US vp for the reason that finish of the battle. The intention of the journey was to construct relations and improve their bilateral relationship to a strategic partnership. Harris and Vietnamese leaders reaffirmed the power of the US-Vietnam complete partnership by the opening of a Peace Corps workplace in Hanoi in addition to the development of a brand new US embassy in Hanoi.
2022 and past
The US is more likely to proceed former President Trump’s confrontational method in direction of China to counter its international financial affect.
It’s extensively agreed that Vietnam has economically benefitted from the US-China commerce battle and that is anticipated to proceed to thrive below the present US commerce coverage. With many of the US tariffs on Chinese language merchandise remaining in place, overseas buyers shall be compelled to search for different places to relocate their manufacturing manufacturing – with Vietnam rising as an very best China plus one vacation spot in recent times.
US companies have additionally famous that Vietnam is a vital hyperlink in international provide chains and that is function is simply anticipated to strengthen.
This manufacturing shift, nevertheless, just isn’t solely led to by the commerce battle however contains components corresponding to geopolitics, rising labor prices in China in addition to the necessity for diversifying enter sources and provide chains amid the pandemic.
In 2020, the US Division of Treasury labeled Vietnam a foreign money manipulator, this cost was later dropped stating that no countervailing duties could be imposed on Vietnam. Nonetheless, the US is more likely to control Vietnam together with its widening commerce deficit.
As well as, a lot of Vietnam’s army stays Russian-built. Given the present geopolitical state of affairs and strict sanctions on Russia, it may derail Vietnam commerce and warrant sanctions. Already some Vietnamese exports have been hampered as a result of sanctions.
Nonetheless, the US-Vietnam relationship is a results of efforts for cooperation and growth over the previous a long time of each international locations. Now that extra bilateral commerce alternatives are introduced for each international locations, the US-Vietnam relationship is anticipated to stay robust.
Earlier than sizing up Vietnam as a possible vacation spot for relocation, US buyers should do their due diligence and contemplate a number of components, corresponding to figuring out a location, uncooked supplies, sourcing companions, and provide chain logistics.
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists overseas buyers all through Asia from places of work internationally, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers could write to email@example.com for extra assist on doing enterprise in Vietnam.
We additionally preserve places of work or have alliance companions helping overseas buyers in Indonesia, India, Singapore, The Philippines, Malaysia, Thailand, Italy, Germany, and the United States, along with practices in Bangladesh and Russia.