Vietnam, Australia look to harvest CPTPP fruit

Julianne Cowley, Australian Consul-General in Ho Chi Minh City

What do you think are the highlights of Vietnam-Australia bilateral cooperation over the last 45 years and in the one plus year of their strategic partnership?

Since the establishment of diplomatic relations in February 1973, Australia and Vietnam have developed strong links that continue to grow via personal ties through business, education, tourism and volunteering.

The signing of the Strategic Partnership Agreement in March 2018 recognized the strength of the Australia-Vietnam bilateral relationship, and has served as a platform for the further deepening of our two-way ties.

Vietnam is one of Australia’s fastest growing trade partners, with two-way trade growing by an average of 12 percent per year. Much of this trade is in resource inputs into Vietnam’s manufacturing and agriculture sectors - the majority of Vietnamese banh mi and wheat noodles are made with Australian wheat, and Vietnam is the second largest market globally for Australian live cattle.

Australia is a top 20 export destination for Vietnam, and this relationship is fast growing: last year saw 13 percent growth in Vietnamese exports to Australia, driven by strong demand for telecommunications equipment and parts. Following Australia’s funding of the My Thuan Bridge in 2000, Australia committed $160 million to the design and construction of the Cao Lanh Bridge in Dong Thap Province. This bridge has linked five million people in the Mekong Delta to Ho Chi Minh City and the region, increasing economic opportunities for citizens of the Mekong Delta region.

As signatories of the CPTPP, what do you think are the new opportunities that will emerge for both countries?

The CPTPP will boost bilateral trade and investment between Australia and Vietnam. It will build on the highly complementary nature of our two economies and create many new opportunities for both Australian and Vietnamese businesses and investors.

The CPTPP brings direct benefits to Vietnam by improving market access for goods and services across our region. Within the next few years, nearly all Vietnamese goods will be able to be exported to Australia with a tariff of zero percent. The deal also makes it easier for Vietnamese companies to invest in member economies, including the Australian market where they can build on the existing successful Vietnamese investments in Australia’s agriculture, real estate and tourism sectors.

The CPTPP also allows Vietnamese companies to integrate better into regional and global value chains, including local SMEs in sectors that play to Vietnam’s economic strengths such as agriculture, manufacturing and textiles.

The CPTPP also accelerates a series of important domestic economic reforms in Vietnam. These reforms will improve the competitiveness and productivity of Vietnam’s economy and make Vietnam a more business-friendly market for both domestic and foreign companies alike.

The benefits of the CPTPP will only be fully realized if members implement fully their commitments. Australia recognizes Vietnam will need to undertake numerous and sometimes difficult reforms to implement the CPTPP, and we stand ready to help Vietnam become CPTPP compliant and to continue our proud history of supporting Vietnam’s economic reform agenda.

Through our partnership with the World Bank, Australia has already supported a legal-gap analysis comparing Vietnam’s current domestic laws with its CPTPP obligations. We are developing an online FTA portal to assist Vietnamese businesses maximize the opportunities created by Vietnam’s trade agreements.

Our Aus4Reform program assists CPTPP outreach by the Vietnam Chamber of Commerce and Industry to the Vietnamese private sector. It also helps the Vietnam Competition and Consumer Protection Authority implement Vietnam’s new competition law. The opportunities for Vietnam under the CPTPP are significant, and Australia is here to help ensure Vietnam realizes these opportunities.

Bilateral talk between Australian Minister for Foreign Affairs and Minister for Women, Senator the Hon Marise Payne and Vietnamese Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh in Hanoi on June 12, 2019

Can you identify some of the sectors in Vietnam that you think carries great potential for Australian businesses and investors in the coming years?

Vietnam’s modernizing and growing economy offers many opportunities for Australian businesses and investors.

Energy, for example, is one of the key sectors driving our strong bilateral trade in goods. Growth in Vietnam’s demand for coal has been so rapid that it has quickly turned from being a net coal exporter to being a net coal importer. As the second largest thermal coal exporter in the world, Australian coal is helping to meet this demand, with 4.5 million tonnes exported to Vietnam in the first 10 months of 2018 - a 48 percent growth in volume compared to the same period in 2017. Australia’s LNG providers also stand ready to assist Vietnam diversify its energy supply in the years to come.

Other Australian export goods in the resources (iron ore), manufacturing (aluminium) and agriculture (wheat, live cattle, barley and cotton) sectors are helping fuel and feed Vietnam’s economic development, and in turn, helping to create jobs and trade opportunities in Australia. Similarly, our education services providers are benefitting from Vietnam’s growing demand for high-quality tertiary and vocational training.

Australian firms are also investing more in Vietnam, with Australian investment exceeding AUD2.3 billion in 2017. Australian investment is quality investment, and we have a number of Australian companies with a long-standing presence in Vietnam. For example, SunRice has sourced rice from Vietnam for more than 10 years and has invested in research to develop higher value rice varieties. This means better returns for Vietnamese farmers. BlueScope Steel, which operates an AUD105 million world-class flat steel metallic coating and painting facility in Ba Ria-Vung Tau Province, has invested heavily in workforce training and development to improve safety and productivity. And RMIT Vietnam has produced more than 11,000 job-ready graduates equipped with the skills required to help Vietnam’s economy grow and diversify.

We have a rapidly growing economic partnership, and our economies are highly complementary. The challenge is now to take our economic partnership to a new level.

What is the latest figure you have on trade value between the two countries? Is there any Vietnamese fruit in the pipeline to make its entry into Australia after lychees, mangoes and dragon fruit?

Our bilateral trade in goods and services has almost doubled from AUD8.2 billion in 2008 to AUD14.6 billion in 2018. Vietnam is now Australia’s fifteenth largest trading partner and Australia is Vietnam’s thirteenth largest merchandise trading partner.

We are both proud agricultural countries and our trade in agricultural products is the backbone of our trade relationship. We are very pleased that Vietnam can now export its delicious lychees, mangoes and dragon fruits to Australia. We anticipate the next fruit for export to Australia from Vietnam will be longan and are hopeful trade will commence in the coming Vietnamese longan season.

What is the current status of education cooperation between the two countries?

Australia has been supporting Vietnam’s human development with Australia Awards Scholarships, Australia Awards short courses and other informal learning opportunities, with an increased focus on targeting skills development and workplace productivity in priority sectors.

Australia is a leading educational destination for Vietnamese students, with around 25,000 Vietnamese students in Australia in 2018.

From July 2017 to June 2018, Aus4Skills (Australia’s human resource development program in Vietnam) delivered 13 Australia Awards short courses and 12 informal training opportunities to 645 Vietnamese participants.

We offered 50 Australia Awards Scholarships for Masters level study commencing in 2019. Since 2007, Australia has awarded over 2,000 scholarship to Vietnamese students for tertiary study in Australia.