Following the signing of the landmark Trans-Pacific Partnership (TPP) early this year, President Barack Obama’s visit to Vietnam this week is expected to bolster US investors’ confidence in the prospects of bilateral relations. VIR talks with some corporate representatives about their views on those moves.
Christian Kamm – President of Kamm Investment Inc
The visit by US President Barack Obama to Vietnam in May 2016 loosely coincides with the ceremonial completion of negotiations for the Trans-Pacific Partnership, the landmark trade agreement which will greatly influence the political, economic, and social landscapes of participating countries for decades to come.
Investors should consider trade agreements like the TPP as roadmaps leading to investment opportunities. Trade agreements open doors for foreign investors, often providing necessary legal frameworks for direct and indirect investment. Safeguards put in place to ensure the protection of investor rights in member countries are also helpful in attracting investment. Member countries are generally net beneficiaries of investment flows and are able grow in a sustainable fashion, although some may benefit more than others. Both Vietnam and the US can celebrate their successful endeavours to move forward economically and socially.
Virginia Foote – President of the International Center and CEO of Bay Global Strategies
Vietnam is important to US companies, and the TPP’s strict standards increase that interest – but as we know, the competition is stiff. We cannot just compare Vietnam to its past and pat ourselves on the back for our accomplishments, we must honestly compare Vietnam to the world we live in today.
The challenge is to prevent US companies from falling into the 3 L’s – we don’t want them to land, look, and leave. We need to look at what has led to success in other countries.
What is holding Vietnam back now? What is the role of the government, state-owned enterprises, the private sector, and foreign direct investment, and what are the partnerships among them?
FTAs operate on a parallel track – WTO tariffs will co-exist alongside the TPP, meaning companies can choose to trade through the TPP with all of its benefits, or to stay with the WTO. The challenge will be meeting the new, higher standards for business practices.
There is always a tendency to avoid difficult issues and pick the cheapest way forward. Short term gain is just that. But US companies are very interested in participating in long-term investments in agriculture, infrastructure, education, healthcare, tourism, energy, manufacturing, and financial services – I can’t think of a sector here that at least one US company is not interested in.
With the TPP, the Europe-Vietnam FTA, the ASEAN Economic Community, and the other FTAs, Vietnam has a golden opportunity that many other countries do not have. I am very optimistic that the future is promising and confident about where we are going together. We are all delighted our president is coming here for this historic visit.
Vu Tien Loc – Chairman of the Vietnam Chamber of Commerce and Industry (VCCI)
Domestic enterprises are paying careful attention to the high-level meeting between Vietnamese and American leaders.
The official visit to the US by Party General Secretary Nguyen Phu Trong in July last year sent an important message about Vietnam’s modern economic reforms, which are being implemented in line with the highest global economic standards. Vietnam’s willingness to join the TPP represents a serious commitment by the government to build a healthy investment climate for foreign investors.
President Barack Obama’s visit to Vietnam in May, partly aimed to promote the TPP, is expected to boost confidence among foreign investors doing business in the country. It also coincides with the advent of Vietnam’s new government, which is symbolic of a change towards even more business-friendly policies expected to drive Vietnam forward in the years to come.
Following the TPP, Vietnam will see an increased flow of foreign direct investment capital, especially from US investors. I believe Obama’s trip to Vietnam will also boost the domestic business community’s confidence in the increasing strength of the economic ties between the two countries in the future.
Jeff McLean – Managing director, UPS Vietnam
Vietnam can benefit greatly from the TPP, and it is not hard to see why. The country has already emerged as a hi-tech manufacturing powerhouse in Asia, and the removal of trade barriers is likely to open up more opportunities.
But Vietnam’s exports are dominated by relatively low-value-added manufactured goods, taking a similar trajectory to China’s industrial revolution. Having built its current economic foundation on low-cost manufacturing, it is now time for Vietnam to move up the manufacturing value chain to avoid the middle-income trap.
One way Vietnamese businesses can build up their capabilities is to work with American businesses and be involved from the product designing process all the way through to distribution and marketing.
Imagine if a Vietnamese company collaborates real-time with a Silicon Valley tech company on production of a new chipset.
They would get to learn about pitfalls in product design, how to source materials, and what it takes to market a product.
The Vietnam-US relationship has become more significant over the years. Moving forward, strong private sector partnerships and government support will be crucial to ensuring this prosperity is continued on into the future.