By Perth USAsia Centre on 13 November 2020
South-East Asia | International Relations
Ahead of the signing of the RCEP in Vietnam and with the 2020 WA-ASEAN Trade and Investment Dialogue
following, Cat Thao Nguyen discussed Vietnam’s growing leadership role in the region.
Vietnam has assumed the chair of the Association of Southeast Asian Nations last November for 2020. Experts have suggested this is the most challenging year for Vietnam to take the reins. What do you think this says about Vietnam’s desire to make their mark within ASEAN.
2020 is an extraordinary year that would make the role of ASEAN Chair challenging for whoever was in this seat. However, Vietnam has demonstrated its willingness to step up as a leader within the region. Vietnam has handled COVID exceptionally well with very little time in lockdown, and comparatively few infections and deaths. It is poised to grow its economy while most others within ASEAN and the rest of the world are receding. It is an opportunity for Vietnam to advance its development agenda including capitalising on its growing middle class to fuel growth, tackling Industry 4.0 challenges, and expanding green energy infrastructure, to name a few. Its diplomacy internationally as a provider of protective equipment for example, during this epidemic, in addition to its handling of COVID, has also helped to cast a new light of Vietnam as a leader within the region.
Bringing all parties to the RCEP table is considered the most significant development in the global trade system since the establishment of the WTO in 1994. What sort of role has Vietnam played in progressing the hologram signing of the RCEP due next month?
Hosting negotiations for RCEP in 2016 and more recently in Danang 2019, Vietnam has been very active in seeking the formal signing of RCEP to enhance free trade within the region. This included various meetings with heads of state of signatory countries, including Australia, with Prime Minister Scott Morrison meeting with Vietnamese Prime Minister Nguyen Xuan Phuc in August 2019.
Quickly addressing the domestic outbreak of COVID-19, Vietnam gained global recognition for its efforts in seeking to aid other countries around the globe, particularly in the context of heightened geopolitical uncertainty and quality issues associated with other regional exporters of medical products. Vietnam has continued to expand on its growing reputation as a responsible regional player by leading the conclusion of negotiations for RCEP towards opening markets, joining value chains and boosting trade between member states. In effect, Hanoi has sought to push back against global and regional notions of economic isolationism and protectionism, encouraging countries to place faith in free trade, towards deepening interconnectivity and synchronizing integration and development in the Asia-Pacific.
Vietnam has also sought to protect the interests of ASEAN members. According to Minister of Industry and Trade Tran Tuan Anh:
“as an ASEAN member, Vietnam has closely coordinated with other countries in the bloc to maintain the leading role of ASEAN and promote negotiations while protecting the maximum interests of ASEAN countries, including Vietnam.”
Such leadership has sought to protect the interests of ASEAN members who have disparate socioeconomic status, and thus differing regulatory status on some issues, by working towards a high quality and balanced agreement which offers flexible solutions to handle problems between countries while respecting their national interests.
Within the broader spectrum of the agreement, Vietnam has also sought to navigate the economic complexities of negotiating FTAs between countries that do not currently have bilateral FTAs such as India with China and Japan with the Republic of Korea. Such complexity has taken time, requiring leadership cognisant of the challenges associated with under-regulation in some markets and advanced regulation in others.
Vietnam has earnt respect from much larger countries for its response to COVID, having dealt with two waves of the pandemic, and flattened the curve quickly. How do you think this will play when it comes to Vietnam’s economic recovery? What sorts of initiatives has Vietnam put in place to bolster their economy – and have they been domestic in nature?
Vietnam reacted very early to COVID. With a generally compliant population that is also quite collectivist, Vietnam’s citizens quickly realised their individual responsibility in contract tracing and adhering to government rules. Expansive and frequent government communication through many channels was also very effective in addition to quick utilisation of technology in contract tracing. Domestic consumption has been a key driver to buoy the Vietnamese economy during the pandemic with existing e-commerce infrastructure assisting in ensuring retail sales.
Whilst the supply chain for exports were significantly disrupted, sectors such as prawns saw exports become more competitive as Vietnam’s competitors struggled to handle the pandemic and remain closed. Corporate income tax cuts for small and medium enterprises will definitely help alleviate some pain. However, the impact of closed borders however and disruptions in manufacturing, has had extreme impact on the informal economy and low-income workers as well as certain sectors such as tourism.
The government announced support package initiatives for such individuals, access and bureaucracy has limited the even, rapid and fair distribution of such funds. Ho Chi Minh City, responsible for around 25% of the nation’s gross domestic product, was in lockdown for only 22 days. Now, streets are bustling, People are trading, dining and working out. At a recent Australian Chamber of Commerce BBQ at the rooftop of the Intercontinental Hotel, kids swam in the pool while parents snaked on a sausage sandwich. No one would think, by looking at this scene, there is a pandemic going on.
Do you think more can be done to strengthen ties between Australia and Vietnam?
Yes there are considerable opportunities for bilateral collaboration. There are challenges ahead for RCEP e.g. how does Vietnam set up an innovation agenda and still remain competitive in the market? We would welcome further consultations like the recent round table with Department Foreign Affairs and Trade andAustralia-Vietnam Young Leadership Dialogue (AVYLD) on the Vietnam Australia Enhanced Economic Strategy. There is considerable work to be done in raising both awareness and knowledge of the business landscape for potential investors and businesses for two-way engagement.
There are clear challenges that face both Australia and Vietnam – climate issues – severe drought, the cost of energy for example. There are also sectors that are very important and resonate with both countries that Australia and Vietnam can jointly co-create solutions in. These sectors include agriculture, finance, tourism, education, logistics.
At a recent conference, I saw incredible innovation in aquaculture using AI that empowers farmers to cut out brokers, increase margin but also reduce environmental devastation. It was stated that all this was done with Vietnamese engineers. An Australian alumnus, Dr. Nguyen Huu Le, Chairman of TMA Solutions said that after 20 years working in technology in Vietnam, Vietnam has all the know-how and the resources to innovate much needed solutions to take it to a developed nation. The question is, how can Australia be part of Vietnam’s journey? How are we positioned to do this? Research partnerships are crucial and are underdeveloped and underutilised.
This is also not just research with universities but also the private sector. We also must not forget the significance of soft diplomacy and people-to-people links to drive long term gains. Other countries have done this well – Japan, Korea. Traditionally relying on giving away scholarships is a dated agenda.
Banking on privately funded international students has also not paid off when they have been commoditised. Our prosperity and mutual agenda for our peoples and our region, must be holistically derived so that we are in synergy with our neighbours. If we think simply in terms of extraction, we have no chance.