Great expectations for Vietnam-US trade and investment

The potential for trade and investment cooperation between Vietnam and the US is still very large, especially when the TPP Agreement comes into effect...

After more than 20 years since the official normalization of relations, from the economic, trade and investment perspective, Vietnam and the US have made important marks and developments. To date, the US has become Vietnam's second largest partner worldwide.

Vietnam has also risen to 19th place among the top countries with trade relations with the US compared to 26th in 2014. The potential for trade and investment cooperation between the two sides is still very large, especially when the Trans-Pacific Partnership Agreement (TPP) comes into effect, which is expected to raise economic cooperation between the two countries to a new level.

Leather and footwear are a strong export product of Vietnam to the US. (Illustration photo: VNA)

Footwear is one of Vietnam's key export industries to the US market. In the first quarter of this year alone, export growth to this market reached nearly 12%, equivalent to 918 million USD, higher than the EU market, which reached nearly 900 million USD. Thus, the US has surpassed the EU market, which has long been considered the key export market of Vietnam's footwear industry.

Ms. Phan Thi Thanh Xuan, General Secretary of the Vietnam Leather, Footwear and Handbag Association, said that the opportunity for businesses to expand exports to the US market is still very large: “When the Trans-Pacific Partnership Agreement (TPP) comes into effect, the tax rates will be reduced to 0%, the opportunity to open the market will be very large, the export growth of the industry will be very good. In 2015, the US market grew by 50%, accounting for the largest market share in Vietnam's export turnover. Every year, the EU market is at the top, but this year the US is at the top. It can be seen that the level of interest and opportunities to enter the US market are very large.”

According to statistics from the General Department of Customs, in the past four months alone, export turnover to the US reached 11.45 billion USD. Meanwhile, in the opposite direction, Vietnam imported only 2.47 billion USD from the US, causing the trade balance to tilt in Vietnam's favor with a surplus of nearly 9 billion USD. Last year, bilateral trade turnover between Vietnam and the US achieved the strongest growth rate among Vietnam's major trading partners.

This spectacular “acceleration” has made the US the second largest partner of Vietnam in the world. Vietnam has also risen to 19th place among the leading countries having trade relations with the US. To achieve the results as today is a long journey of cooperation efforts, one of the milestones of important influence is the two countries officially signing the Bilateral Trade Agreement (BTA) in 2000. After 15 years, trade between Vietnam and the US has grown dramatically from 1.5 billion USD to over 41.3 billion USD at the end of last year.

Mr. Pham Tat Thang, Institute of Trade Research (Ministry of Industry and Trade) commented that with the increasing export turnover and added value to the US market, in the future, it will still be one of the important export markets of Vietnam. This is a large market, importing up to 2,000 billion USD annually, while the US's import turnover from Vietnam accounts for only 1.7% of the total import turnover of this country, showing that there is still a lot of room for improving trade cooperation between the two countries, especially when the TPP Agreement comes into effect.

“When the TPP Agreement comes into effect, Vietnam can benefit greatly from textiles, footwear, seafood, etc. From the US market, we have the ability to import source technology, invest in high technology, processing technology, etc. Export turnover to the US accounts for 20% of Vietnam's total export turnover. For us, the proportion of exports to the US is relatively large, but compared to the US import market, it is still small, showing that there is still a lot of room. If we know how to exploit it, the turnover will increase even higher,” Mr. Thang emphasized.

Besides trade, investment cooperation between Vietnam and the US has also made remarkable progress. By the end of 2015, US investors had poured over 11.3 billion USD into Vietnam, with 781 projects, ranking 8th out of 110 countries and territories investing in Vietnam. Since 2006, we have witnessed large US projects in Vietnam, including Intel (US) investing 1 billion USD in a chipset factory in Ho Chi Minh City High-Tech Park.

In 2014, Microsoft investors moved factories and smartphone production lines from China, Mexico, Hungary to Bac Ninh - Vietnam and decided to increase investment capital to 1.5 billion USD.... Recently, Jabil company specializing in manufacturing electronic devices with a factory located in Ho Chi Minh City High-Tech Park also built a plan to increase capital from 200 million USD to 1 billion USD to expand production scale... In addition, many investment projects in the fields of education, health, food, and agriculture were also implemented.

According to a survey report on the performance of US businesses in ASEAN countries published by the American Chamber of Commerce in Singapore, Vietnam is currently the second most attractive market for US investors in ASEAN, after Indonesia. US investors are looking to increase their investment and aim to become the number one investor in Vietnam.

Professor, Dr. Nguyen Mai, Chairman of the Foreign Investment Association, said that there is sufficient basis and premise to put faith in this goal: “American investors need to recognize efforts to improve the business and investment environment in Vietnam. At the same time, Vietnam also needs to fundamentally change the way it approaches US investment capital. We have had good relations from high-level visits by senior Vietnamese leaders. And the US President will soon officially visit Vietnam. I think the premises to attract US investment capital are sufficient. We need to carefully study the requirements of US investors and solve the problems that US businesses are concerned about. At that time, the goal of the US becoming the number 1 investor in Vietnam will come true.”

If the Vietnam-US Bilateral Trade Agreement opens a new page in the cooperative relationship between the two countries, the Trans-Pacific Partnership (TPP) Agreement could be a “boost” that brings many great opportunities for trade and investment between the two countries. Along with that, high-level visits by leaders of both sides not only promote and deepen the comprehensive partnership between the two sides but also raise many expectations to further enhance economic relations between the two countries in the coming time.

According to VOV