Trade and investment between Singapore and Vietnam have increased significantly since the two countries’ diplomatic ties were established in 1973, and this growth has been a key contributor to the development of strong bilateral relationships. Additionally, several measures have been implemented since the introduction of the Connectivity Framework Agreement in 2006 to create a favorable climate for Singaporean businesses investing in Vietnam. Examples of the strong economic collaboration between the two nations include the seven Vietnam-Singapore Industrial Parks in Binh Duong, Hai Phong, Bac Ninh, Quang Ngai, Hai Duong, and Nghe An.
Trade and investment
FDI
One of the top places for Singaporean businesses to invest in Vietnam. There were 1,786 investment projects up through 2016, totaling US$37.9 billion in registered investments. With 9.9 percent, or US$2.41 billion, of all FDI into Vietnam in 2016, Singapore ranked third. The most alluring industries in terms of newly registered capital were construction and real estate. Manufacturing, particularly in the textile and apparel industries, was the dominant industry in terms of value, aside from real estate and construction.
The seven Vietnam-Singapore Industrial Parks have drawn over US$9 billion in investments over the years, and 600 enterprises have created jobs for more than 170,000 people, demonstrating the success of the industrial parks that were jointly established. Given their experience and ability in operating such parks, the industrial parks are suitable landing areas for Singaporean enterprises wishing to establish themselves in Vietnam. Currently, these parks are home to Singaporean businesses involved in the production of food, chemicals, and precision engineering.
Singaporean foreign direct investments (FDIs) have found Vietnam to be a desirable location due to its strategic position, affordable labor, growing middle class, and incentives for international companies.
Trade
In 2016, the two neighbors’ bilateral commerce amounted to US$19.8 billion. Vietnam and Singapore are each other’s sixth and twelve major trading partners, respectively. items made of iron and steel, grease, leather, tobacco, glass, seafood, and vegetable items have all seen the greatest development in commerce.
Opportunities
The expanding Vietnamese economy presents several prospects for Singaporean businesses. Manufacturing, consumer services, hotels, food processing, infrastructure, real estate, and high-tech manufacturing are among the major interest areas.
Manufacturing
Singapore enterprises can set up manufacturing operations in Vietnam and offer supporting services like automation and logistics to businesses setting up such operations there, since Vietnam is rising as a manufacturing center and a less expensive alternative to China. Singapore enterprises may help in these areas as well. Foreign industrial investments will also increase demand for utilities and transportation needs.
Goods & Services for Consumers
Urbanization, rising wages, and favorable demographics all create enormous prospects for the sale of products and services to consumers. Particularly in bigger cities, a growing middle class may generate enormous demand for food and drink, entertainment, and lifestyle goods and services. Vietnam’s total consumer spending surged by more than 80% from US$80 billion in 2010 to an expected US$146 billion in 2016. While spending by urban residents was larger than rural residents’ spending and accounted for 42% of the nation’s consumer expenditure over the same time, rural consumer expenditure increased by roughly 94 percent, more than the 69 percent rise in urban consumer expenditure.
Agriculture
Singapore imports over 90% of its food supplies from its neighbors due to its small agricultural production. Singapore has become a specialist in storage, shipping, and packaging as a result of this. However, while being a significant economic driver in Vietnam, the country’s agriculture industry is seen to produce goods of poorer value and quality. Singaporean businesses may provide their experience in the use of cutting-edge technologies and methods for value-added processing. Businesses can re-export the food goods from Singapore after value-added processing in addition to investing in Vietnam.
High-tech industries
The export of high-tech goods has significantly expanded during the past several years. Phones, electronics, computers, and componentry made up 72% of all Vietnam’s exports in 2016. Foxconn, Intel, Panasonic, Samsung, and Samsung have all made major investments in the nation. Numerous international technology companies have moved their production centers to Vietnam as a result of government incentives, such as tax breaks, preferred rates, and exemptions for investments in high-tech industries.
Future investments from Singapore will rise in industries including e-commerce, food and drink, education, and retail in addition to manufacturing, real estate, and construction. Factors including the expansion of the manufacturing base, the growth in consumer spending, and governmental reforms will continue to have an impact on investments.
