Vietnam-US trade and investments hold acceleration opportunities

Various senior diplomat visits and working sessions of Vietnam and USA have recently contributed to the opening of trade and investments between the two nations as trust-worthy partners and traders.

Vietnamese commodities in US market grow

In 2000 which was 6 years after President Bill Clinton lifted trade ban of the US on Vietnam, the two nation signed bilateral trade agreement (VN-US BTA), opening up new economic development stage of both sides. Bilateral trade revenue has increased to nearly US$ 33.4 billion in 2015 from US$ 1.2 billion in 2000. At the time, daily trade surplus was staying at US$ 454 million in 2000 before increasing to US$ 20 billion in 2015. USA is currently the largest exportation market of Vietnam to offer the major economic surplus for Vietnam. It is forecast that by 2020, the exportation revenue of Vietnam to the US will reach US$ 57 billion.

As the BTA was signed, USA has become a vital exportation market of Vietnam. One of the sectors of largest exportation volume is agricultural sector. For rough comparison, Vietnam was accounted for half of black pepper exportation volume to the US market. Other major agricultural products including rice, dragon fruit, longan, coffee, etc. have large exportation revenue to the US market. Meantime, the sectors of husbandry and seafood have impressed the exportation into the US market. According to Vietnam Association of Seafood Exporters and Producers (VASEP), USA is constantly the largest exporting market of catfish, shrimp, and tuna of Vietnam in the first 4 months of 2016, contributing to accelerate the general growth of the sector by 6.1% higher than in previous term.

Experts believe that Vietnam-US relation of trade and investments have never before been so rich. In this photo: Sports shoes are produced by Dong Hung Shoe-making Company in Di An Town for exportation into the US market. Photo: Khanh Vinh.

Exporting commodities of Binh Duong in particular and of Vietnam in general into the US market include textile, shoes, furniture, and pottery. Total textile exportation revenue into the US market in 2015 has been nearly US$ 11 billion, increasing by over 217 times of US$ 50 million in 2000. Of the amounts, exportation revenue of shoes has been over US$ 4 billion into US market in the past year, making USA as the largest shoe exportation market of Vietnam, superseding the stronghold EU markets.

Talking about the importance of US market, Nguyen Van Le, the Deputy Chair of Binh Duong Provincial Association of Shoes, informed that many have forecast that after US-VN BTA, USA will become a major exportation market of Vietnamese shoes, proved by the 16-year of shoes trading development of the two nations. As the matter of fact, the Association keeps increasing commodities to this market to boost production and exportation revenue for the time to come.

Investments to be boosted

Foreign Investment Bureau of Ministry of Planning and Investment has just announced that USA is the world’s investor with about US$ 5,000 billion by the end of Q1-2015. Such investments of the USA have been accounted for 25-26% of its total foreign investments. According to functional agencies, USA currently has 712 direct investment projects into Vietnam at the capital of over US$ 10 billion being the 7^th out of 110 nations and territories of investments into Vietnam.

Up to date, Binh Duong Province has lured over US$ 650 million of foreign investments from USA which is ranked 6^th of nations and territories of investments into Binh Duong. Majority of investment projects of US corporates into Binh Duong are mainly industrial sectors of high-tech with low labor over-use and friendly to the environment.

In September 2015, Amway Group started up its factory at Vietnam-Singapore Industrial Park II in Binh Duong Province at the cost of US$ 25 million. The factory is part of the global expansion plan of US$ 332 million. Similarly, in 1997, American Standard had invested into a large-scale production factory of up to US$ 16.5 million to produce 400,000 sanitation equipment pieces a year in Binh Duong Province. By 2011, American Standard has doubled its initial capacity with more expansion to be established to satisfy the demands of Vietnamese consumers.

Moreover, the settlement of production factories in Binh Duong Province has been for servicing market expansion and opportunities for new growth as the province is of advantageous location in the major economic zone of the South.

Like the two mentioned enterprises, many US investors have an eye on Binh Duong Province regarding their investment strategies. Many US enterprises have poured large capital resources to welcome the new production and consumption of US and Vietnamese markets. By general evaluation of US enterprises, Binh Duong Province is the place of rich human resources and welcoming leadership ready to support them with highest responsibilities.

The perspective of large investments from US into Vietnam in general and into Binh Duong Province remains. As the two nations have been closer in various aspects of relation, especially the Trans-Pacific Partnership (TPP), US corporates are prompted to seek for business opportunities in Vietnam as the solid foundation for more expectation into trade and investment relation of the two nations for the time to come.

Some economic experts asserted that US consumers tend to switch to purchase of Southeast Asian nation commodities instead of China’s. Mark Gillin, the President of Amcham Vietnam informed that TPP will trigger investments and trade of its members. Thus, US investors have recently diverted to Vietnam from China. TPPP can bring up brilliant chance and challenges for localities nationwide to lure the investments including Binh Duong Province as well as enhanced opportunities for Vietnamese commodities to be exported into the US markets. Thus, Vietnamese enterprises should be prepared with all necessary conditions to catch the chances and reduce risks in being partnership to US companies.

In November 2015, AmCham Vietnam has coordinated with Binh Duong Provincial People’s Committee to open a representative office for Vietnamese-US enterprises at Becamex IDC Tower in Thu Dau Mot City. Mai Hoang, the Chair of AmCham Vietnam informed that Vietnam and USA have been engaged in various international organizations and vital trade treaties including TPP to investigate and seek for investment environments. Thus, the representative office has been among the great efforts to enhance investment flow from US enterprises to Binh Duong Province and Vietnam.

Reported by Khanh Vinh – Translated by Vi Bao