Vietnam-U.S. cooperation in high technology is expected to be a bright spot in their bilateral relations in the years to come, as Vietnam’s economic growth orientations with tech-centric approaches are relatively on a par with Washington's friendshoring strategy.
The recent Vietnam visit by U.S. President Joe Biden and the elevation of the Vietnam-U.S. relations from a comprehensive partnership to a comprehensive strategic partnership are anticipated to further boost each nation’s economic expansion, with their innovation, science, and technology cooperation deemed to make a breakthrough.
At a meeting with President Biden on Monday, Vietnam’s Prime Minister Pham Minh Chinh underlined the importance of cooperation in innovation and hi-tech.
Amitendu Palit, senior research fellow and research lead of trade and economics at the Institute of South Asian Studies, under the National University of Singapore, told Tuoi Tre (Youth) newspaper that President Biden's visit reflects the significance of Vietnam to U.S. strategies.
Palit believed that the U.S. views Vietnam not only as an important economic ally but also as an overall strategic partner, based on the fact that the Southeast Asian country is being regarded as an effective economic location in U.S. efforts to diversify supply chains.
The Biden administration also expressed its desire to become a global leading semiconductor manufacturer.
To realize this goal, Washington is working with its reliable partners to build resilient semiconductor supply chains, Palit said.
Although the amount of capital poured into Vietnam from the U.S. has risen over the years, the total investment remains modest compared to those made by other trade partners of this Southeast Asian nation, such as Japan, South Korea, and Singapore.
Alicia Garcia Herrero, chief economist for Asia-Pacific at French investment bank Natixis, believed that the upgrade of the Vietnam-U.S. bilateral ties to a comprehensive strategic partnership could pave the way for more positive changes made in the years ahead.
Vietnam could receive much more funding from foreign investors for projects in such fields as semiconductor, artificial intelligence, and green technology, the key cooperation sectors between the two countries, the Natixis representative said.
Vietnam’s manufacturing capacity built over the past three decades is expected to offer itself a good position to engage in semiconductor supply chains.
Palit added that Vietnam will likely play a crucial role in Washington's strategies to safeguard the latter’s semiconductor supply chains, for Vietnam is a manufacturer of electronic products and thus needs a huge volume of chips.
Herrero told the newspaper that it could take time for Vietnam to invest in hi-tech sectors and enhance its manufacturing capacities, especially when the country currently faces a number of challenges such as an inadequate infrastructure system and reliance on raw materials.
Over the past few years, multiple international corporations, including American investors, have increased their investment into Southeast Asian markets, including Vietnam due to a global shift of supply chains.
The shift has brought about both challenges and opportunities, said Nguyen Thang Vuong, an official at the European-American Market Department under the Ministry of Industry and Trade.
Vietnam is considered an ideal destination to embrace the global shift of supply chains, as it is a member of 17 free trade agreements, with 15 already coming into effect, and has a stable macroeconomy, the Vietnamese official said.
With its population of 100 million people, consumer demand is expected to soar in the future.
Also, Vietnam has been working to improve its business climate to woo more investors, Vuong added.
According to the Ministry of Industry and Trade, to embrace the future of ecommerce and online shopping, local businesses should make the best use of ecommerce platforms to boost online exports, aside from operating their traditional trading channels.
About the friendshoring strategy, it is the practice of relocating supply chains to countries where the risk of disruption from political chaos is low.
“Friendshoring is about expanding our trade ties and diversifying our supply chains among many trusted partners like Vietnam to mitigate against global shocks, geopolitical risks, and overconcentration in critical industries,” U.S. Treasury Secretary Janet Yellen told Vietnamese Minister of Finance Ho Duc Phoc at a meeting in Vietnam in July this year.
Yellen further explained that friendshoring is to reduce the vulnerability of the economy to supply shocks in the production of critical goods, especially due to overconcentration, geopolitical, and security risks.
This means deepening U.S. economic integration with a large number of countries – including Vietnam, she added.