The newly upgraded comprehensive strategic partnership with the U.S. during the visit of President Joe Biden is expected to unlock Vietnam’s economic opportunities, boosting hopes for a positive prospect of the country's becoming a new 'Asian Tiger,' according to some experts.
Vietnam and the U.S. announced the establishment of comprehensive strategic partnership for peace, cooperation, and sustainable development on Sunday, lifting their bilateral relations to a new level that puts the U.S. on the same footing as Russia or China.
Regional experts argued that strengthening ties with the U.S. would pave the way for Vietnam to develop its economy, while fortifying Hanoi’s stance in Washington’s ‘friendshoring’ strategy, as said by Julien Chaisse, professor at the City University of Hong Kong.
The optimism about Vietnam's economic development potential brings to mind a notable question in recent years: can Vietnam be a new 'Asian Tiger?' That is to say whether Vietnam is capable of repeating the success of Singapore, Hong Kong, Taiwan, and South Korea -- the past 'Asian Tigers.'
“The prospect of Vietnam emerging as a new ‘Asian Tiger’ is indeed a palpable reality. The nation has the potential to foster a high-tech economy through concerted efforts to nurture homegrown technological talent and foster innovation," Chaisse told Tuoi Tre News.
“The U.S., being a vanguard in the field of technology, will be indispensable in this endeavor.”
David Dapice, senior economist at the Ash Center for Democratic Governance and Innovation from the John F. Kennedy School of Government under Harvard University, also talked to Tuoi Tre News over Vietnam's 'Asian Tiger' vision.
When U.S. President Biden visits Vietnam, his top priorities are upgrading relations and strengthening Vietnam-U.S. cooperation in a number of areas including cybersecurity, education, green energy, and perhaps higher technology, according to Dapice.
The comprehensive strategic partnership puts the U.S. on the same footing as Russia or China. In practice, it increases the confidence of both nations that they can cooperate on subjects of mutual interest and concern.
Given that the U.S. is, by far, the biggest importer of Vietnam's exports, with a US$100 billion trade surplus for Vietnam, it makes sense to solidify cooperation.
If Vietnam wants to improve cybersecurity, it may want a domestic cloud computing center and there might be cooperation on that front, including training of computer scientists.
When it comes to economic growth potential, Vietnam has a better chance to become a new 'Asian Tiger' than others in ASEAN, but it needs to strengthen its private sector, mid- and high-level technical skills, while continuing reforms.
The U.S. can help with education, high-tech investment, and joint projects on things like artificial intelligence.
Loans for green finance would also be a boost.
For the U.S., Vietnam is definitely in the 'friend' box and is well placed to replace a fraction of other regional countries’ exports, as the investments of Foxconn and Pegatron, both major Apple suppliers, suggest.
Adding domestic value would insulate it against charges that it is just importing inputs and screwing them together.
There are limits to how much rural labor can be transferred to factories, so some lower-value exports may migrate to Cambodia or Bangladesh like garments, shoes, and toys so that higher-value products with better skills and wages can grow.
This will also insulate Vietnam against ever-more capable robots, which will compete with labor going forward.
The steps needed within Vietnam would be taken at a company level in many cases.
Private firms need to build up skills, scale, and reliability. The government can help, but longer-term investments will be needed.
If a Vietnam-U.S. trade agreement is upgraded, that will increase confidence that the rules would not be suddenly changed, supporting both foreign and domestic long-term investment.
There are problems in Vietnam-U.S. trade relations that need to be resolved. However, it is not Vietnam's fault that it is often the next best place after China to produce things.
To the extent that Vietnam's exports grow more slowly in the future, adding value by producing parts now imported would support gross domestic product (GDP) growth more without increasing the bilateral deficit.
Again, this will happen when private domestic firms are able to better connect with foreign direct investment (FDI) exporters.
The impact of Biden's visit on U.S. corporations will be felt gradually. Big companies have plans which are adjusted from time to time, not immediately.
There is also a likely period of slow growth in the U.S. due to tighter monetary policy. But having a friendly and secure nation with increasing capabilities will attract investment, and not only from the U.S..