Why Singapore and Vietnam mean business
At first glance, there may appear to be few similarities between the economies of Vietnam and Singapore. One is a leading exporter of consumer electronics, textiles and footwear. Another is a global hub for shipping, technology and financial services. Yet like many successful partnerships, strong potential synergies exist.
One key area for cooperation is digitalisation. In February 2022, Vietnamese President Nguyễn Xuân Phúc visited Singapore as his first overseas stop of the year. Close to 30 memoranda of understanding between businesses from both countries were signed1. Worth almost US$11 billion, many were in the field of technology2.
Vietnam’s forward-looking ambitions are noteworthy. Aspiring to be a high-income economy by 20453, the nation’s digital economy is set to account for 20 per cent of its national GDP4, thanks to its ambitious Digital Transformation Plan. Milestones to achieve by 2025 include 80 per cent of online public services to become mobile friendly5, and 80 per cent of households with fibre optic broadband (compared to about 55 per cent in 20206).
Collaborate for growth
Singapore could play a major role in supporting this journey. The Lion City’s technology companies, from SingTel7 to STTelemedia8, are highly advanced, with many commanding an overseas presence throughout Asia, and across Europe and North America.
The city-state can assist with the development of digital infrastructure, from data centres that store and manage digital assets to networks connecting people and businesses online. Singapore companies can also help nurture Vietnam’s talent pool, especially in roles involving science, technology, engineering, and mathematics, and instil good governance in talent management. In return, this digitally savvy workforce can add competitive advantage for Singapore businesses operating in Vietnam.
At the same time, Vietnam’s increasingly skilled workforce can help advance the nation’s manufacturing transformation, supporting Singapore manufacturers and retailers’ supply chains diversification. This will help ease the impact of disruptions brought about by the global pandemic and prolonged lockdowns.
Purposeful partners
Another area of potential partnership is sustainability. At the COP26 meeting in 2021, Vietnam pledged to become net zero by 20509. Likewise, Singapore has since announced its intention to be net zero by or around mid-century10. Towards this ambition, the Vietnam government has undertaken many measures. Employing a whole-of-government approach to promote the interaction between ministries, and adopting a legal and governance framework that encourages foreign and domestic private investments in the green economy and sustainable development, will be instrumental.
One such policy is Vietnam’s National Green Growth Strategy 2021-203011, which sets out to accelerate economic prosperity, environmental sustainability, and social equality. The Strategy strives to reduce greenhouse gas emissions per GDP by at least 15 per cent and 30 per cent by 2030 and 2050 respectively (compared to 2014 levels)12. It also aspires to increase renewable energy’s mix in Vietnam’s total primary energy supply to up to 20 per cent13.
Singapore has built world-class infrastructure, and is renowned for robust urban planning. It is a global sustainable financial centre and a fintech hub, whose efforts to bring down the cost of providing financial services could help Vietnam, as it strives to become more financially inclusive, especially in rural areas.
Inclusive green growth requires ready access to green financing. In Vietnam, Standard Chartered is raising capital on behalf of companies through green bonds and providing credit facilities to incentivise borrowers to reduce their carbon footprint – as well as offering individuals green mortgage loans and carbon-neutral debit and credit cards. Vietnam has the potential to become a leader in renewables, given its comprehensive installed solar power capacity and abundant wind resources14. The nation’s political will and market incentives could offer valuable lessons to other ASEAN countries in their just transition journey15.
Supporting a resilient future
For Vietnam’s digitalisation and sustainability agendas to succeed, financing will of course be a non-negotiable pre-requisite. According to the United Nations, there is a global shortfall of US$100 trillion in funding sustainable development16. And that is why at Standard Chartered we continue to work with governments and businesses to support sustainable economic growth and boost financial inclusion through digital solutions.
One such solution is Solv, a technology platform for micro, small and medium enterprises (MSMEs) that is designed to help small businesses digitalise their B2B commerce and lending journeys. Standard Chartered has launched Solv in India and Kenya and plans to unveil the solution in Southeast Asia to support the region’s underserved MSME segments.
A close partnership between Singapore and Vietnam will enable the two countries to further capitalise on the wealth of opportunities that digitalisation and sustainability offer. This should not only spur growth and prosperity for both nations but also foster greater interconnectivity and prosperity for the whole of ASEAN.
The author is CEO, Standard Chartered Vietnam.
1 https://www.mfa.gov.sg/Newsroom/Press-Statements-Transcripts-and-Photos/2022/02/20220225-Vietnam
4 https://www.vietnam-briefing.com/news/vietnams-digital-transformation-plan-through-2025.html/
5 https://www.vietnam-briefing.com/news/vietnams-digital-transformation-plan-through-2025.html/
7 https://www.singtel.com/business/why-singtel-business/global-services
8 https://www.sttelemedia.com/about-us/overview
9 https://vietnamnet.vn/en/net-zero-emissions-a-strong-commitment-from-vietnam-816951.html
10 https://www.nccs.gov.sg/media/press-release/singapore-will-raise-climate-ambition
11 https://moit.gov.vn/en/news/energy/national-green-growth-strategy-for-2021-2030-adopted.html
12 https://moit.gov.vn/en/news/energy/national-green-growth-strategy-for-2021-2030-adopted.html
13 https://moit.gov.vn/en/news/energy/national-green-growth-strategy-for-2021-2030-adopted.html