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 as is the case in many successful partnerships, strong potential synergies exist.

One key area for cooperation is digitalisation. In February 2022, Vietnamese President Nguyen Xuan Phuc visited Singapore as his first overseas stop of the year. Close to 30 memoranda of understanding between businesses from both countries were signed. Worth almost US$11 billion, many were in the field of technology.

Vietnam’s forward-looking ambitions are noteworthy. The country aspires to be a high-income economy by 2045, with the digital economy set to account for 20 per cent of national gross domestic product (GDP) thanks to an ambitious Digital Transformation Plan. Milestones to achieve by 2025 include having 80 per cent of online public services being mobile-friendly, and ensuring that 80 per cent of households have fibre optic broadband, up from about 55 per cent in 2020.

Collaborate for growth

Singapore could play a major role in supporting this journey. The Lion City’s technology companies – from SingTel to ST Telemedia – 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 turn, this digitally savvy workforce can be a 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, thus supporting the supply chain diversification efforts of Singapore’s manufacturers and retailers. This will help ease the impact of disruptions brought about by the global pandemic and prolonged lockdowns.

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Purposeful partners

Another area of potential partnership is sustainability. At the COP26 meeting in 2021, Vietnam pledged to become net zero by 2050. Similarly, Singapore has since announced its intention to reach net zero by or around mid-century. In pursuit of 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 to its success.

One such policy is Vietnam’s National Green Growth Strategy 2021-2030, which aims to accelerate the journey towards 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. It also aspires to raise the share of renewable energy in Vietnam’s total primary energy supply to up to 20 per cent.

Singapore has built world-class infrastructure, and is renowned for robust urban planning. As a global sustainable financial centre and a fintech hub, Singapore’s efforts to bring down the cost of providing financial services could help Vietnam as the latter 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 resources. The nation’s political will and market incentives could offer valuable lessons to other Asean countries in their just transition journey.

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 for sustainable development. 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 (business-to-business) commerce and lending journeys. Standard Chartered has launched Solv in India and Kenya, and plans to unveil the solution in South-east 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 chief executive officer of Standard Chartered Vietnam.