In an era marked by significant volatility in worldwide trade, Australia ought to broaden and vary its economic alliances. The supply chains continue to show vulnerability, and talk of protectionism is increasingly resonating within key Western nations once more.
US President Donald Trump’s
America First
The agenda encompasses implementing extensive tariffs on imported goods.
withdrawal
From global accords and exertion of influence to produce internally.
Meanwhile, China, which is Australia's biggest trading partner, has frequently employed trade as a tool for geopolitical influence. This was particularly evident in 2020.
Beijing imposed tariffs
by over 200% for Australian wine. Consequently, this led to a decrease of 30% in the sector’s export value.
Thus, economic diversification is not just preferable but strategically crucial.
An opportunity
Half a century since the
fall of Saigon
, Vietnam offers a significant chance for expanding both economic activities and strategic partnerships. As a unified nation, it is keen on moving past its war-torn history and positioning itself as a rising economic leader.
Given the release of the
Doi Moi reforms
In 1986, Vietnam adopted economic liberalization and market-driven strategies. The Doi Moi reforms facilitated foreign commerce, permitted private property rights, and revamped state-run businesses.
Starting with a modest growth rate of only 1.6% back in 1980, Vietnam is projected to emerge as one of the globe’s leading 20 economies by 2050. Throughout just this year, 2023, the country has seen considerable attraction
A$8.5 billion
In terms of foreign direct investment, this highlights robust investor confidence.
The nation marked the 50th reunion anniversary on April 30, offering glimpses of its development journey. The festivities featured military processions, 3D virtual reality presentations, and exhibits highlighting technological advancements.
Slow to act
Nevertheless, Australia has been sluggish in this regard. Even with close geographical ties and common goals, Australia’s economic presence in Vietnam is unexpectedly minimal. As of 2023, Australian foreign direct investments amounted to merely
A$3 million
It was placed at number 22, following nations such as Switzerland and Seychelles.
In commerce, the difference is just as evident. Vietnam constitutes merely 2.33% of Australia’s export market and 1.4% of its import sources. Bilateral trade between these nations amounted to
$26.3 billion in 2022
At the same time, Vietnam’s trade with the United States amounted to over A$191.9 billion.
Several Australian companies are already establishing their presence. BlueScope Steel, Linfox, and SunRice have made substantial investments in sectors such as manufacturing, logistics, and agriculture. Additionally, RMIT University has played a crucial role in international education since launching its initial campus in Vietnam back in 2000 among three total locations.
ANZ and Qantas maintain a noticeable presence as well. Nonetheless, small and medium-sized enterprises—which make up over 98% of Australian companies—remain mostly unrepresented. A lot of them favor export partnerships or distribution agreements rather than direct investments.
Potential obstacles
Australian firms have traditionally favored
English-speaking or high-income
These provide higher levels of institutional and cultural familiarity along with more predictable regulations.
Vietnam's commercially oriented relational ecosystem presents difficulties, particularly for businesses that lack integrated networks and local insight. Issues surrounding this include:
regulatory transparency
, intellectual property protection,
contract enforcement
and
corruption
— although improving — still continue to influence corporate decisions.
In particular, small to medium-sized businesses encounter additional hurdles because of inadequate institutional backing, insufficient knowledge of regulations, lack of market insights, and scarce local connections.
Help from government
The Australian government has made efforts to bridge this gap.
Enhanced Economic Engagement Strategy
, launched in 2021, aims to double two-way investment and elevate both nations to top ten trading partner status.
It highlights key areas like agriculture, education, clean energy, digital tech, and manufacturing. Nonetheless, the plan lacks binding legal safeguards, tariff reductions, or mechanisms for resolving conflicts.
These factors being absent, countries like Japan, South Korea, and members of the European Union have adopted integrated economic approaches. Such strategies encompass subsidized financing, stringent legal structures, and assistance within domestic markets. This facilitates the success of their enterprises amidst Vietnam’s intricate regulatory landscape.
Likewise, the EU has combined trade facilitation with legal security through accords such as the
EU Vietnam Free Trade Agreement
.
More needs to be done
Without comparable tools, Australia’s initiatives risk being more aspirational than actionable.
Last year’s enhancement in mutual relations to
Comprehensive Strategic Partnership
, indicates increasing political commitment.
For Australia to realise the potential of its relationship with Vietnam it should back long-term policies. These policies should reduce market entry barriers, incentivise small to medium enterprises and increase joint skills development.
Investors likewise require backing from legal and institutional frameworks.
Australia holds significant promise for growth within rising industries such as renewable energy, digital tech, health care, vocational education and training, eco-friendly and intelligent infrastructure, along with agri-tech.
Vietnam’s drive towards eco-friendly economic development, digital transformation, and skill enhancement resonates well with Australia’s expertise. These synergies present chances for collaborative investments and partnerships.
Australia has the opportunity to forge a robust partnership with Vietnam that could be pivotal for its economic standing in the Indo-Pacific region over the long term.
Anne Vo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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