Plenty of room for Vietnam, Singapore boost economic connectivity

They also highlighted the great potential that exists for the two countries to further expand economic co-operation in the time ahead.

With over 3,600 projects worth more than US$70 billion by the end of 2022, Singapore remained the largest foreign investor in the Vietnamese market for three consecutive years, as well as being the largest Southeast Asian investor.

In 2022, Singapore’s total investment in the country reached US$6.46 billion, accounting for 23.3% of the total amount of foreign direct investment (FDI) poured into the country.

Most notably, in the opening month of the year, while FDI into the nation drop by nearly 20%, Singaporean investors promptly poured US$767.6 million into the country, accounting for nearly 64% of the total newly registered capital. This made Singapore the largest investor among 28 countries and territories to have projects licensed in the nation in January.

The city state has invested in thousands of projects in the country over the last 50 years. In 1996, Singapore's Sembcorp Industries and Vietnam's Becamex Group established the first Vietnam-Singapore Industrial Park (VSIP) on an area covering 2,500 ha in the southern province of Binh Duong. This represented an IP project that was started based on the co-operation idea of the governments of both Vietnam and Singapore. So far, as many as 12 VSIPs have taken shape across the country, attracting a total investment of roughly US$17 billion and creating more than 300,000 jobs in the process.

The investment projects of Singaporean enterprises in Vietnam mainly focus on the processing industry, real estate, and electricity production. Most of the Singaporean projects are large-scale, including the three "super projects" of the Bac Lieu LNG-fueled power plant project in the Mekong Delta province of Bac Lieu and the Nam Hoi An resort in the central province of Quang Nam worth US$4 billion each, as well as the Long An I and II LNG-fueled power plant projects with a combined investment capital of US$ 3.12 billion.

Vietnam is among the top 10 countries exporting goods to Singapore, with a double-digit turnover growth rate per year.

According to details given by the Vietnam Trade Office in Singapore, the city state represents the world’s transshipment market with a total trade turnover of up to SGD1.2 trillion, over US$905 billion in 2021, doubling its GDP.

Vietnam has primarily shipped garments and textiles, iron, steel, copper, boilers, glass, tobacco, salt, quartz, lime, and cement to this market. The largest foreign currency earners include machinery, equipment, mobile phones, components and spare parts.

Furthermore, Singapore is also a major crude oil importer of the country. In December, 2022, Vietnamese exports of petroleum and petroleum products to Singapore grew by seven times compared to the previous month.

According to Do Hoa, general director of IME Vietnam, Singapore is a potential market for Vietnamese businesses, especially in terms of wholesale. As many experienced wholesalers around the world have headquarters located there, Vietnamese firms should seek ways in which to connect and partner with wholesalers in the market.

In an article detailing Vietnam-Singaporean relations published recently, Singaporean Ambassador to Vietnam Jaya Ratnam highlighted the strong and sustainable development, as well as stable growth of bilateral trade over the past decade.

At a regional level, both sides can be seen as like-minded partners in free trade agreements (FTAs), such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), Ambassador Ratnam said.

Moving forward, the two countries will seek to bolster economic ties in the digital economy and innovation, infrastructure, energy, and sustainable development, as well as urgently accelerating actions to meet goals related to climate change. This will contribute to further strengthening co-operation in trade, investment, finance, transportation, and tourism, he emphazised.

According to Dr. Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management, many small businesses and entrepreneurs of Singapore are paying attention to Vietnam as it represents an ideal launch pad for their businesses.
The average scale of Singaporean projects in the nation stands at more than US$23.5 million a project, much higher than the average size of FDI projects in Vietnam. This therefore demonstrates the confidence of Singaporean investors in Vietnamese macro policies, the local business environment, and development prospects, Dr. Thanh added.