Canada and Vietnam have shared a longstanding relationship based on trade, development, and immigration. Over the past several years, this relationship has deepened considerably.
With Vietnam’s new national leadership put in place for 2021 to 2026, the CABC urges Canada to secure its economic interests with Vietnam as a key tenet of Canada’s evolving Indo-Pacific strategy.
Bi-lateral Relationship Overview
Since 2015, Vietnam has been Canada’s largest trading partner in Southeast Asia1 with two-way trade reaching a record of CAD $11.2 billion in 20202. With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canadian and Vietnamese exporters and investors now enjoy increased market access and tariff reduction in a rules-based trading environment. Two-way trade has increased by 12% over 2019 and by 37% compared to 2018, when the CPTPP began to take effect3.
With a rapidly growing population that is expected to reach 120 million by 20504 and a strong GDP forecast of 6.5% growth in 20215, Vietnam is a high-potential market for Canadian companies especially in key industries such as agri-food.
Aside from the trading of goods, a wide range of opportunities are available in areas such as investments, financial services, infrastructure development, supply chain diversification, technology, and human capital development. To fully capture these opportunities and ensure inclusive growth, both governments should boost their support for SMEs to maximize the utilization of trade deals such as the CPTPP.
Political Transition in Vietnam
At its recent 14th National Assembly, the Vietnam Government has finalized a political transition for the 2021 to 2026 period.
Vietnam remains anchored into its four-pillars leadership structure where political responsibilities are shared between the positions of General Secretary of the Communist Party of Vietnam (CPV), President, Prime Minister and Chair of the National Assembly.
Nguyen Phu Trong was re-selected as the CPV’s General Secretary while Nguyen Xuan Phuc, who served as Prime Minister from 2016 to 2021, takes on the role of President. New Prime Minister is Pham Minh Chinh who previously was the Head of the CPV Central Organizing Committee and a Deputy Minister of Public Security. The National Assembly Chair is filled by Vuong Dinh Hue, a former Deputy Prime Minister and Minister of Finance.
What Does This Leadership Change Mean for Canada?
It is expected that the new Vietnamese government will continue its predecessors’ economic growth policies. This would include prioritising foreign investment attraction, new multilateral trade deals, and other reforms to further integrate Vietnam with the global economy.
In foreign policy, Vietnam will likely look to avoid choosing sides between economic superpowers while engaging through multilateral institutions such as ASEAN, the UN and with other middle power countries like Canada to provide strategic options.
This political stability and policy continuity has instilled confidence among the domestic and foreign private sectors and observers, particularly due to Vietnam’s excellent domestic COVID-19 response and economic growth despite the pandemic’s impact.
|Expected Priorities: |
• Develop strategic and key infrastructure
• Create a business friendly environment
• Improve the digital economy
• Manage climate change, natural disasters, environmental pollution, and epidemic
A Shared Future for Canada and Vietnam
The CABC acts as the voice of the Canadian private sector in ASEAN6, and our Members – including many of Canada’s leading firms such as Manulife – have a significant and longstanding presence in Vietnam and many more companies are following suit. Similarly, Vietnam’s most innovative companies such as automotive manufacturer VinFast are prioritising investing in and selling to the Canadian market7.
Canada’s and Vietnam’s commitment to multilateral trade through the CPTPP and critical new opportunities such as a potential Canada-ASEAN FTA positions Vietnam as an essential partner for Canada in the decades ahead.
As Canada looks to develop an Indo-Pacific strategy, we urge public policymakers and business leaders to prioritize this relationship by:
- Increasing support to SMEs looking to take advantage of the CPTPP;
- Expanding Canada-Vietnam business collaborations in high-growth sectors such as agrifood, aerospace, infrastructure, financial services, and digital economy; and
- Negotiating a Canada-ASEAN FTA to increase the overall opportunities for Canada in Southeast Asia.
- Wayne Farmer: President, CABC, and Managing Partner at Islemount Capital Advisers
- Thi Be Nguyen: Canada Activities Chair, CABC, and Manager at the Office of the President and Philanthropy, National Bank of Canada
- Geoff Donald: Advocacy Chair, CABC, and Managing Director at Asia Engagement Consulting Group
2. https://en.nhandan.com.vn/business/item/9700302-vietnam-canada-trade-revenue-hits-record-high-at us$8-9-billion-in-2020.html
4. https://www.worldbank.org/en/country/vietnam/overview#:~:text=Vietnam%20is%20experiencing%20rapid %20demographic,to%20120%20million%20by%202050
5. http://hanoitimes.vn/imf-maintains-vietnam-gdp-growth-forecast-at-65-in-2021-316951.html#:~:text=Vietnam%20would%20be%20the%20second,latest%20World%20Economic%20Outlook% 20report