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: 

  1. Increasing support to SMEs looking to take advantage of the CPTPP; 
  2. Expanding Canada-Vietnam business collaborations in high-growth sectors such as agrifood, aerospace, infrastructure, financial services, and digital  economy; and 
  3. Negotiating a Canada-ASEAN FTA to increase the overall opportunities for  Canada in Southeast Asia.

Authors:

  • 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

Sources

1. https://www.canadainternational.gc.ca/vietnam/bilateral_relations_bilaterales/index.aspx?lang=eng       
2. https://en.nhandan.com.vn/business/item/9700302-vietnam-canada-trade-revenue-hits-record-high-at us$8-9-billion-in-2020.html 
3. Ibid. 
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
6. https://www.canasean.com/events/canada-asean-business-leaders-series-2021/ 
7. https://www.canasean.com/event/growing-the-canada-vietnam-business-partnership-21jan2021/