Interview: Lim Hng Kiang
How can the mechanisms for coordination within the ASEAN Economic Community (AEC) help encourage trade between Singapore and Vietnam?
LIM HNG KIANG: There are several existing platforms and mechanisms at the ASEAN forum which Singapore and Vietnam can leverage to better coordinate with each other and with other ASEAN member states to facilitate the implementation of the AEC. These include the Coordinating Committee on the ASEAN Trade in Goods Agreement (ATIGA). This committee oversees the implementation of the ATIGA and discusses improvements that can be made to ASEAN’s trading regimes. A key objective is enabling virtually all goods to be traded tariff-free throughout the region.
This will make it cheaper for traders to do business in ASEAN. Not only will companies in Singapore and Vietnam continue to benefit from lower business costs, but such an initiative also makes our countries more attractive to foreign investors and businesses. Another objective of the ATIGA is to remove nontrade barriers. This will complement our work on eliminating tariffs, for truly seamless flows of goods traded among the ASEAN countries.
The Coordinating Committee on Investment oversees the implementation of the ASEAN Comprehensive Investment Agreement and discusses ways to improve ASEAN’s investment activities and regulations. Key elements for this committee are investment protection and transparency of investment rules. Investors like certainty and are attracted to markets where they can be assured of protection and where rules are simple, transparent and consistent. Having such an environment in place will attract greater foreign direct investment, including from Singapore into Vietnam. Vietnamese and Singaporean enterprises will have access to a wider network of businesses and be better plugged into regional value chains. The Coordinating Committee on Services oversees and negotiates the ASEAN Framework Agreement on Services. This is an important initiative under which ASEAN countries can reduce their services barriers in a meaningful way. An example is the lowering of foreign equity limits, which enables and encourages more joint ventures. Such initiatives, which provide Singapore’s and Vietnam’s businesses with greater market access to regional services sectors, will benefit manufacturing companies that rely on services.
Which sectors present opportunities for Singaporean companies’ expansion in Vietnam?
LIM: Vietnam’s rapid urbanisation provides opportunities in urban solutions, especially in the construction, energy and utilities sectors. Our companies have built strong capabilities and experience during Singapore’s development over the past 50 years. They can customise solutions to meet Vietnam’s developing needs – for example, water supply to provide potable water, and wastewater treatment facilities to recycle water for industrial purposes.
Manufacturing in Vietnam continues to be an attractive sector for companies, given the country’s favourable workforce demographics and abundance of land. International Enterprise Singapore hopes to bring more Singaporean small and medium-sized enterprises into Vietnam to serve as support industries to manufacturing giants, such as Intel Corporation and Samsung Electronics.
This will help Vietnam to develop its own ecosystem and increase localisation in-market. In doing so, these Singapore companies can also contribute to improving the skills of the local workforce. There are also opportunities for Singapore companies in the consumer services sector. Looking ahead, the middle and affluent class in Vietnam will continue to grow, resulting in an increase in disposable incomes as well. Singapore’s food service and lifestyle brands can offer innovative products and services, providing more options and customised consumer experiences.
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