CPTPP offers rising appeal

With the landmark Comprehensive and Progressive Agreement for Trans-Pacific Partnership in effect in Vietnam, the race among investors in the sectors that stand to gain the most is expected to heat up, heralding in opportunities for Vietnam to approach long-coveted higher-quality capital flows.
cptpp offers rising appeal

Last week, a delegation from Singapore’s Sembcorp ­Industries worked with ­Vietnam’s southern province of Binh Duong, with the former’s president and CEO Neil ­MacGregor announcing that the group will invest in new projects with more added value, ­especially focussing on the application of hi-tech and renewable ­energy.

As a symbol of the two countries’ investment co-operation over the past 20 years, Sembcorp has so far invested in nine Vietnam-Singapore industrial parks, generating jobs for some 200,000 people. Sembcorp’s new commitment shows its strong ­interest in industrial property in ­Vietnam.

Boon across many sectors

Sembcorp is one of the success stories of Singaporean investment in the Vietnamese real estate market. Others include CapitaLand and ­Mapletree, both prominent names on the real estate market with plans to ­expand in Vietnam.

“Real estate and construction have traditionally been the big magnets drawing Singaporean businesses to Vietnam. It is forecast that the interest will continue in the future, driven by the newly-effective Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” Jazreel Lim, president of the Singapore ­Business Association of Vietnam (SBAV), told VIR.

Evidently, real estate is among the most interesting sectors in Vietnam not only for Singaporean investors but also other CPTPP members, including those from South Korea, Japan, and Malaysia.

According to Viet Dragon ­Securities Corporation (VDSC), ­property is expected to get a big push from foreign investment inflows, driven by the growing demand for ­industrial parks, high-end buildings, resorts and golf-courses for entertainment, and offices for lease.

In this context, Vietnam’s appeal is said to mainly come from ­manufacturers exiting China for Vietnam and ­foreign direct investment (FDI) ­heading to Vietnam to serve the local and Southeast Asian markets.

Seeing the growth potential, Japanese investors are also venturing further into the sector. As shown in the recent survey by the Japan External Trade Organization (JETRO), the number of new Japanese-invested property and construction projects rose to 33 in 2018 from 19 in 2017. In terms of capital, fresh Japanese ­investment in real estate made up the largest proportion last year with $4.35 billion, making up 66 per cent of the country’s total. The figure in 2017 was $233 million or 3 per cent.

Currently, Japan’s Sumitomo and Vietnam’s BRG Group are co-operating to develop a $4.2 billion smart city project in Hanoi. Japan’s Mitsubishi has recently decided to pour about $500 million into many projects ­developed by domestic Phuc Khang Group, while Japanese Kajima Corporation is looking for opportunities in offices, residential areas, and other real estate development.

Businesses from Malaysia and New Zealand have also been joining the race. Malaysian names who have been on the local property market for years now include Gamuda Land, ­Berjaya, IJM Land, Guocoland, SP Setia, and Samling.

“The CPTPP has enhanced ­Vietnam’s position as an attractive ­location for investment. Vietnam’s growing economy offers numerous ­opportunities for prospective Malaysian investors,” said M. ­Zamruin Khalid, Malaysian ­Ambassador to Vietnam.

In addition to property, the CPTPP-driven ­competition is forecast to further stiffen in other sectors that can make great gains from the landmark ­agreement, including textiles and garments, fishery, logistics, agriculture, pharmaceuticals, and finance.

According to VDSC, Vietnam’s exports of textiles and garments to CPTPP member countries accounts for 13 per cent of the industry’s total export turnover, lower than the 38 per cent to the US. Among the 11 CPTPP member countries, Japan is the top importer of Vietnamese textiles and garments, at around $4.1 billion, or 8.8 per cent of the total.

One of the key contents of the CPTPP is the removal of 95-98 per cent of tariff lines as soon as the agreement enters into force. The remaining tariff lines will be cut over the next seven years, poised to aid the growth and export turnover of the two industries.

The fishery industry also shows bright prospects as the CPTPP member economies annually import about $2 billion, or 23 per cent of Vietnam’s total fishery export turnover. As expected, exporters of shrimp, octopus, and tuna will be the biggest winners.

Earlier this month, the Mekong Delta city of Can Tho granted an investment ­certificate for a seafood processing project to Japanese Marine Foods Corporation. Costing $14 ­million, the facility is expected to be put into operation in May 2020 with advanced technology and a focus on exports to Japan.

According to VDSC, logistics is also a potential industry for investors, with commodities via Vietnamese seaports forecast to grow by 8-9 per cent annually. In order to grab this potential, a group of Japanese and South Korean investors are seeking opportunities to invest in cold-chain logistics in the Mekong Delta region to meet the growing import-export demand.

Regarding pharmaceuticals, after the EU-Vietnam Free Trade Agreement (EVFTA) and the CPTPP come into effect, pharmaceutical imports and exports from the EU and other CPTPP countries will be duty free. “Consequently, foreign pharmaceutical companies would be able to import pharmaceutical products with lower taxation. The future plan for foreign-invested enterprises in the context of the CPTPP and other free trade agreements is to boost business from importation,” said Vaibhav Saxena, legal consultant at Vietnam International Law Firm.

Meanwhile, domestic Vietnamese businesses in agriculture, milk, sugarcane, animal feed, pharmacy, and finance will face more challenges amid the abundant higher-quality food supplies from Australia, New Zealand and others, thus urging them to change their approach to stand firm.

According to statistics from the Ministry of Health, Vietnam imported $3.7 billion worth of pharmaceuticals in 2018, up 8.8 per cent on-year. The figure is expected to rise further in the coming time. Among the 11 CPTPP member countries, Japan, Canada, and Mexico are among the top 20 manufacturers of pharmaceuticals worldwide.

In terms of banking and finance, Japan, Canada, and Australia can now sell financial services to Vietnam without establishing branches there, meaning more pressure in the local market.

Approaching higher-quality FDI

Industry insiders said that in this investment race, foreign investors can compete with their strong expertise in technology and make investments aligned with ­Vietnam’s new FDI strategy, giving priority to the five sectors of hi-tech/ICT, processing and manufacturing, supporting industries, tourism, and hi-tech agriculture.

Looking at the plans of CPTPP members, technology is one of their points of focus in Vietnam. For Japan, the main investments will continue to be in manufacturing, agriculture, logistics, healthcare, technology, banking and finance, and services, focusing on hi-technology.

Similar interests are also seen among Australian businesses in particular. Some are persifying investment in Vietnam’s key sectors like manufacturing, education, services, logistics, and agriculture, with well-known names such as Telstra, BlueScope Steel, and VN Futuremilk.

At present, CPTPP member states make up 27.7 per cent of Vietnam’s total projects and 36.46 per cent of the total registered FDI. The country might expect higher-quality FDI inflows from members who can bring in high-technology, capital, and research and development (R&D) expertise that domestic businesses do not have, thus helping change the FDI picture in Vietnam towards bringing in higher added value to the economy, and increasing the competitiveness of its value chain.

For now, Vietnam’s new FDI attraction strategy is in the final stage of drafting before being submitted to the Politburo for ­approval. While clear-cut details are few and far between, not only Sembcorp from Singpore, but many other investors from the CPTPP members are expecting the new strategy to realise Vietnam’s high-quality FDI goal, thus further facilitating them in their future expansions.

Source: VIR

Related News

Vietnam, Korea Customs sign AEO MRA

Vietnam, Korea Customs sign AEO MRA

VCN- The Director General of the General Department of Vietnam Customs (GDVC), Mr Nguyen Van Tho, and the Commissioner of Korea Customs Service (KCS), Mr Ko Kwang Hyo, signed the Authorized Economic Operator Mutual Recognition Agreement (AEO MRA) on the afternoon of December 24, at the GDVC’s headquarters.
“Give and Take” in the Value Chain of the CPTPP Market

“Give and Take” in the Value Chain of the CPTPP Market

VCN - Vietnamese businesses have many opportunities and advantages if they take advantage of resources from imports and technology transfers when joining the supply chains of FDI companies within the CPTPP.
Prioritizing semiconductor workforce training

Prioritizing semiconductor workforce training

VCN - Vietnam is well-positioned to participate deeply in the global semiconductor industry. Experts believe that developing a skilled workforce in microchips and semiconductors should be a long-term priority to effectively capitalize on this opportunity.
Vietnam-Cambodia: Looking back on journey of cooperation

Vietnam-Cambodia: Looking back on journey of cooperation

VCN – The bilateral meeting between the General Department of Vietnam Customs (GDVC) and the General Department of Customs and Excise of Cambodia (GDCEC) was held by the GDVC on December 9.

Latest News

Việt Nam tightens fruit inspections after warning from China

Việt Nam tightens fruit inspections after warning from China

The Plant Protection Department has urged local authorities and relevant agencies to strengthen the inspection and monitoring of durian cultivation areas and export packing facilities following a warning from China.
Brand building key to elevate Vietnamese fruit and vegetable sector: experts

Brand building key to elevate Vietnamese fruit and vegetable sector: experts

Trade promotion, product introduction and brand promotion also need to be innovated to attract customers effectively.
Freight transport via China-Việt Nam cross-border trains posts rapid growth

Freight transport via China-Việt Nam cross-border trains posts rapid growth

The Nanning branch of China Railway Group Limited reported a sharp increase in freight transport on the China-Việt Nam cross-border railway last year, with trains departing from Guangxi carrying a total of 19,670 containers, marking a staggering annual increase of 1,153 per cent.
Vietnamese retail industry expects bright future ahead

Vietnamese retail industry expects bright future ahead

With a young and dynamic population, rising incomes and increasing urbanisation, the sector is emerging as one of the most promising engines for economic expansion in the coming years.

More News

Complying with regulations of each market for smooth fruit and vegetable exports

Complying with regulations of each market for smooth fruit and vegetable exports

VCN - According to Mr. Dang Phuc Nguyen (photo), General Secretary of the Vietnam Fruit and Vegetable Association (Vinafruit), with the development momentum and increasing consumption demand from the Chinese market, the Vietnamese fruit and vegetable industry is setting new records and is expected to reach an export turnover of US $10 billion by 2030. With great potential and advantages in developing agricultural products, Vietnam has been affirming its position as one of the world's leading agricultural exporters.
Fruit and vegetable industry aims for $10 billion in exports by 2030

Fruit and vegetable industry aims for $10 billion in exports by 2030

Based on impressive export results in recent years, Việt Nam’s fruit and vegetable industry has set a target of achieving US$10 billion in export value by 2030, according to the Việt Nam Fruit and Vegetables Association.
GDP grows by over 7 per cent, exceeds target for 2024

GDP grows by over 7 per cent, exceeds target for 2024

The growth rate is relatively impressive for the 2011-24 period, only lower than the rates of 2018, 2019 and 2022.
Vietnamese pepper: decline in volume, surge in value

Vietnamese pepper: decline in volume, surge in value

In December 2024, Việt Nam exported 15,265 tonnes of pepper of all types, including 12,771 tonnes of black pepper and 2,494 tonnes of white pepper, generating a total turnover of $100.6 million.
Việt Nam maintains position as RoK’s third largest trading partner

Việt Nam maintains position as RoK’s third largest trading partner

Việt Nam continued solidifying its position as the Republic of Korea (RoK)’s third-largest trading partner in 2024, trailing only China and the US, marking the third consecutive year of the significant trade relationship.
Greater efforts to be made for stronger cooperation with European-American market

Greater efforts to be made for stronger cooperation with European-American market

The European-American Market Department (MoIT) will monitor regional developments and explore opportunities to strengthen Việt Nam’s economic and trade ties.
Leather, footwear industry aims to gain export growth of 10% in 2025

Leather, footwear industry aims to gain export growth of 10% in 2025

The footwear sector will still focus on exporting to available and easy-access markets such as Africa and Asia to increase revenue.
Grasping the green transformation trend - A survival opportunity for Vietnamese Enterprises

Grasping the green transformation trend - A survival opportunity for Vietnamese Enterprises

VCN - Green transformation not only helps enterprises minimize the risk of being eliminated from important export markets, but also creates opportunities to build sustainable brands, enhance product value and reach high-end customer segments globally.
Việt Nam to complete database of five domestic manufacturing industries in 2026

Việt Nam to complete database of five domestic manufacturing industries in 2026

The project to build a comprehensive database of domestic industries aims to enhance the capacity and efficiency of trade remedy investigations. It also serves as a strategic tool to protect domestic production.
Read More

Your care

Latest Most read
Việt Nam tightens fruit inspections after warning from China

Việt Nam tightens fruit inspections after warning from China

The Plant Protection Department has urged local authorities and relevant agencies to strengthen the inspection and monitoring of durian cultivation areas and export packing facilities following a warning from China.
Brand building key to elevate Vietnamese fruit and vegetable sector: experts

Brand building key to elevate Vietnamese fruit and vegetable sector: experts

Trade promotion, product introduction and brand promotion also need to be innovated to attract customers effectively.
Freight transport via China-Việt Nam cross-border trains posts rapid growth

Freight transport via China-Việt Nam cross-border trains posts rapid growth

The Nanning branch of China Railway Group Limited reported a sharp increase in freight transport on the China-Việt Nam cross-border railway last year, with trains departing from Guangxi carrying a total of 19,670 containers, marking a staggering annual increase of 1,153 per cent.
Vietnamese retail industry expects bright future ahead

Vietnamese retail industry expects bright future ahead

With a young and dynamic population, rising incomes and increasing urbanisation, the sector is emerging as one of the most promising engines for economic expansion in the coming years.
Complying with regulations of each market for smooth fruit and vegetable exports

Complying with regulations of each market for smooth fruit and vegetable exports

VCN - According to Mr. Dang Phuc Nguyen (photo), General Secretary of the Vietnam Fruit and Vegetable Association (Vinafruit), with the development momentum and increasing consumption demand from the Chinese market, the Vietnamese fruit and vegetable indu
Mobile Version