On behalf of both the Embassy in Hanoi and the Consulate-General in Ho Chi Minh City, a happy 2016 to the BBGV and all its members!
The bilateral relationship
2015 was a big year for the UK-Vietnam relationship because of the visit by Prime Minister David Cameron in July - the first ever to Vietnam by a serving British PM. The fact that the PM chose to make SE Asia his first long-haul destination after winning the General Election in May shows the importance he attaches to this region. And he was personally keen to include Vietnam in the itinerary, and to visit both Hanoi and Ho Chi Minh City. The PM’s talks in Hanoi with Vietnam’s top leaders were both warm and business-like, with a strong focus on the mutual prosperity agenda. And the business-focused Ho Chi Minh City leg really brought home Vietnam’s dynamism and potential to the PM and to his accompanying ministers and business delegation.
The visit was highly productive on the commercial front. Not only were British companies able to sign some high value contracts during the visit, but the PM was also able to push the UK offer in a number of areas ranging from infrastructure to financial services technology (FinTech) – on the latter, this month’s follow-up visit by a FinTech business delegation has firmly established the UK as Vietnam’s leading partner in this emerging sector. The PM was also delighted with the event on business integrity which the BBGV helped to organise: anti-corruption is a global priority for him and, although we recognise the local sensitivities, this is an area in which we are going to want to do more work in future.
So I think that the visit lived up to its historic nature, and that it has done a great deal for the UK’s standing and image with our hosts. This is evident in the warmth of the receptions given to other senior UK visitors following the PM’s visit, including the PM’s Trade Envoy Lord Puttnam, HRH the Duke of York, and the Minister for Intellectual Property Baroness Neville-Rolfe.
The Vietnamese government also showed its commitment to the relationship by organising the Vietnam Discovery Week in the UK in September, with Deputy Prime Minister Ninh, the Minister of Planning and Investment, the chair of VCCI and many other Vietnamese VIPs in attendance. The events attracted high levels of interest from British businesses and investors – aided, I think, by Vietnam’s increasingly strong performance at a time when other regional economies are struggling.
So we are set for another good year in 2016. The PM visit raised Vietnam’s profile in Whitehall, so we should have a good pipeline of senior visitors from the UK. And I expect the Party Congress to re-confirm Vietnam’s strategy of further integration into the international economy and closer relations with western countries including the UK, irrespective of who gets the top jobs.
Department for International Trade (DIT)
The PM made clear during his visit that developing the trade and investment relationship is at the heart of our interests here. How are we doing?
The final data from the Office of National Statistics (which issue with a 10 month lag) show that 2014 was generally a tough year for UK exports to S E Asia. Vietnam actually performed better than most of the other markets in the region, with a small increase in goods exports (the only ASEAN market to achieve this other than the Philippines), albeit offset by a bigger fall in the value of services exports. It was a similar story for many of our European competitors, so there are wider structural forces at work here. And 2015 looks likely to be a better year on the back of stronger growth in Vietnam.
Meanwhile, there are important central changes in hand. Since the General Election, the Government has confirmed its intention to “shift the dial” in terms of both the global value of UK exports, and the number of UK companies which export. To deliver this, the Trade Minister, Lord Maude, and the new CEO of DIT, Catherine Raines, are developing a new strategy for HMG’s trade promotion work. This is still work in progress, but most of the main elements are falling into place:
- a tighter focus on the highest value sectors and markets. A mapping exercise is currently underway to determine these. For an emerging market like Vietnam, we will be arguing that this needs to give due weight to future potential as well as past performance.
- a tighter focus on exports of goods or services.
- stronger support from all Whitehall departments, not just DIT and the FCO, for exports
- government restricting itself to “what only government can do”, with a strong focus in our new performance metrics on additionality – that is, the value added by government support or intervention – and looking increasingly to the private sector to provide on-demand support services to exporters
How this plays out on the ground in Vietnam and other markets will become clearer during the next 6 months. For now, we will continue to focus our efforts on:
- identifying and developing strategic opportunities for UK participation in key sectors;
- providing support on government-to-government channels and tackling market access issues, including through our bilateral Joint Economic and Trade Committee;
- deploying the UK Export Finance offer for Vietnam to best effect, particularly in infrastructure;
- using campaigns to add value, as with our planned British Food and Drink Week in March;
- working with counterparts across the ASEAN region to develop a more joined-up approach to promoting Britain in S E Asia, and vice versa
Two wider pieces of good news. The EU-Vietnam FTA, on which negotiations were finalised in November, is one of the most comprehensive and ambitious FTAs which the EU has ever concluded with a developing market. As well as sweeping tariff reductions, it also covers important areas like services and public procurement. Although implementation is unlikely to be straightforward (as we have seen from the recent Vietnamese move to rebase Special Consumption Tax on certain categories of imports), overall it is likely to create a new level of opportunity for UK and other European exporters in this market. We will be using the time before entry-into-force (likely to be late 2017 or early 2018) to analyse the prospects in more detail and to share this analysis with British business.
The second piece of good news came in the November Spending Review, when the Government announced the creation of a new Prosperity Fund worth £1.3bn globally over five years. The Fund’s main goal is to support sustainable growth and development in middle-income countries, and in doing so, to improve the overall business environment and create downstream opportunities for British business. So, for example, Prosperity Fund programmes might provide technical assistance for policy or regulatory improvements, either within a certain sector or on cross-cutting issues such as IPP, commercial dispute resolution or anti-corruption. Or support skills and knowledge transfer in areas such as infrastructure, low-carbon growth or education. At the time of writing, it appears that Vietnam will be covered by a S E Asia regional Prosperity Fund programme focussing on the five major emerging economies (Malaysia, Philippines, Thailand, Indonesia and Vietnam), but with scope to tailor interventions at a country level. This is a really exciting prospect, and we will continue to work closely with BBGV and the business community more generally to help us refine our ideas for where we can have most impact.
Working with the BBGV
2015 was also, of course, a big year for the BBGV: full accreditation by the British Chambers of Commerce at the end of March, and strong membership growth. We’re delighted by both the BBGV’s continuing success, and by the strength of our partnership. We worked together on a range of events from business integrity to the inaugural Loseby Lectures in Hanoi and Ho Chi Minh City, and it’s great to see BBGV events like the Fun Runs and football tournaments getting bigger and better every year.
In line with changes in the British government’s approach to trade and investment promotion, the nature of the partnership with BBGV and the Business Centre to provide business support services will also continue to change. BBGV is seen by the centre as one of the stronger performers in the global Overseas Business Network Initiative (OBNI), and many thanks are due to all on the board (past and present) and to Wai Kit Ho and his team at the Business Centre for their efforts to get us to this point. The DIT Vietnam team will hand over additional sectoral responsibilities to the Business Centre in FY 16-17, as we look to focus on strategic priorities and to run down our role in reactive or on-demand service-delivery work which could equally well be undertaken by a commercial partner. The new DIT strategy will also respond to OBNI partners’ concerns about financial sustainability by setting a multi-year framework for HMG funding rather than the current year-to-year arrangement, and giving OBNI partners more flexibility over pricing for on-demand services (eg OMIS-type products). In general, Douglas and I will continue to argue for an OBNI partnership model which is not “one size fits all” and which can be tailored to the reality of local circumstances. Encouragingly, the centre seems to be thinking along similar lines. But watch this space.
2016 will be a sad year in some ways as we are due to say goodbye to both Douglas Barnes and Wai Kit Ho, who have made a huge contribution over the past few years to this agenda – Douglas in his dual role as Consul General Ho Chi Minh City and Head of DIT Vietnam, Wai as former Executive Director of BBGV. We’re sure all members of the BBGV will join us in wishing them well in their next jobs, and in welcoming their successors.
With very best wishes for a happy and above all PROSPEROUS Year of the Monkey.