At first look, the economies of Singapore and Vietnam would not seem to have many characteristics. One is a significant exporter of apparel, textiles, and consumer electronics. A third is a center for shipping, technology, and financial services on a worldwide scale. However, there are significant potential synergies, as in many other successful collaborations.
Digitalization is an essential area for collaboration. Nguyen Xuan Phuc, the president of Vietnam, paid a first-of-the-year visit to Singapore in February 2022. Nearly 30 memoranda of understanding were signed by companies from the two nations. Many were in the technology sector and were worth nearly US$11 billion.
The aspirations Vietnam has for the future are important. By 2045, the nation hopes to have a high-income economy, with the help of an ambitious Digital Transformation Plan, the digital economy is expected to contribute 20% of the GDP. The following milestones should be accomplished by 2025: 80% of online public services should be mobile-friendly; and 80% of homes should have fiber optic internet, up from around 55% in 2020.
Join forces for development
Singapore could be quite helpful in making this travel possible. From SingTel to ST Telemedia, the technological firms in the Lion City are among the most sophisticated in the world, and several of them have operations throughout Asia, Europe, and North America.
The city-state can help with the creation of digital infrastructure, including networks that connect people and companies online and data centers that store and manage digital assets. Additionally, Singaporean businesses may foster Vietnam’s talent pool and promote excellent governance in talent management, particularly for positions requiring science, technology, engineering, and mathematics. This technologically aware workforce might also provide Singapore companies doing business in Vietnam a competitive edge.
The manufacturing transition in Vietnam may be advanced by the country’s growingly trained workforce, which will boost Singapore’s manufacturers’ and retailers’ aspirations to diversify their supply chains. This will mitigate the effects of the interruptions caused by the epidemic and protracted lockdowns.
Another area of a potential partnership is sustainability. At the COP26 meeting in 2021, Vietnam pledged to become net zero by 2050. Similarly, Singapore has since announced its intention to reach net zero by or around mid-century. In pursuit of this ambition, the Vietnam government has undertaken many measures. Employing a whole-of-government approach to promote the interaction between ministries, and adopting a legal and governance framework that encourages foreign and domestic private investments in the green economy and sustainable development, will be instrumental to its success.
One such policy is Vietnam’s National Green Growth Strategy 2021-2030, which aims to accelerate the journey towards economic prosperity, environmental sustainability, and social equality. The Strategy strives to reduce greenhouse gas emissions per GDP by at least 15 percent and 30 percent by 2030 and 2050 respectively, compared to 2014 levels. It also aspires to raise the share of renewable energy in Vietnam’s total primary energy supply to up to 20 percent.
Singapore has built world-class infrastructure and is renowned for robust urban planning. As a global sustainable financial center and a fintech hub, Singapore’s efforts to bring down the cost of providing financial services could help Vietnam as the latter strives to become more financially inclusive, especially in rural areas.
Inclusive green growth requires ready access to green financing. In Vietnam, Standard Chartered is raising capital on behalf of companies through green bonds and providing credit facilities to incentivize borrowers to reduce their carbon footprint – as well as offering individuals green mortgage loans and carbon-neutral debit and credit cards. Vietnam has the potential to become a leader in renewables, given its total installed solar power capacity and abundant wind resources. The nation’s political will and market incentives could offer valuable lessons to other Asian countries in their just transition journey.
promoting future resiliency
The success of Vietnam’s digitalization and sustainability agendas will, of course, depend on money, which is a necessary but non-negotiable condition. The United Nations estimates that there is a worldwide financial gap for sustainable development of $100 trillion. And for that reason, at Standard Chartered, we keep collaborating with organizations and institutions to promote financial inclusion and sustain economic growth.
Solve, a technological platform for micro, small, and medium-sized businesses (MSMEs) that aims to assist small firms in digitalizing their B2B (business-to-business) commerce and loan experiences, is one such solution. To help the neglected MSME segments in the area, Standard Chartered has already introduced Solv in India and Kenya. The company also wants to do the same in Southeast Asia.
By working closely together, Singapore and Vietnam will be able to take advantage of all the potential that digitalization and sustainability provide. This should promote increased interconnectedness and wealth for all of ASEAN as well as development and prosperity for the two countries individually.