In order to tighten the bilateral relations between Vietnam and Singapore, in 2006, Singapore’s Minister of Industry and Trade Lim Hng Kiang and his Vietnamese counterpart Truong Dinh Tuyen officially signed the Framework Agreement on Vietnam-Singapore Connectivity that covered six pivotal areas: finance, information technology, and communications, education and training, transport, investment, trade, and services. The Singapore-Vietnam Connectivity Framework is an annual platform that plays a significant part in strengthening the economic bilateral relations between the two nations. The connectivity ministerial meetings between leaders of both parties are organized on a regular basis to review the effectiveness of the Agreement and plan on future cooperation directions.
Developments and economic results for Vietnam since the signing of SVCFA
The implementation of the Connectivity Framework has proven itself to be a success in the effort of creating an open environment full of appealing opportunities for foreign business in Vietnam. Ever since 2006, Vietnam has observed various positive trends within its economic market.
Vietnam FDI since the signing of SVCFA
Over the past decades, Singapore has consistently invested in Vietnam. In 2016, Singapore was the third-largest source of FDI into Vietnam, accounting for 9.9 percent at US$37.9 billion over 1,786. Key sectors included real estate and construction, as well as, manufacturing, especially in textiles and garments. 2017 saw a remarkable rise from 1,786 to 1,800 projects with a cumulative investment of USD43.2 billion, approximately USD10 billion more than the previous year.
In 2020, the foreign direct investment (FDI) from Singapore accounted for one-third of Vietnam’s total foreign investment with nearly USD9 billion, majorly in sectors such as manufacturing, consumer services, hospitality, food processing, infrastructure, real estate, high-tech manufacturing, finance, and technology. By the first four months of 2021, Singapore has managed to become the largest foreign investor in Vietnam with a total investment of over USD4.8 billion, taking up nearly 39.6 percent of the total foreign investment in Vietnam.
A highlight of the positive economic results of the signing of the Singapore-Vietnam Connectivity Framework Agreement is the construction of the seven Vietnam-Singapore Industrial Parks. Over the last 14 years, there have been 7 construction of the Vietnam-Singapore industrial parks: VSIP 1 and VSIP 2 in Binh Duong, VSIP 3 in Bac Ninh (12/2007), VSIP 4 in Hai Phong (01/2010); VSIP 5 in Quang Ngai (9/2013); VSIP 6 in Hai Duong (8/2015) and VSIP 7 in Nghe An (9/2015).
VSIP has developed a total of 9 projects across the country with a total investment of USD 15 billion of investment capital from tenants, as well as supplied production infrastructure for 880 partners from more than 30 countries and territories and created job opportunities for more than 250,000 workers. More than 600 Singapore companies involving food manufacturing, chemicals, and precision engineering have a presence in these parks. VSIP also set out a goal to further develop the field of Industrial – Service – Urban Complexes.
Before the signing of the SVCFA, the two-way trade value was about USD6.4 billion. After the implementation of the Connectivity Framework Agreement, bilateral trade values have steadily increased year on year, which rose to a value of USD 15.8 billion in 2012. Until 2016 and 2017, the value attained at USD 19.8 billion and USD 21.6 billion, respectively, made Singapore Vietnam’s sixth-largest trading partner and Vietnam Singapore’s 12th largest trading partner. The highest growth rate commodities in trade are electrical, electronic equipment, Mineral fuels, oils, distillation products, grease, leathers, tobaccos, glass products, seafood, and vegetables.
The signing of SVCFA has undisputedly fostered an advantageous environment with more investment opportunities in Vietnam for Singaporean business. The SVCFA has displayed its effectiveness in boosting the potentiality of the Vietnam market. In the future, there will inevitably be further positive outcomes from the agreement; thus consolidating the intimate bilateral economic relations between Vietnam and Singapore.
If you are foreign investors and businessmen who seek investment opportunities in Vietnam or in Singapore-Vietnam Industrial Parks in particular, please contact Viettonkin consultant team via email or contact page to get support. With our specialized knowledge and experience in helping foreign enterprises’ getting into the Vietnamese business environment fruitfully and economically, we can provide detailed advice on procedures, stages, and documents required to prepare for the application of a Vietnam business registration certificate.