Việt Nam and UK forge long-term collaboration in a post-UKVFTA landscape

October 26, 2023 - 08:23
Christopher Jeffery, Chairman of the BritCham Vietnam, shares insights on the specific challenges and opportunities faced by British businesses in Việt Nam.
Christopher Jeffery, chairman of BritCham Vietnam. — VNS Photo Mai Hương

As the UK-Việt Nam Free Trade Agreement (UKVFTA) marks its second year in force, Christopher Jeffery, chairman of the British Chamber of Commerce Vietnam (BritCham Vietnam), shares insights with Việt Nam News reporter Mai Hương on the specific challenges and opportunities faced by British businesses in Việt Nam. This dialogue captures the essence of the evolving relationship between the two nations.

What recent progress has been made in the trade ties between Việt Nam and the UK two years after the implementation of UKVFTA? Have British businesses observed improvements in business conditions and market opportunities in Việt Nam as a result of the trade deal?

I believe we have. I think the key thing is to realise that a trade deal is a long-term development of the relationship between the two countries, building up trust and understanding. The trade deal presents an opportunity for British business to engage with Vietnamese suppliers, offering support both in the UK and in Việt Nam’s pursuit of its future objectives.

The free trade agreement is an exciting start and we've seen an increase in the number of UK companies expressing interest in Việt Nam. This interest spans across various scale, ranging from multi-billion dollar companies to small- and medium-sized ones. Their aim is to leverage Việt Nam as a production hub.

The UK is committed to making long-term contributions to Việt Nam’s development, well-being and prosperity. Việt Nam aims to become a leader in AI and finance through initiatives like the International Finance Centre initiative and all those areas Britain possesses great expertise and so we need to educate the UK about the opportunity linked with Việt Nam.

Yet, from the UK perspective, there are still several challenges and one of them is the lack of understanding about the business landscape in Việt Nam. So, it's crucial to educate people about the immense opportunities presented by Việt Nam, with its population of 100 million people and rapidly growing middle class.

Another challenge involves establishing a clear framework for taxation and investment, as well as providing reliable incentives which will offer stability and predictability to businesses, enabling them to make informed decisions and invest in Việt Nam.

Tuy Phong District No. 1 wind farm in south-central Bình Thuận Province is the check-in spot for tourists. — VNA/VNS Photo

Which sectors do British businesses have plans to invest or expand their operations in Việt Nam?

I think it's renewable energy, finance services, as well as the food and drink sectors. These sectors present promising opportunities for growth and collaboration between businesses of both countries.

For the renewable energy sector, taking into account the UK’s commitment since the signing of the free trade agreement, we can observe a massive interest from the UK businesses in this sector, not only in terms of equipment supply, but also in providing funding.

Additionally, the automobile sector is also a significant area that stands to benefit from the tariff reductions associated with the free trade agreement. There is keen interest in supporting Việt Nam’s automobile industry, including initiatives like supporting Vinfast and their global positioning system.

The agreement itself is important, but equally significant is the commitment demonstrated by both countries to collaborate and work together.

Given the UK's strategic focus on Việt Nam in the Asia-Pacific and considering trade tensions and climate change challenges, how has the deal aided British businesses in maintaining and expanding partner networks in the region?

Việt Nam is viewed as a potential springboard for UK’s adventurous companies to venture into exciting new areas, with the prospect of establishing significant operations in Việt Nam and subsequently expanding throughout the ASEAN region.

The British government, treating HCM City as a hub, is committed to spreading awareness and facilitating business connections throughout the region. While British businesses in Việt Nam may encounter challenges, they're passionate about opportunities in Việt Nam and have believed in the country's rapid development.

We're going for long-term collaboration, which is evident in sectors like banking, education, and pharmaceuticals which have undergone step-by-step, sustained growth.

For example, AstraZeneca's journey from a representative office to a wholly owned company showcases this commitment, as does the significant investment in renewable energy. It's amazing that Việt Nam is on top of the agenda of both local and headquarters leadership in UK companies. Việt Nam is in the top five markets with which Britain wants to develop stronger relationships.

Is there an ongoing commitment and initiative to enhance trade and investment between the UK and Viet Nam, extending beyond the current provisions of UKVFTA?

The JETP (Just Energy Transition Partnership) initiative, alongside the European Union and energy companies in Việt Nam, to support Việt Nam’s transition to renewable energy, indicates a significant investment. This goes beyond mere financial contributions, emphasising the importance of knowledge transfer, training, and robust frameworks for long-term effectiveness. The JETP project, with active support from the Vietnamese Ambassy in the UK, demonstrates Britain's leading role in key initiatives.

Another pivotal initiative involves supporting Việt Nam's transition to becoming a regional and international financial centre. This extends beyond physical infrastructure to include development of processes, systems, regulations, and frameworks aligned with global norms. The approach emphasises the building of capacity, knowledge and expertise. The goal is not rapid progress, but rather a meticulous building of foundations to ensure sustainability.

Efforts to accelerate this progress include collaboration with British companies in Việt Nam, working closely with the British Consul General in HCM City on a project with TheCityUK. This collaboration focuses on supporting the development of frameworks and is likened to the philosophy of constructing a building — requiring time and effort to build strong foundations before visible progress. The UK Government, through the Consul General and British businesses, is actively engaged in laying these essential, yet not always visible, groundwork for sustained success. — VNS