Vietnam - US relations on a positive trajectory

With the unpredictable fluctuations seen in the global economy, what should Vietnam prioritize to ensure resilience and sustained growth in such a highly-open economic environment?

Vietnam should focus on diversifying its economy and trading partners to mitigate external shocks. Strengthening its participation in global value chains, particularly through the proactive utilization of its many free trade agreements (FTAs), is critical. Vietnam is well-positioned to capitalize on global trends like reshoring and friendshoring. By providing a stable and attractive alternative for global manufacturers, it can secure long-term investment and integration into critical supply chains.

Building economic resilience also requires advancing digital transformation, enhancing the quality and availability of infrastructure, and supporting the development of key sectors like logistics, renewable energy, and advanced manufacturing. A particular focus should be placed on developing industry ecosystems and supporting industries, which remain bottlenecks for high-tech sectors like semiconductors and automotive manufacturing. Addressing these gaps is essential to creating an environment that attracts and sustains investment in these critical industries.

Additionally, deepening financial sector reforms to improve access to capital for businesses and ensuring macro-economic stability will be pivotal. Collaboration with international partners, including the US, can provide knowledge transfer, technological expertise, and capital to support Vietnam’s efforts to build a resilient and competitive economy.

What are the most promising sectors for deepening Vietnam - US economic cooperation, and how can Vietnam leverage its workforce to attract high-value US investments?

The US remained Vietnam’s largest export market in 2023, with value reaching approximately $100 billion, or double that of Vietnam’s second-largest market, China. This underscores the significant economic relationship between Vietnam and the US.

In addition, the upgrade to a Comprehensive Strategic Partnership between Vietnam and the US marks a significant milestone, reflecting the growing depth and breadth of the bilateral relationship. This elevated status opens new avenues for collaboration in strategic sectors, including semiconductors, where Vietnam has emerged as a key beneficiary of global trends and policies such as the US CHIPS Act, renewable energy, digital transformation, and advanced manufacturing. Other promising sectors include healthcare and agricultural technology, where Vietnam’s growing capabilities and market potential align well with US expertise and investment priorities. Vietnam’s strategic location and robust manufacturing base make it an attractive partner for US companies seeking supply chain diversification.

To attract high-value investments, Vietnam must invest in workforce development, emphasizing STEM education, vocational training, and English proficiency. Notably, the government’s recent issuance of the National Semiconductor Industry Development Strategy and the Semiconductor Human Resources Development Strategy underscores the critical role of workforce development in building a robust high-tech supply chain. Collaborating with US educational institutions and companies to design specialized training programs aligned with these strategies could help align the skills of the workforce with the needs of US businesses.

How can Vietnam address its trade surplus with the US while strengthening bilateral trade relationships and avoiding potential trade defense measures?

Vietnam can address its trade surplus by encouraging imports of US services and high-value goods, such as agricultural products, energy technologies, and advanced machinery. This, in turn, will contribute significantly to production and skills in the country. Collaborative efforts to align product standards and certifications can facilitate smoother trade flows. Vietnam should also work on joint ventures that create value in both markets, such as technology co-development or agricultural innovations.

Maintaining regular dialogue through trade and economic councils can ensure that potential trade imbalances are addressed proactively, minimizing risks of trade defense measures.

How do you view Vietnam and the US relationship under the new Donald Trump Presidency?

Political changes in the US could introduce new uncertainties in trade policies, such as tariff adjustments or shifts in economic priorities. While Vietnam might face new challenges, it is important to consider these within the broader strategic context. Vietnam’s position as a trusted and increasingly integral partner in global supply chains could offer a relative advantage.

Even in the face of protectionist measures, Vietnam is well-positioned to benefit from shifts in global trade patterns. Vietnam’s diversified trade relationships, adherence to high-standard agreements, and reputation for manufacturing excellence are key factors that mitigate risks and enhance its appeal to US businesses.

To prepare, Vietnam should focus on maintaining strong bilateral dialogue to demonstrate its unique role in supporting US economic goals, including supply chain resilience and regional stability. At the same time, Vietnam’s proactive efforts to align with international standards and deepen its integration into global value chains will further solidify its importance as a strategic partner, regardless of political transitions in the US.

What specific improvements should Vietnam make to its investment environment to become more attractive to US businesses?

To attract US businesses, Vietnam should focus on ensuring transparency, predictability, and efficiency in its regulatory framework. Simplifying administrative processes, strengthening intellectual property rights protection, and fostering public-private partnerships in infrastructure development are key steps.

Additionally, Vietnam should create incentives for high-tech and sustainable investments, such as tax benefits for R&D and green energy projects. Developing an ecosystem of supporting industries, particularly in strategic sectors like semiconductors and electronics, will further attract US companies looking for end-to-end solutions.

What policy changes or initiatives should Vietnam consider to ensure sustainable and mutually-beneficial economic cooperation with the US?

Vietnam should prioritize policies that support innovation, green growth, and technological adoption. Establishing joint innovation centers, with US support, can drive collaboration in cutting-edge industries like AI, the Internet of Things (IoT), and biotechnology.

Expanding programs that promote sustainable development, such as renewable energy projects and environmental, social, and governance (ESG)-aligned investments, will resonate with US priorities. Furthermore, enhancing trade facilitation measures and investing in digital infrastructure to support e-commerce can open new avenues for cooperation.

Looking ahead, what is your outlook for Vietnam - US economic relations, and what should Vietnam do to cement its role as a key partner for the US in Asia?

Overall, the positive trajectory of Vietnam - US economic relations will likely continue as both countries align on mutual priorities such as supply chain resiliency, green growth, and technological innovation. Vietnam’s strategic location and its role as a critical hub in regional and global value chains ensure its increasing importance to US economic and geopolitical strategies.

To bolster its position with the US, Vietnam should take proactive steps to fully leverage the opportunities presented by the Comprehensive Strategic Partnership. This includes continuing to strengthen trade and investment ties, fostering innovation and workforce development, and addressing bottlenecks in infrastructure and regulatory frameworks. Enhancing Vietnam’s capacity for high-tech manufacturing, particularly in semiconductors and green energy, will position the country as an indispensable partner in the region.

Furthermore, Vietnam should demonstrate leadership in addressing global challenges, such as climate change and digital governance, while maintaining active participation in regional trade frameworks like the Indo-Pacific Economic Framework. These efforts will not only deepen trust and collaboration with the US but also reinforce Vietnam’s position as a central player in Asia’s evolving economic and security architecture.