In Vietnam, a signed contract is not always an enforceable one. Many foreign investors are surprised to learn that a fully negotiated and executed contract can be declared invalid by a court, simply because it failed to meet specific, overlooked, legal formalities. This critical gap between a contract’s formation (the moment of signing) and its […]
Over the past decades, the UK has been a reliable partner in supporting Vietnam's socio-economic development goals and promoting trade and investment between the two countries. The UK has also been a strong supporter of Vietnam's integration into the global economy and its efforts to tackle climate change and promote sustainable development.
Diplomatic relations between UK and Vietnam
The United Kingdom and Vietnam are celebrating the 50th anniversary of their diplomatic relations in 2023. This is a time to reflect on the past half-century of friendship and cooperation between the two countries, and to look ahead to the future.
The UK and Vietnam established diplomatic ties on September 11, 1973. In 2010, Vietnam and the United Kingdom (UK) signed a Joint Declaration to establish the Vietnam – UK Strategic Partnership. In the late 2020, the UK and Vietnam signed the UK-Vietnam Free Trade Agreement, which aims to boost trade and investment between the two countries and create new opportunities for businesses and consumers. The two countries have also pledged to cooperate more closely on issues such as climate change, sustainable development, and human rights.
Over 50 years, the two countries have built a strong cooperative relationship in a wide range of areas, including politics and diplomacy, global and regional issues, trade and investment, development cooperation, sustainable socio-economic development, education and training, security and defense, and people-to-people exchanges. The two sides have also been coordinating closely in multilateral fora, including the United Nations (UN), Asia-Europe Meeting (ASEM), Association of Southeast Asia Nations (ASEAN) - led fora and the World Trade Organisation (WTO). Here are the key sectors that the two countries have laid a strong foundation of cooperation:
1. Political-diplomatic co-operation
2. Trade, investment and the business environment
3. Sustainable growth, development co-operation
4. Education, vocational training, English language training, higher education, science and education technology
5. Defence, security and serious organised crime
6. People-to-people links and equal rights
7. Global and regional issues
A thriving partnership in trade and economics
With the UK - Vietnam Strategic Partnership being signed as well as the UK-Vietnam free trade agreement (UKVFTA), the economic-trade relation between two countries are being at its strongest ever. Trade volumes increased 17 per cent in 2021, and total trade in goods and services (exports plus imports) between the UK and Vietnam was £6.4 billion ($8 billion) in the four quarters to the end of Q3 2022, an increase of 20.5 per cent, or £1.1 billion ($1.37 billion) from the four quarters to the end of Q3 2021.
Of this, total UK exports to Vietnam amounted to £950 million ($1.18 billion) in the period, an increase of 13.6 per cent, or £114 million ($142.46 million), compared to the same period the previous year. Total British imports from Vietnam amounted to £5.4 billion ($6.75 billion), in current prices, an increase of 21.8 per cent, or £974 million ($1.21 billion) compared to the four quarters to the end of Q3 2021.
Regarding investments, as of the end of 2021, there were 447 UK-invested projects in Vietnam, which accounted for 1.3 percent of a total number of foreign direct investment (FDI) projects, with total investment capital of $4 billion. Meanwhile, Vietnam has had nine projects with total registered capital of $11.5 million in the UK. The UK is Vietnam’s third largest trade partner in Europe and the ninth largest export market for Vietnam.
These figures clearly demonstrate Global Britain in the Age of Competition, the strategy announced by the British Prime Minister in the context of post-Brexit and Covid-19. The UK is determined to shift its strategic focus to the Indo-Pacific region, prioritizing Southeast Asia in finding new partners and markets.
According to economists, the space for trade cooperation between the UK and Vietnam remains large, especially because Vietnam is considered a market with high potential when entering the new economic development period with targeted income per capita of $3,500 by 2025 and $7,000 by 2030.
The Vietnamese side can take advantage of UK supply chains and technology, while large corporations in Vietnam can take advantage of business fields such as aviation, tourism, real estate and farm-forestry-seafood products.
UK Investment in Vietnam: Upcoming plans and opportunities
With the UK's recent inclusion in the CPTPP, there is a great opportunity for the UK and Vietnam to increase their bilateral trade and reach their target of US$10 billion. The agreement is a gateway for the UK into the wider Indo-Pacific, which is set to account for the majority of global growth and around half of the world’s middle-class consumers in the decades to come. Vietnam's agro-aquatic products, such as fruits and vegetables, coffee, and cashew nuts, are expected to benefit the most, with several export items to the UK receiving more favorable tax exemptions under the CPTPP agreement.
In addition to the traditional sectors of financial and professional services and insurance, education has also been of interest to UK companies, with the British International School in Vietnam celebrating its 25th anniversary this year. Moreover, bilateral ties have expanded to include pharmaceuticals, technology, digital transformation, climate change response, and green growth. The pharmaceutical sector is expected to see more investment, facilitated by the UKVFTA. Last year, British global healthcare company GSK has launched its new legal entity in Viet Nam – GSK Pharma Viet Nam Company Limited (GSK Vietnam) – with an investment capital of US$200 million.
As part of this initiative, BritCham has taken on the role of Co-Chair of the Vietnam Business Forum, which is a platform for businesses to engage with the Vietnamese government and other stakeholders on issues related to economic development. By taking on this leadership role, BritCham is helping to ensure that UK companies have a greater say in the development of policy and regulation in Vietnam.
Challenges
"Vietnam is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, otherwise known as the New York Convention. Its provisions are incorporated into Vietnamese law. However, unofficial statistics suggest that international arbitration awards are recognised in only approximately 50% of cases within the country. The UK is working with Vietnam to improve this, including through better legislation and legal training."
"However, concern is rising among rights holders that Vietnam’s IP enforcement system has not yet developed sufficiently to control the rapid growth of piracy and counterfeiting despite the substantial legislative work completed over the past several years"
Conclusion
The diplomatic relationship between the United Kingdom and Vietnam has grown significantly over the past 50 years. From a modest beginning, today, the two countries enjoy a strong and mutually beneficial partnership.
In 2023, the UK and Viet Nam celebrate 50 years of diplomatic relations between the two
countries. The 50th anniversary is a chance to celebrate half a century of deepening friendship between the UK and Viet Nam, as well as to look ahead to the next 50 years. Therefore, this is an ideal time for UK investors to take advantage of the many opportunities available in Vietnam. Viettonkin Consulting is here to provide support to UK investors with establishing a company or starting investments in Vietnam’s thriving economic landscape. With our extensive knowledge and experience in both the Vietnamese and global markets, we are well-equipped to guide you through the complexities of setting up a business in Vietnam. We have expertise across multiple sectors and can assist with legal procedures, making the process as smooth as possible for you. Reach out to us if you are looking for new opportunities in Vietnam. With us by your side, you can focus on what matters the most!
