Vietnam - Netherlands: Advancing Towards Sustainable Development and Enhanced Cooperation

The Vietnam-Netherlands relationship began to thrive in the early 1990s as Southeast Asia entered a period of robust development that attracted the attention of European business communities, including the Netherlands.

Overview of Vietnam - Netherlands bilateral relations

Since 1993, there have been numerous high-level visits and exchanges between the leaders of the two countries, which have laid the foundation for enhancing reliable friendship and cooperation in all fields, exemplified by the visits of Prime Minister Phan Van Khai (2001), Prime Minister Nguyen Tan Dung (2011 and 2014), Prime Minister Nguyen Xuan Phuc (2017), Chairwoman of the National Assembly Nguyen Thi Kim Ngan (2018), and visits to Vietnam by Dutch leaders such as Prime Minister Wim Kok (1995), Prince Willem Alexander (2005 and 2011), and Prime Minister Mark Rutte (2014). Through these visits, many bilateral cooperation mechanisms have been approved, important cooperation agreements have been signed, and legal frameworks have been established to promote bilateral relations in many areas.

Vietnam and the Netherlands are two coastal countries with strategic locations, large deltas, and face challenges of climate change and rising sea levels. These similarities have transformed the relationship between Vietnam and the Netherlands from a regular partnership to a Strategic Partnership on Climate Change Adaptation and Water Management in 2010 and a Strategic Partnership on Sustainable Agriculture and Food Security in 2014.

Since January 2014, the Vietnam-Netherlands relationship has shifted from development cooperation to a "trade partner," with a focus on promoting trade and investment. The Vietnam-Netherlands trade relationship has continued to grow, with trade turnover increasing steadily by over 20% per year. In 2016, bilateral trade turnover reached $6.68 billion, and in 2017 it reached $7.7 billion. Since then, the Netherlands has become the largest export market for Vietnam in the European Union (EU).

Vietnam & Netherlands trade and investment cooperation 

Regarding investment, it is notable that the Netherlands has consistently played a significant role as the largest European investor in Vietnam and the second-largest EU trading partner of Vietnam. Among the many large corporations currently operating efficiently in Vietnam, noteworthy examples include De Heus, Friesland Campina, Peja Vietnam, Heineken, Unilever, Royal Dutch Shell, Akzo Nobel, and Philips. Increasingly, more and more Dutch companies that focus on offering innovative solutions, circular economy and sustainable trade are entering the market. The EU – Vietnam Free Trade Agreement (EVTA), which has been in effect since August 2020, and the EU – Vietnam Investment Protection Agreement (EVIPA), which is expected to take effect soon in the near future, are paving the way to boost sustainable and inclusive trade and investment between Vietnam and the Netherlands.

According to recent statistics, the Netherlands has been granted 11 new investment projects and adjusted the capital on eight projects within the first five months of 2023, with a total newly registered, adjusted, and contributed capital of nearly USD 602 million. As of the end of May 2023, the Netherlands ranked eighth out of 143 countries and territories investing in Vietnam, with a total registered investment capital of USD 14.112 billion and 426 valid projects.

The EVFTA has had a positive impact on attracting investment and resources from the Netherlands into Vietnam. For Dutch enterprises currently doing business in Vietnam, especially those that import goods such as raw materials and supplies for production from EU countries and export finished products to this market, in addition to the tax incentives brought about by EVFTA, goods of Vietnamese origin are being elevated thanks to EVFTA.

In addition, the structure of Vietnam’s exports to the EU has been diversified and expanded during the first eight months of 2022, ranging from equipment and machinery (up 34.8% year-on-year), garment (41.2%), footwear (36.2%), to agro-fishery-forestry products of coffee (54.4%), seafood (42%), vegetable (18%), and rice (22.2%). In return, Vietnam has also boosted importing products from the EU, including pharmaceutical products (up 7.6%), chemicals (102%), wood, wooden products, animal feed (15.5%), and milk and dairy products (21.9%). According to experts, preferential treatments under EVFTA, especially tariff reductions, have significantly improved the competitiveness of Vietnam's exports and their penetration of European markets.

Prospects and trends in future bilateral relations

Ms. Vo Thi Ngoc Diep, the Vietnamese Commercial Counselor in the Netherlands, has stated that investment from the Netherlands into Vietnam is currently growing at a relatively good rate, although there are not many large projects. Dutch businesses still view the investment environment in Vietnam favorably, particularly with the recent significant improvements in administrative procedures, abundant and diligent labor resources, and a willingness to learn. Additionally, the renewal of appropriate policies and regulations that align with the country's economic development, regional and international trends have been positive developments.

Following the Covid-19 pandemic, in addition to high-level government delegations from the Netherlands visiting Vietnam, many business delegations from various Dutch localities have conducted market research and evaluations. Among them, many businesses operate in the fields of information technology, semiconductor technology, materials, high-tech agriculture, and climate change prevention projects.

Vietnam's current approach aligns with the strengths of the Netherlands, which is to attract investment into green and clean energy sectors, high-tech agriculture to create value-added products, industrial materials, semiconductors, and climate change prevention projects. The domestic ministries, agencies, and localities need to build standard documents and publish them on the websites of management agencies, as is currently done in Malaysia and Singapore. These documents should clearly outline information on the priority sectors/fields for investment attraction by the central and local authorities, as well as information on related procedures such as land leasing, leasing prices, taxes, locations, and regulations for each type of investment.

Conclusion 

N. Investing in Vietnam from the Netherlands means promoting bilateral trade growth, specifically increasing exports of goods from Vietnam to the Netherlands/EU to benefit from the EVFTA incentives. Moreover, with the goal of transitioning to clean and green energy by 2037, the Netherlands will only retain high-value goods production sectors and shift investment in production and export to countries with cheaper fuel and labor costs.

In conclusion, the economic and trade cooperation potentials between Vietnam and the Netherlands are promising, with Vietnam being a priority trading partner for the Dutch government. The recent investment policy from the Netherlands highlights the importance of investing in Vietnam, which will promote bilateral trade growth and increase Vietnam's exports to the Netherlands and the EU, benefiting from the EVFTA incentives.

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