Vietnam is a narrow S-shaped country extending 1,650 kilometres along a north–south axis and sharing borders with China, Laos and Cambodia. Vietnam is densely populated: 89 million people, the world’s 13th largest population, live in an area less than half the size of New South Wales.
Vietnam’s economy and society have been transformed since the 1970s. Today, Vietnam is a low middle-income country with a strong outward orientation. Vietnam’s economy ranks 41st in the world (PPP terms). Vietnam is the world’s second-largest coffee producer (after Brazil) and rice exporter (after Thailand). Its urban middle class is growing and is increasingly sophisticated. However, Vietnam is still a developing country. Agriculture remains an important source of national income and employs more than half the workforce. Income disparities are pronounced. Many Vietnamese live in low-lying deltas, notably the Mekong Delta, and Vietnam is one of the five countries most vulnerable to rising sea levels.
Vietnam is a rapidly emerging player in East and Southeast Asia and a growing partner for Australia. Australia established relations with Hanoi in 1973. Since then, relations have grown steadily alongside Vietnam’s integration into the regional and global economic, political and strategic community. Today, the relationship is multifaceted and active, including political exchanges, trade, investment, aid, education, border security, defence and cooperation to counter transnational crime. Education is Australia’s largest export to Vietnam, followed by wheat, gold and copper. Crude oil is our largest import. The large Vietnamese community in Australia – around 220,000 according to the 2011 census – is the foundation for active people-to-people ties.
At the government-to-government level, the Australia-Vietnam relationship is underpinned by strong architecture. A number of formal agreements and regular meetings are supported by a vigorous program of high-level bilateral visits. The growing bilateral relationship has been bolstered by an increasing appreciation of our shared interests in a stable and prosperous region. For example, as the Association of Southeast Asian Nations (ASEAN) chair in 2010, Vietnam played a leading role in expanding the East Asia Summit process to include the United States and Russia, creating a forum embracing all major countries with interests in East Asian security—an important outcome for Australia and the region as a whole. These shared interests inform our close regional and multilateral cooperation with Vietnam such as in the ASEAN Regional Forum, the East Asia Summit and the Asia–Pacific Economic Cooperation (APEC) forum, and globally in the United Nations, the World Trade Organization and other bodies.
Government, business and people-to-people links
The top-level bilateral agreement is the Australia–Vietnam Comprehensive Partnership, signed in 2009 to provide a strategic approach to developing the relationship. The partnership is supported by a Plan of Action with concrete goals in many areas, which are periodically reviewed and updated.
The two countries are strongly focused on expanding political ties and policy dialogues to increase understanding, confidence and cooperation. To that end, Australia and Vietnam hold annual bilateral talks at the ministerial level on trade and investment, and at the senior officials level on aid, education, defence, consular affairs and human rights. There are regular ministerial contacts at regional and international meetings. A strategic dialogue was initiated at deputy secretary/vice-minister level in 2011 to exchange views on global and regional strategic issues.
Promoting economic growth and trade is a priority for Vietnam. Australia is keen to support Vietnam’s efforts to develop its economy and its further integration into the global economic system. A more prosperous and confident Vietnam will improve the quality of life of its citizens, contribute to regional security, and be a bigger export market and trade partner for Australia.
Snapshot of Australian investment in Vietnam
Australian companies have invested in many sectors of the Vietnamese economy. Leading investors in manufacturing and processinginclude Strategic Marine (shipbuilding), BlueScope Steel, Midway Metals (stainless steel products) and Interflour (wheat milling).
Interest in the petroleum sector has grown strongly since 2007, with significant investments by Santos, Arrow Global, Neon Energy and Origin Energy.
Investment in services has grown steadily since the late 1990s. Australia’s reputation in Vietnam is closely linked to education: RMIT International University (6,000 students in Hanoi and Ho Chi Minh City) and the University of Danang – University of Queensland English Language Institute are notable investments.
In financial services, ANZ set up in Vietnam in 1992 and is one of only five wholly foreign owned banks licensed to operate there. The Commonwealth Bank has operated a branch in Ho Chi Minh City since 2008 and has a 20 per cent stake in the Vietnam International Commercial Joint Stock Bank (VIB). CPA Australia established offices in Vietnam in 2008 and has memorandums of understanding with the Ministry of Finance, the Vietnamese Association of Certified Public Accountants and several universities.
Qantas has had an interest in Vietnam’s domestic aviation market since 2008 through its 27 per cent stake in Jetstar Pacific airlines, now majority-owned by Vietnam Airlines.
Both countries are parties to the ASEAN–Australia–New Zealand Free Trade Agreement, which has created new opportunities for trade and investment. Both are also participants in the Trans-Pacific Partnership free trade negotiations, which aim to open markets further and promote regional supply chains.
Development and technical cooperation has been fundamental to the broader relationship for many years. Vietnam has had significant success in reducing its poverty rate, which declined from 58 per cent in 1993 to around 12 per cent in 2009. Australia is the sixth-largest bilateral donor to Vietnam. Our aid program is designed to help address remaining poverty issues by promoting economic growth and integration, developing infrastructure and human resources, and overcoming environmental challenges (especially climate change). The aid program directly addresses challenges confronting Vietnam as it strives to break through to higher levels of middle income status and avoid the so-called ‘middle income trap’.
Beyond the government to government sphere, development links between Australia and Vietnam involve the broader community. Many Australians are helping to advance Vietnam’s development. In any year, around 70 Australian volunteers work in Vietnamese agencies and non-government organisations. Among many examples, the Fred Hollows Foundation is working to prevent blindness in Vietnam, the Loreto Vietnam program in Ho Chi Minh City helps educate poor children, the Australian Vietnam Veterans Reconstruction Group that has undertaken building, medical, educational, agricultural, aquacultural and reconstruction projects, and the Australia Vietnam Medical Foundation based at the University of Sydney helps build the practical knowledge of Vietnam’s doctors and nurses.
Cooperation on transnational crime and at the operational level between our police forces is strong, and helps to protect the region and Australia’s borders from drug smuggling, people smuggling and human trafficking.
Helping Vietnam meet its climate change challenges
Weather-related disasters are a major national concern for Vietnam, and the incidence of severe typhoons, which already cost Vietnam 1–2 per cent of GDP per year, is expected to rise.
Australia is working with Vietnam to understand climate change impacts, identify and implement appropriate adaptation measures and support low‑carbon growth. Australia’s assistance includes:
- strengthening the capability of local communities to respond and adapt to climate change, including weather related disasters; for example, by introducing new mangrove planting techniques in high erosion areas and improving dyke construction and management
- supporting a partnership between Australian and Vietnamese climate scientists
- supporting research to help farmers introduce salt-tolerant rice varieties and identify ways to reduce greenhouse gas emissions in agricultural production
- incorporating climate resilience into all new infrastructure support activities, including the Cao Lanh Bridge project in the Mekong Delta.
Rich Vietnam–Australia people-to-people links are based on strong family and community bonds between Vietnam and Vietnamese Australians, and are promoted through Australian Development Scholarship alumni, Australian volunteers, and returning veterans assisting Vietnam to move beyond its years of conflict.
Our defence relationship is developing from a firm base established more than a decade ago. The core of the relationship is an education and training program, including a comprehensive English language program managed by the Australian Defence Force at Vietnam People’s Army facilities. The Australian Defence Force also conducts regular ship visits and special forces exchanges. Each year, a number of Vietnamese officers use their English language training to attend higher-level studies at Australian universities, military colleges and military training institutions. Australia is also providing language training and expertise to help the Vietnam People’s Army prepare for possible future involvement in UN peacekeeping operations. Cooperation will be increased by building on the strategic dialogue to implement further professional exchanges and, ultimately, exercises.
In the mid-1970s, Australia was among the first Western countries to offer scholarships to Vietnam. Today, we provide the most full scholarships of any country each year (around 400). Vietnam has been particularly successful in the internationally competitive Endeavour Awards program, demonstrating the high calibre of Vietnamese students and researchers.
The Vietnamese place a strong emphasis on developing personal relationships, and bilateral dealings are underpinned by a strong program of two-way visits that help to strengthen relations at senior levels. Over recent years, the Vietnamese Prime Minister, Deputy Prime Minister, other ministers, parliamentarians and party officials have visited Australia. Recent high-level Australian visitors to Vietnam include the Governor-General, the Prime Minister, and the ministers for foreign affairs, trade, defence and immigration.
Vietnam is right at the geographical centre of major shifts in global power and influence. It is an important economic, political and strategic participant in those shifts and is likely to become more important and influential over coming years. Vietnam faces significant challenges in maintaining its successful economic trajectory and being able to continue to deliver rising living standards and greater benefits and freedoms to its people.
By 2025, Vietnam will have a population of nearly 100 million. If Vietnam is able to deal with its infrastructure, skills and governance challenges effectively over the next decade, it should be able to sustain annual economic growth of over 7 per cent. Maintaining growth will be crucial if Vietnam is to meet its own policy goals domestically and internationally.
A strong and emergent Vietnam would create significant two-way trade and investment opportunities for Australia. A larger, wealthier middle class, bolstered by a growing number of Australian alumni, will consume more Australian goods and services, from high-quality food and beverages to education. A growing economy will require increased imports of coal, liquefied natural gas and other resource inputs, as well as sophisticated services.
It is in Australia’s interests to help Vietnam address its key challenges through a further intensification of the policy dialogue and aid program, including on sustainable development In the education sector, as more Vietnamese academics and youth speak English and as governance improves, Australia will have opportunities to deliver more in-country twinning programs with local universities, colleges and schools. Partnerships to engage in ground breaking research in fields such as science, medicine and agriculture can highlight the quality and practical applications of Australian education. We will continue to share our experience in vocational education reform and continue to explore deeper sporting and cultural links.