During a visit to Vietnam last week with a delegation of Australian groups to co-chair the Southeast Asia Ministerial Forum 2022, Tim Ayres, Australian Assistant Minister for Trade and Manufacturing, said that Vietnam was a fantastic country for Australians to grow their business.

Tim Ayres, Australian Assistant Minister for Trade and Manufacturing, and Tran Duy Dong, Vietnamese Deputy Minister of Planning and Investment

“Australian companies have opportunities such as strong capabilities in human resources, infrastructure, and the real enthusiasm the Vietnamese government has for lifting trade and investment. We want to support the economic development of Vietnam with strong investment and complimentary trade,” said Ayres.

In recent years, Vietnam and Australia have built a close relationship in many fields, and the economy is considered one of the most important factors. The success of this cooperation can be attributed to the role of pioneering entrepreneurs connecting the two countries through new business projects, opening up opportunities for long-term trade and cooperation.

According to the Australian Chamber of Commerce in ASEAN’s (AusCham) Australian Business in ASEAN Survey 2021, education and training in Vietnam drew the most Australian investment, with 28 per cent of all projects.

Professor Martin Bean, a former vice-chancellor of RMIT University, is typical of Australian businessmen who have contributed to good cooperation between the two countries in education.

“Our original intent was to form bilateral learning and teaching to bring the best of Australian higher education to Vietnam. But as time has gone on, we’re seeing more and more research collaboration now as well, with our research scientists and practitioners and professors able to share their research to tackle some of the big challenges of our two countries,” said Bean.

According to AusCham, 8 per cent of Australian investment in Vietnam is in agriculture.

“We see the Vietnamese market is a very strong market, and we would love to be present in this market. It has 50 different markets around the world that we service, and we have 11 supply chains to source rice from around the world, and we would like to develop Vietnam to be one of the larger of those supply chains,” said Rob Gordon, CEO of Australian group SunRice, which pumped money into a production facility in Dong Thap province in 2018.

Conversely, Hoa Phat Group firmly set its first step into the Australian market by acquiring all shares of the Roper Valley mine project in May 2021.

Roper Valley iron ore has a reserve of about 320 million tonnes and a mining capacity of four million tonnes per year. Hoa Phat is considering buying new iron mines in Australia to ensure a long-term supply of at least 50 per cent of the group’s iron ore needs (equivalent to 10 million tonnes per year).

Hoa Phat also holds the greatest market share in supplying Australian beef in Vietnam.

Australia ranked as Vietnam’s 10th-largest trade partner in 2021, with a total import-export transaction of $12.4 billion, an increase of 49.5 per cent on the previous year. Vietnam’s exports to Australia achieved $4.45 billion, an increase of 23 per cent compared to 2020, while Vietnam’s imports from Australia exceeded $7.95 billion, an increase of 70 per cent.

Vietnam’s import and export turnover with Australia reached approximately $12 billion in the first nine months of 2022, increasing 31.5 per cent from the same period in 2021. The country’s export turnover to Australia reached $4.2 billion, an increase of 33.9 per cent over the same time in 2021, while import turnover from Australia reached $7.8 billion, an increase of 30.3 per cent.

However, in comparison to other nations, Australian investors’ expansion in Vietnam has been cautious. In 2021 and 2022, only a quarter of businesses said they aimed to raise their company size, while over 60 per cent wanted to maintain operations at their current scale, and over 10 per cent planned to lower their business scale, according to AusCham Vietnam.

In June, the Foreign Investment Agency under the Ministry of Planning and Investment reported that Australia had 562 investment projects in Vietnam with the total investment capital of $1.96 billion, accounting for 1.59 per cent of total foreign-invested projects and a relatively tiny share at 0.45 per cent of total foreign direct investment, placing 21st out of all countries and territories invested in Vietnam.

According to the Vietnam Chamber of Commerce and Industry, Australian corporations are trying to diversify their investments and operations in Vietnam due to the two key factors of favourable labour costs and a stable political climate. However, it cited five obstacles for foreign-invested enterprises doing business in Vietnam: persistent corruption and bureaucracy; a flawed tax system; a lack of highly-qualified labour; ineffective law enforcement; and unfair market competition.