PM Pham Minh Chinh (right) and Malaysian Minister of Investment, Trade, and Industry, Zafrul Abdul Aziz, Photo: Nhat Bac

Last week marked the second visit to Vietnam by Malaysian Minister of Investment, Trade, and Industry, Zafrul Abdul Aziz, where he co-chaired the fourth session of the Vietnam-Malaysia Joint Trade Committee in Hanoi.

“It is likely that bilateral trade turnover will reach $18 billion this year, surpassing the target initially set for 2025,” Aziz said. “Vietnam has become a major investment destination for Malaysian companies, who are planning significant projects in the country.”

He added that Malaysia had high hopes for further boosting bilateral economic, trade, and investment ties with Vietnam, particularly in sectors such as the Halal industry, digital transformation, green transition, wind power, innovation, and AI.

Prime Minister Pham Minh Chinh praised Malaysia as Vietnam’s key trade and investment partner, emphasising Vietnam’s desire to attract more Malaysian investors and businesses. He committed to “protecting their legitimate rights and interests, ensuring fair treatment, and creating the best conditions for all foreign investors, including those from Malaysia in Vietnam.”

Both sides have set a goal of achieving $20 billion in two-way trade in the coming years, a target PM Chinh believes can be met.

To achieve this goal, PM Chinh suggested that Malaysia further facilitate the entry of Vietnamese goods into its market, particularly processed agricultural products, seafood, and foodstuffs. He also urged support for Vietnam’s Halal industry development and encouraged Malaysian investments in digital transformation, green energy, clean energy, and wind power exports. Additionally, PM Chinh called for increased cooperation in emerging fields such as innovation, AI, and cybersecurity.

Currently, Malaysia is Vietnam’s third-largest trading partner in Southeast Asia and the 10th-largest globally. Total bilateral trade reached $12.7 billion last year and $6.2 billion in the first five months of this year, marking a 22.1 per cent on-year increase.

Malaysia exports a diverse range of products to Vietnam including consumer electronics and parts, chemicals, fabrics, crude oil, petroleum products, glassware, paper, plastics, food preparations, wires, cables, and liquefied petroleum gases. Vietnam’s key exports to Malaysia consist of computers, electrical products, spare parts, iron and steel, machinery, equipment, tools, and instruments.

According to consultancy firm Dezan Shira and Associates, Malaysia and Vietnam have become crucial links in each other’s global supply chains. Over the past two decades, they have strengthened their trade partnership, benefiting from the shift away from China and the diversification of supply chains.

Malaysian investment in Vietnam has significantly contributed to the increase in two-way trade. Data from the Vietnamese Ministry of Planning and Investment shows that as of June 20, Malaysia has invested a cumulative total of $13.1 billion in Vietnam through 745 valid projects, making Malaysia the third-largest investor, after Singapore ($80.2 billion) and Thailand ($14.1 billion).

These investments are primarily concentrated in education (28 per cent of total registered capital), manufacturing and processing (20 per cent), and electricity, gas, and water production and distribution (20 per cent).

Malaysian investors are active in 34 out of Vietnam’s 63 provinces and cities, with the largest investments located in Ho Chi Minh City (348 projects totalling $4.88 billion), followed by Tra Vinh, Hanoi, Binh Duong, Dong Nai, and Danang.

One notable project is the Berjaya Vietnam International University Urban Area, a $2.56 billion initiative in Ho Chi Minh City. Initially approved in 2008, the project faced delays due to funding challenges.

In recent years, Vietnam and Malaysia have also strengthened their bilateral cooperation in the oil and gas sector. For instance, Malaysia’s state-owned Petroliam Nasional Bhd (Petronas) and Vietnam Oil and Gas Group (PetroVietnam) collaborate on oil and gas exploration, exploitation, and service supply. Their partnership began in 1991 and includes activities from exploration to processing and service delivery.

In 2019, Petronas and PetroVietnam signed an agreement for the sale and purchase of additional gas for Vietnam’s Ca Mau gas-power-and-fertiliser complex. This agreement addresses the complex’s annual gas shortfall by providing an additional one billion cu.m of gas.

The $2 billion complex, located in the southernmost province of Ca Mau, includes the PM3-CM gas pipeline, CM1 and CM2 power plants, the Ca Mau fertiliser plant, and associated facilities. It was established in 2001 to meet a gas consumption demand of 2.2 billion cu.m annually, utilising natural gas resources from Lot PM3-CAA, an offshore area between Vietnam and Malaysia.

Furthermore, both nations have expanded their cooperation in electricity and renewable energy. Key Malaysian-backed projects include the $2.2 billion, 1,200MW Hai Duong Thermal Power Plant in the northern province of Hai Duong, operated by Jaks Pacific Power, and the $2.4 billion, 1,320MW Duyen Hai 2 Thermal Power Plant in the Mekong Delta province of Tra Vinh, managed by Janakuasa.

In late 2022, Toyo Ventures Holdings Berhad’s subsidiary, Toyo Ink, and Vietnam’s Song Hau 2 Power Company signed a temporary engineering, procurement, and construction agreement with the Sunway-PECC2 Consortium for the $3.23 billion, 2,120MW Song Hau 2 Thermal Power Plant project in the Mekong Delta province of Hau Giang. Sunway-PECC2 is a joint venture between Malaysia’s Sunway Construction and Vietnam’s Power Engineering Consulting JSC 2, with Song Hau 2 Power Company, a subsidiary of Toyo Ink. The contract is valued at approximately $2.2 billion.

Another significant Malaysian investment is the $864 million Yen So Park project in Hanoi, licensed in 2007 for Gamuda Group.