The Evolving Economic Partnership Between Singapore and Vietnam Before and After COVID

Over the years, domestic and foreign businesses appreciate the positive progress and significant improvements in Vietnam’s business and investment environment. Although the COVID-19 pandemic has slowed the momentum of Vietnam’s reform to some extent, Vietnam has always been considered as an attractive investment destination with a vibrant economy and consistently having one of the world’s highest growth rates. In recent years, Singapore continues to be one of the leading investors in Vietnam. Therefore, it is necessary and worthwhile to study Singapore’s investments in Vietnam during and after COVID-19.

1. Vietnam’s investment environment during and after COVID-19

The advantages of Vietnam’s investment environment policies during COVID-19
Sustaining high employment rates, improving the business environment, enhancing competitiveness, and promoting innovation towards sustainable development are key focus areas of Vietnam’s economic reform. Therefore, every year the Vietnam government has issued policies in the forms of government resolutions on improving the business environment and improving Vietnam’s national competitiveness.

Vietnam’s investment environment after COVID-19: Changes and adaptation to the new environment

Foreign Direct Investments (FDI) will continue to be a particularly important capital flow for Vietnam’s growth and international economic integration. FDI is expected to provide additional capital, technology-sharing, management capacity, new business capabilities and integration with the global supply chain.

The government timely reviews and adjusts foreign investment policies timely to suit and keep up with the changing dynamics of the global economy and adapts its strategies to attract FDI from private enterprises and public investments from countries around the world. The government aims to create a competitive and open business investment environment by streamlining policies and administrative processes to reduce the barrier of entry for foreign investors and foreign businesses. The Vietnam governments hopes that this would create favourable conditions for the day-to-day business operations of foreign businesses.   Moving forward, the Vietnam government is developing a strategy to continually improve Vietnam’s economic competitiveness in various new industries. This strategy would involve Vietnam reviewing and supplementing the clean land fund, electricity planning, the development of green energy projects, strengthening the training of high-quality human resources, developing supporting industries and improving administrative procedures.

2. Singapore’s investment situation in Vietnam during COVID-19

In 2020, 112 countries and territories have invested in Vietnam, of which Singapore leads with a total investment of nearly US$9 billion, accounting for 31.5% of total investment capital in Vietnam (Vietnam Foreign Investment Agency, 2020). Singapore has long had the strength of being a centre of finance and international trade, logistics, a knowledge-based economy, science and technology, and is very agile in seizing trade-investment opportunities. Vietnam and Singapore have a strategic partnership with close economic cooperation frameworks such as the Joint Declaration on Comprehensive Co-operation Framework in the 21st Century, the Singapore-Vietnam Connectivity Framework Agreement and the Comprehensive and Progressive Treaty for Trans-Pacific Partnership (CPTTP). Through this government-to-government (G2G) partnership across various trade initiatives, along with an established legal framework, businesses from both countries are able to conduct business activities across both countries easily, creating opportunities for collaboration and synergy across both markets.

In 2021, there were 106 countries and territories investing in Vietnam. Singapore leads with a total investment capital of over US$10.7 billion, accounting for 34.4% of total investment capital in Vietnam, an increase of 19.1% over the same period in 2020; Korea ranked second with nearly US$5 billion, accounting for 15.9% of total investment capital, up 25.4% over the same period. Japan ranked third with a total registered investment capital of nearly US$3.9 billion, accounting for 12.5% ​​of total investment capital, an increase of 64.6% over the same period. Followed by China, Hong Kong, Taiwan among the top five. In 2021, Singapore’s investment capital is nearly 2.2 times higher than Korea’s investment capital and more than 2.7 times higher than Japan’s investment capital because Singapore has one new investment project and one project with large investment capital. These two projects accounted for over 49% of Singapore’s total investment capital. (Vietnam Foreign Investment Agency, 2021)

Singaporean investors are early investors in Vietnam’s infrastructure and urban development solutions, reflecting the foresightedness of Singaporean businesses. Established in 1996, the Vietnam – Singapore Industrial Park (VSIP), a joint venture between a Vietnamese enterprise – Becamex IDC and a consortium of Singapore investors led by Sembcorp Development Group, is one of the start-up projects of Singapore’s enterprises. By 2020, VSIP was operating and developing 7 industrial – urban – service projects, attracting more than US$14.5 billion and creating about 272,300 jobs (Vietnam Foreign Investment Agency, 2021). In addition, Ascendas has a joint venture with Protrade Company to develop and manage the Protrade International Industrial Park with an area of ​​500 hectares in Binh Duong province and Saigon OneHub Project, with an area of ​​​​12 hectares in the Ho Chi Minh City Hi-Tech Park.

The manufacturing, energy, and logistics sectors are also attracting increasing attention from Singaporean businesses. In September 2020 SG Logistics Joint Stock Company invested more than US$80 million in Tan Phu Trung Industrial Park. This is the third project by this enterprise in Ho Chi Minh City and its part of the company’s strategy to capitalize on a fresh wave of foreign investments in Vietnam. In October 2020, Delta Offshore Energy Company (Singapore) signed a Memorandum of Understanding to invest an estimated total of US$4 billion (Vietnam Chamber of Commerce and Industry (VCCI), 2021) in the Bac Lieu LNG Gas Thermal Power Plant Project which has a total design capacity of 3,200MW.

In addition to the real estate and energy sectors, Vietnam has recently been considered a key market for many financial, technology, and service businesses from Singapore. The wave of Singaporean technology enterprises participating in investment and cooperation in Vietnam has grown stronger recently. Some examples of these firms include Finaxar, which cooperates with Indovina Bank Vietnam to provide suitable financial support solutions for small and medium enterprises, and Bankograph Pte Limited, which invests in the fintech sector in Vietnam.

In line with Vietnam’s economic strategy, the Vietnam government is encouraging Singaporean businesses to invest in the high-tech sector by establish innovation centres, building research and development (R&D) capabilities, develop industrial park infrastructure in industries such as the processing industry, supporting industries, and high-quality services. Regulations in the Investment Law (2020) were amended to create a clearer mechanism in the investment process, clearly stipulating investment incentives for qualified businesses such as innovative startups and R&D centres. This will encourage Singaporean technology enterprises and start-ups to invest in Vietnam, especially as the two countries continue to strengthen G2G cooperation on innovation. As of February 2022, Singapore invested in Vietnam with 2,860 projects, with a total registered capital of US$66 billion. The average investment scale of a project is over US$23 million, higher than the nation-wide average investment of US$11.9 million/project for FDI projects of other countries. Singapore investors have participated in 18/21 industries, focusing on processing and manufacturing industries; real estate business; energy and power distribution. Singapore has had investments in projects across 51 provinces and cities of Vietnam (Huong, 2022).

On May 12, 2022, on the occasion of attending the ASEAN-US Special Summit in the US, Prime Minister Pham Minh Chinh and his Singaporean counterpart Lee Hsien Loong have agreed to promote high-level visits and meetings and maintain bilateral cooperative mechanisms (Vietnam Government News, 2022). During this meeting, the two Government leaders agreed to step up high-level visits and contacts; regularly maintain bilateral cooperation mechanisms; continue cooperation in post-pandemic economic recovery and development, including in developing the digital economy, green economy and circular economy. The two countries will further expand and develop VSIPs in Vietnam; jointly coordinate trade policies to effectively take advantage of benefits from new-generation free trade agreements between the two countries, such as CPTPP and the Regional Comprehensive Economic Partnership (RCEP). In addition, Prime Minister Pham Minh Chinh suggested bolstering collaboration in education-training and proposed that Singapore provide more scholarships for Vietnamese managerial officials at all levels. He also wished to strengthen cooperation between the two countries in addressing security challenges, both conventional and non-conventional, epidemics and climate change. The two Prime Ministers also discussed a number of regional and international issues of mutual concern; including existing cooperation mechanisms and new economic cooperation initiatives in the region.

3. Singapore’s investment prospects in Vietnam after COVID-19

Vietnam hopes to encourage more Singaporean businesses to invest in infrastructure, energy, manufacturing, high-quality agriculture, information technology, smart cities, financial services, and banking.

The Vietnamese government and businesses have been highly appreciative of Singaporean investors because of its good track record in its investments in Vietnam through these years. Vietnam wishes to continue coordinating and cooperating with Singaporean businesses to focus on investing in industries and fields suitable to Vietnam’s key development in the future, focusing on industries and fields such as digitalization of industries, innovation and the digital economy.

Vietnam is also building and developing a number of financial centres to attract Singaporean businesses for research and investment. Vietnam’s guidelines, policies, and legal regulations for foreign investors are increasingly favourable, especially for investors and enterprises with large investment projects using high technology, in line with Vietnam’s economic development strategy.

In the post-COVID-19 world, foreign investors looking to invest in Vietnam can consider prioritizing areas such as technology research, high-tech manufacturing, development of high-quality services, e-commerce and logistics (Vietnam still has muchroom for development in this field). Investors in the field of fintech and innovation should pay attention, focusing on urban areas, and developed infrastructure such as Hanoi and Ho Chi Minh City. With Vietnam’s plan to expedite the development of fintech and financial centres within Vietnam for regional financial connectivity, Singapore investors can fully pay due attention to this field in the near future.

4. Policy recommendations

There should be more policies to encourage Singapore’s investment in industries that complement Vietnam’s competitive advantages, such as infrastructure development, logistics, finance and banking, education, healthcare, tourism, maritime industry, aerospace and startups.

The need to improve the business environment to promote economic recovery and to increase economic resilience is especially important after the COVID-19 pandemic. A favourable business environment is important for the long-term resilience of the economy and for a rapid recovery from the crisis. Over the medium and long term, the business environment will affect how businesses weather the pandemic and how well they take advantage of opportunities as they begin the recovery process. The quality of the business environment within Vietnam and the connection of Vietnamese firms to global supply chains is also important. In the light of inflation risk due to global current affairs, there is also a pertinent need to improve the efficiency of commodity market regulations to ensure that businesses in Vietnam are able to tide over the rising cost of inflation and minimize the impact of supply chain disruption to their bottom-line.

On May 23, 2022, the Launching Ceremony of the Indo-Pacific Economic Framework for Prosperity (IPEF) took place in Tokyo (Japan) with the participation of the President of the USA H.E. Mr. Joseph R. Biden and Prime Minister of Japan H.E. Mr. Kishida Fumio, as well as the virtual presence of leaders of other partners countries viz. Australia, Brunei, India, Indonesia, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam (CNBC, 2022). Prime Minister Pham Minh Chinh attended and delivered a speech via teleconference. The leaders agreed that future discussions of the IPEF should focus on the four pillars of trade, supply chains, clean energy, decarbonization and infrastructure; and taxation and anti-corruption.

Therefore, if Vietnam and Singapore join the IPEF, the two countries can seek to build high standards, inclusive, free and fair-trade commitments, and develop new and innovative approaches. These can be facilitated by trade and technology policies that help realize a range of goals that would stimulate economic activity and investment, promote inclusive and sustainable economic growth, and benefit workers and consumption.


Vietnam has been an attractive destination for many investors with advantages such as political stability, high and stable economic growth, competitive production costs, abundant human resources, potential market; extensive international integration, open policy with many competitive incentives and strategic geographical location.

In the context of complicated world economic developments, COVID-19 negatively impacted all aspects of countries and production activities in the global supply chain, multinational corporations also tend to structure their production activities. Recognizing this trend, Vietnam has had many policies to increase investment attraction from large corporations.

Vietnam has always focused on training human resources, building action programmes to train the necessary human resources to meet demand; international integration with many signed free trade agreements, improving the business and investment environment with many new foreign investment strategies; building an increasingly favorable legal framework with an open and transparent mechanism.

Vietnam and Singapore have a strategic partnership and are participating in many new-generation free trade agreements – complete and comprehensive legal frameworks, creating a favourable business environment for businesses to operate within the two countries. Vietnam wishes to have an increased presence of Singaporean investors in many fields, especially in fields such as digitization, technology and innovation. The Ministry of Planning and Investment commits to partner with Singaporean investors to introduce investment opportunities, streamline the investment processes and remove obstacles that investors may face to help grow this partnership between Singapore and Vietnam.

Lam Thanh Ha
Vice Dean, Faculty of International Economic, Diplomatic Academy of Vietnam, Ministry of Foreign Affairs.

August 2022