With the signing of many important free trade agreements, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement, Vietnam has opened up a lot of chances for investment to foreign partners, Canada included.
In recent years, Vietnam has been actively signing important free trade agreements, notably the CPTPP (which account for 13% of the world GDP), EVFTA (16% of the world GDP), and in November 2020, the Government signed the Regional Comprehensive Economic Partnership (RCEP) agreement. RCEP consists of 15 countries, accounting for 30% of the total GDP of the world, with the GDP of the trade bloc reaching 26,000 billion USD. According to Mr. Jean Charest – the former premier of Quebec, by participating in the RCEP trade bloc, Vietnam has offered a new perspective for investment to Canadian companies.
By the end of 2020, the CPTPP agreement had been in effect for two years. Mr. Charest stated in a discussion about the trade relation of Vietnam and Canada that after two years of applying the agreement, both countries had yet to utilize the opportunities that CPTPP provides. According to the former Quebec premier, the trade relation between Vietnam and Canada had yet to meet its potential. Although the bilateral trade between Vietnam and Canada had improved, and the two countries had found investment opportunities in food processing and manufacturing, there were still new areas available for collaboration. There is still great room for Vietnam and Canada to expand their trade cooperation, especially when goods transactions between the two countries are complementary rather than competing with each other.
Mr. Charest affirmed that Vietnam is considered a special country with a very close relationship with Canada. With all the mentioned trade agreements signed, Vietnam has become a “center of FTAs” in Southeast Asia. As a country in the Pacific, Canada values the importance of the growing relationship with Vietnam, as Vietnam will be the bridge to bring Canadian goods and services to the 660 million consumer market of the ASEAN. Vietnam is regarded as an attractive investment destination for Canadian companies looking to reach out to the Asia region.
In 2020, after two years with the CPTPP in effect, the trade relation between Vietnam and Canada witnessed impressive growth. The bilateral trade in goods between Canada and Vietnam reached a record of 8.9 billion USD in 2020, increased by 12% compared with 2019, and has gone up by a total of 37% in the span of two years since the agreement came into effect, despite the impact of the COVID-19 pandemic.
Since 2015, Vietnam has remained the biggest business partner of Canada among the ASEAN. In the year 2020, Vietnam was the second-largest destination for agriculture and fishery products export from Canada. Notable agri-fishery products exported from Canada are grains and oilseeds, fish and crustaceans, fruits, beef, pork, and dairy products. CPTPP has created tax-free access for goods trading, help make it easier for Canadian companies to approach Vietnamese customers, providing them with affordable high-quality products. As of November 2020, Canada has become the 14th largest investor in Vietnam, with 212 investment projects established, making a total worth of more than 5 billion USD. Canadian investment projects are highly evaluated in sectors such as hospitality, insurance, renewable energy, etc.
The ongoing COVID-19 pandemic still presents many difficulties for the economy worldwide, however, investing in Vietnam in 2021 will be advantageous for Canadian companies, especially if they can exploit the advantages provided by the CPTPP agreement.
Compiled by VietnamCredit