As the only Southeast Asian nations in what was once called the TPP trade agreement, Vietnam and Singapore seem far apart. One has the lowest income per capita among agreement members, the other has the highest. One relies on physical manufacturing and commodities, the other on financial and trading services. One is populated by close to 100 million people, the other is an island of not even 6 million people.
However, Vietnam would like to think the two are closer than that as it labors to become the next Singapore.
Both are linked in joining what is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade agreement. More generally, Vietnam thinks of Singapore as a reachable example of an open and attractive economy, yet one that has been largely controlled by the same political party for decades.
"Vietnamese enterprises are using Singapore as a hub to reach out to the international market, and Singaporean companies are investing in Vietnam to expand their business," said Tao Thi Thanh Huong, Vietnam’s ambassador to Singapore.
She said she was happy to see "the cooperation between Vietnam and Singapore as strategic partners."
Vietnam is not the only one with its eyes on Singapore. Numerous developing nations want to mimic its economic development. Developed nations wonder whether to copy its decreased taxes to please corporations. As Britain prepares for Brexit, its departure from the European Union, some bankers want a "Singapore-on-Thames" of decreased taxes and regulation to favor their industry.
State capitalism
For Vietnam, the goal combines economics and politics. Author Parag Khanna argues controversially that nations no longer prefer liberal democracy, but economic growth with stable politics, more along the lines of Chinese state capitalism. Singapore and Vietnam have the longest-ruling parties in the Association of Southeast Asian Nations.
How is Vietnam studying Singapore? Students go there literally to study. Officials from both governments conduct informational exchanges. Corporations go to Singapore to incorporate and raise money from global investors.
"Vietnamese issuers and investors have found the Singapore capital markets to be of great interest, and we have the privilege of being the preferred listing venue for bond issuers from Vietnam," said Loh Boon Chye, chief executive officer of the Singapore Exchange (SGX).
Singapore is also the largest investor in Ho Chi Minh City and the third largest in Vietnam. However, the figures are likely inflated because corporations incorporate in Singapore while actually originating elsewhere. It is similar to the trend of foreign investors officially coming from the Virgin Islands but not likely to have actual operations there.
However, there is Singaporean influence in Vietnam. There are two Vietnam-Singapore industrial parks close to Ho Chi Minh City. Singaporean corporations invest in Vietnamese real estate and banking, as well as join the Singapore Business Group of Vietnam.
"Today over 40 stocks listed on SGX, across a range of industries such as pharmaceutical, energy and consumer business, have business relations with Vietnam," Loh said in a speech welcoming Huong, Vietnam's first female ambassador to Singapore, to SGX this month.
