Expectations of the new Asian dragon
VietNamNet Bridge - 20 years ago, Australia expected that Vietnam would become an "Asian dragon" when it dedicated priorities, economic and business opportunities to Vietnam.

VN-Australia:Fromthe steel bridge to the bridge of knowledge

Australianministerwho has “predestined ties” with Vietnam

vietnam-australia, bilateral relationship, cooperation, investment 

The Australian companies were the pioneers who paved the way for a strong wave of investment into Vietnam. 

During the difficult years of embargo, which lasted from the late 1970s until the early 1990s, Vietnam still had opportunities for collaboration with the outside world.

In May 1993, Prime Minister Vo Van Kiet paid an official visit to Australia. That was the first official visit of the head of the Government of Vietnam after 20 years establishing diplomatic relations between the two countries. Mr. Kiet returned with economic and investment cooperation agreements and commitments.

Previously, Australia was one of the countries that early removed the ban on trade with Vietnam (1991) and signed several agreements with Vietnam when Vietnam was under siege and sanctions.


The Australian companies were the pioneers who paved the way for a strong wave of investment into Vietnam.

Telstra, in the 1980s, invested hundreds of millions of dollars in Vietnam to help establish Vietnam's first telecommunications network. BHP is one of the first Western oil companies that explored oil and gas on the continental shelf of Vietnam. Meanwhile, ANZ opened its branches and offices in Vietnam since the early days when the Foreign Investment Law of Vietnam took effect.

There were ambitious pushes for expanding the relations between the two countries. Australia has expected Vietnam to become an "Asian dragon" after China.

In the 1990s, there were several workshops and conferences to promote, explore investment opportunities held by many channels in both countries. Some dynamic Australian businesses tried to learn about the Vietnamese market themselves. Even some overseas Vietnamese businesses became the intermediates for Australian investors to seek investment opportunities in Vietnam.

One of the fields that Australia gave priority to Vietnam is textiles. Australia gave big priority in this area to China 30 years ago, with the expectation of seeing China becoming the leading dragon in Asia. For Vietnam, Australia also gave the opportunity with the hope of seeing Vietnam to become a new dragon, after China.

"They did not want to give all incentives for China. Textiles is the industry that Australia believed that Vietnam could do better for ingenuity," said a former officer in the Ministry of Foreign Affairs in the 1990s.

However, this great opportunity was missed. Australian textiles businesses then redirected their investment into the Chinese market. In the past decade, Beijing has dominated the position of the number 1 textile and garment processor in the Australian market

A big mineral company of Australia said that they used to set expectations and paid opportunity cost of investment, but they had to stop at the door of the Vietnamese market because they could not adapt business practices in the early period of the market economy in Vietnam.

Explaining about the missed opportunities, the former diplomat said that at that time Vietnam was in the early stage of the market economy. It was the stage when the basic technical elements of the market economy were still in the completion stage. The law on business was incomplete, administrative procedure was cumbersome, the ask-give mechanism, poor infrastructure and corruption were still the bottlenecks.

Some Australian businesses withdrew from the Vietnamese market during this time, such as Telstra.

Winds of change

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Wooldmark’s CEO Jimmy Jackson.

But the strong development of the Vietnamese economy in the years of renovation has made the wind to change its direction.

Jimmy Jackson, general manager of Woolmark, a world leading wool textile company, went to Vietnam to learn about the investment environment in 1994.

At that time, Jackson met with officials of the Vietnam Textile and Garment Group (Vinatext) and officials of the Ministry of Industry of Vietnam but finaly the firm decided to invest in the Chinese market.

"At the time, we were fascinated with China," he said.

18 years from that visit, Woolmark officially entered the Vietnamese market.

2012 was the year Woolmark strongly implemented its business plan in Vietnam. Talking about this market, Wooldmark’s CEO Jackson confirmed: "Now is the time of Vietnam."

"We come here later than other companies. But we do not think there is no chance for us. The coming decade will belong to Vietnam. Certainly there will be a lot of interest in this market," Jackson said.

According to him, 40-50 years ago, Japan dominated the world market for textile and garment. In the 80s, it was the time for Taiwan and Korea. Then the 90s was for China and now it is for Vietnam.

Jackson made 5 points for the success of the Vietnamese market: low risk in sovereign; well-established infrastructure for the textile industry; abundant skilled labor resources; abundant textile and garment products; having many international trade opportunities as the largest exporter of textile and garment to the U.S. after China; Vietnam signed economic agreements with Japan, joined ASEAN’s FTA with South Korea.

Meanwhile, Mike Smith, the CEO of ANZ Bank who sat in the headquarters in Docklands, Victoria, Australia, could not move his eyes out of the information from the Vietnamese market. The dismal economic situation in the last three years in Vietnam with the volatility of the currency market, especially the health of the currency attracted his attention.

"The Vietnam's economy remains difficult. One of the challenges is the inflation index is relatively high. Though it has been controlled but in comparison with other countries in the region it is clearly high," Smith said.

According to the ANZ’s CEO, strengthening infrastructure, improving the system, strongly combating corruption will help Vietnam become more attractive to foreign investors.

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ANZ’s CEO Mike Smith.

This business is expected that the difficult period of the Vietnamese economy will pass quickly, the dong will be stable and the economy will move more quickly over the next five years. It is the foundation for the upcoming strategy that ANZ has set up.

Since the establishment of diplomatic relations, Vietnam and Australia have become important economic and trade partners. The two-way trade turnover grows 20% per year and reached over $ 5 billion in 2012, an increase of 150 times over 20 years ago.

Vietnam has become the 15th trading partner of Australia while Australia is the 13th trade partner of Vietnam. Today, with a total investment of over $ 1.3 billion, Australia is the 21st largest investor in Vietnam.

After the FTA that Vietnam joined ASEAN to sign with Australia in 2009, the both are looking forward to the Trans-Pacific Agreement (TPP,) which promises to open up a breakthrough in economic, trade and investment exchange.

Xuan Linh
vietnam-australia, bilateral relationship, cooperation, investment