Is the current level of economic activity between Australia and Vietnam too low given the strong relationship we've built across the last 50 years?
In her first article for AVPI as one of our esteemed 2024-25 Fellows, Binh Le Vandekerckove, unpacks the strategic and economic relationship between Australia and Vietnam, focusing in on a review of the bilateral trade, investment and mergers and acquisitions (M&A) activities between the two countries.
Binh takes a deep dive into some of the key strategic deals that have taken place since the early 90’s, and provides her take on how to accelerate the potential for further collaboration and mutual growth in the future.
Key Takeaways
Trade relations have surged amid active free trade agreements – Despite being a long-time partner, trade relations between Vietnam and Australia only began to accelerate in 2010 with the establishment of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). It has grown more significant with the help of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
Mutual investment boosted through diverse projects and FDI – Australia is ranked as the 20th largest foreign investor in Vietnam out of 146 countries and territories, and there is still room for more cooperation. The primary industries and sectors in Vietnam receiving the majority of FDI from Australia include manufacturing, natural resources and renewable energy, agriculture, infrastructure, and economic development.
M&A activities remain low, however notable and strategic since 1992 – There have been a modest number of 36 M&A deals between Vietnam and Australia, with a disclosed value of approximately USD322 million (from 15 deals). M&A activities between the two countries remain low, however notable and strategic. About 78% of M&A activities are strategic, 11% are financial and 11% are asset acquisition.
An evolving partnership that promises further potential in collaboration and mutual growth – The current level of activities between Australia and Vietnam remains too modest given the strong relationship between the two countries. Both countries need a comprehensive plan and framework to enhance their collaboration and maximise mutual benefits.
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