Vietnam rising: will Australia keep up?

By Cat Thao Nguyen

Cat Thao Nguyen Disruptive Asia

Vietnam seeks allies to navigate the region and collaborate to fulfil its potential. Australia can be its partner.

Freedom. Independence. Happiness. These words in Vietnam appear on correspondence to and from government agencies, and in posters and signs in meeting rooms across the country. It is a motto that was used to buoy courage in warfare against foreign powers and to anchor reconstruction pursuits during the post-war phase. These notions were encapsulated in the Declaration of Independence read out by Ho Chi Minh on September 2, 1945. The document announced that Vietnam was a free and independent nation, no longer subject to French or Japanese rule. And yet war continued for decades after. But today, whilst these words are visibly prevalent, they may not be sufficient to inspire a dynamic, young population in a changing world. Vietnam seeks allies to navigate not only this external landscape but also to collaborate to fulfil its potential, and that of its role within the region and beyond. Australia can be this partner.

The relationship already has deep roots. Two years before the fall of Saigon, Australia established an Embassy in Hanoi in 1973. The US trade and aid embargoes prevented Vietnam from accessing finance from multi-lateral agencies such as the World Bank as well as US private sector trade. In the midst of this, Australia approved aid support for Vietnam which was critical. The aid continued through decades of change. Relations with the US wouldn’t normalise until 1995. But in 2012, Australia was still the largest provider of grant finance to Vietnam. During the period before 1995, The Australia and New Zealand Banking Group (ANZ) opened a branch in Hanoi in 1993 and was one of the first foreign banks to be permitted to operate in Vietnam. And one American Vietnamese telecoms engineer traveling through Vietnam recalls: “OTC (now Telstra), was working in Vietnam with the government to establish communications infrastructure. It was an early player here”.

The foundations of the bilateral relationship are strong

I visited for the first time in 1991 when Vietnam was a shadow of its self now. There were almost no cars. People travelled on cyclos. The main boulevard leading to the Ho Chi Minh City Opera House was quiet, dotted with a few motorbikes and bicycles. But by 1998, RMIT was invited to establish Vietnam’s first foreign university. The My Thuan Bridge in the Mekong delta was built with $91 million of Australian aid. Any citizen of a developing country knows the significance of what a good bridge can do. The impact on the economy is immense. It is no surprise, that my illiterate grandmother in Tay Ninh province called it “the Australian bridge.” It was clear that Australia recognised Vietnam as an opportunity, both economically and strategically.

However, much has changed because in 2018, Australia’s presence in Vietnam is certainly not like it was. The ANZ has sold its retail banking business. For decades, its branding was prominent – from a clock at a roundabout on Nguyen Hue Boulevarde to a grade A commercial building opposite the US consulate. The Commonwealth Bank also closed its branch. Japan (US$9.11 billion) and South Korea (US$8.49 billion) accounted for almost half of the total foreign direct investment into Vietnam in 2017. Australia’s investment is much smaller at about $2 billion. And its two-way trade with Vietnam at $11.8 billion is less than New Zealand’s at about US$18.5 billion. Education is now Australia’s third largest export and here the close to 20,000 Vietnamese students are second only to Malaysians in their per student contribution to Australian GDP amongst foreign students.

Vietnam’s GDP grew 6.8 per cent in 2017 and Boston Consulting Group says that it has the fastest growing middle class in South-East Asia. And some neighbours are capitalising on this in a big way. Samsung Electronics factories in Vietnam produce almost a third of the firm’s global output and the company has US$17 billion in the country.” Vietnam is now the second largest exporter of smart phones in the world, after China.

Australian investment is falling behind

So where is Australia in all of this? Clearly Vietnam’s Asian neighbours have grown and changed in the last 40 plus years since the end of the war. Their own rise has also propelled offshore investment and increased trade. Comprehensive and concerted Japanese policies such as conditional aid, investment support, cultural exchange and public diplomacy has now started to pay off – in some parts to the detriment of Australia. Vietnam now sends larger numbers of students to Japan. The number of Vietnamese students in Australia in 2017 grew 8.7 per cent to 19,708. But the flow to Japan increased 14.6 per cent to 67,671, second only to China.

When I asked a sales person working for a Japanese company in Vietnam why he chose to study in Japan, he said “because if I don’t get to stay in Japan, even if I come back, there are more opportunities to work for Japanese companies. If I speak Japanese I’ll get an even higher salary. If I become a personal assistant to the CEO of a Japanese company here, I can get US$1000 per month. Whereas my friends who work as graduates of international companies like PWC Vietnam, get less than US$400.” Many education agents in Vietnam are finding it harder to sell Australia. There is also a large movement of students going to Canada. China’s universities are becoming world class and combined with professional opportunities, the study abroad option is less compelling than in the past. Australia is also facing question marks over conditions for foreign students with, for example, a recent ABC report on how international students experience challenges such as racism and poverty. One Vietnamese student was reported to be the target of racial abuse on a train. These messages spread quickly amongst the community of current and future customers. Australia needs to embrace its diversity so that all parts of the community see it not as a threat but an asset, so the country can achieve its own potential on the world stage.

In March 2018 at the ASEAN Summit in Australia, the prime ministers of Australia and Vietnam signed a Strategic Partnership which signals a significant evolution in the bilateral relationship, at least from a political perspective. There have already been increased high level visits from both nations. The Australian government is creating a framework to facilitate deeper engagement with Vietnam especially on a people to people level. The Australia ASEAN Council and the New Colombo Plan are excellent initiatives to further this agenda. But what does the partnership really mean to the people of both nations and why should it be important to them?

Identifying new opportunities for a partnership

On multiple fronts, the Australian government is visible in its support of Vietnam. On a sweltering afternoon in Ho Chi Minh City, I am standing amongst Vietnam’s first UN peacekeeping contingent – the deployment of doctors and nurses from Military Hospital 175 to South Sudan to provide a military hospital. Australia supported the peacekeepers with English language training – a massive feat given their usual daily life involved almost no English. As a project manager for UTS Insearch – which has provided English lessons in Vietnam for 16 years – I was responsible for delivering the English language training for the project with the joint venture partner, ACET. Australia also provided the airlift to South Sudan. Governor General Peter Cosgrove visited the peacekeepers in Vietnam prior to their departure. The mission has signalled Vietnam’s emerging maturity in the international landscape – from a once war-torn country to one that is helping to maintain peace in war-ravaged countries. As I eat with the contingent in the officer’s mess, I marvel at the awesome food. They are lucky the cook will also go – his pho is apparently very good. But the reality of the new bilateral Strategic Partnership in this deployment to South Sudan goes beyond the military cooperation symbolised by the visit by the Governor General, a former military man. It extends to how sitting in a classroom studying Australian curriculum in Ho Chi Minh City will have sparked an interest amongst the hospital staff in sending their children to study in Australia.

Not long after the Governor General’s visit, then Foreign Minister, Julie Bishop opened the Cao Lanh Bridge in the Mekong Delta. Australia co-financed the civil works for the bridge and 25 km of interconnecting roads with development assistance valued at $160 million. Bishop also attended a dinner with a group of Australian Vietnamese living and working in Vietnam who shared their life stories. There were stories of struggles for identity and place in Australia, searches for belonging and journeys to ancestry. I sat amongst Australians who were refugees, former international students and those sponsored under family reunion visas. The bilateral relationship is alive in these people. Australians of Vietnamese heritage and Vietnamese with connections to Australia hold the key to advancing the relationship.

But engagement with Vietnam across the diaspora is complex. After the fall of Saigon, millions of people fled by boat and in my family’s case, by foot across the killing fields of Cambodia. The bulk of the initial Vietnamese community in Australia were refugees. They established formal representative bodies that waved the old Southern Republic of Vietnam flag. They established radio programs, networks, newspapers, festivals and businesses. Each time there is an official visit from Vietnam, there are protests.

As Vietnam celebrates unification on the 30th April each year, many Australian Vietnamese travel in buses to the Embassy in Canberra to mourn their loss. But over time the composition of the community has changed. First were family reunion migrants. Then came the continuing wave of international students. And now, flows of business and skilled migrants. Overseas remittances to Vietnam are reported to reach US$10 billion in 2017.

As each year passes, there are more young people who have no memory of the war. Most people in Vietnam are under 35. While a portion of the initial group of refugees are deeply adamant about non-engagement with Vietnam, the changing nature of the Vietnamese community is and will further create opportunities. Engagement is accelerated by commerce and market forces despite governments. Each year Australians go to Vietnam to do IVF and dental treatment because it is much less costly there and has decent results. On the other hand, the Vietnamese buy education and beef from Australia. International students to Australia who have stayed, opened businesses and married, have created a life that has nothing to do with the refugee narrative. It is important to understand that further engagement with Vietnam does not necessarily mean that the Vietnamese refugee stories are erased or that the past will not be honoured.

The diaspora has changed as some people return home

Nevertheless, tensions occur that still draw on the wartime experience. In 2017 Vietnamese authorities cancelled official commemorations at the site of the Battle of Long Tan in South Vietnam. But as deeper people to people links emerge and increased economic and cultural activities are nurtured between the two countries, tensions like the Long Tan issue may not occur, smoothed by deeper relationships.

A lasting relationship is based on mutual respect, understanding and trust, where each recognises in the other true value. Australia and Vietnam are vastly different in terms of economic development. But GDP per capita is only one measure of maturity. In 2016, Vietnam’s National Assembly had 26.8 per cent women. Australia’s House of Representatives had 27 per cent. In the same year Vietnam’s literacy rate reached 97.3 per cent. Australia’s is 99 per cent. According to the OECD’s PISA scores, the average performance of 15-year-old students in Vietnam exceeded Australia’s scores in maths and science. Furthermore, the share of students in Vietnam who perform well despite disadvantaged backgrounds, referred to as ‘resilient’ students, also exceeds that of Australia’s.

There is much to learn from each other. Amidst the geopolitical strain in the South China Sea and unpredictable US foreign policy, what is needed is stable, reliable partnerships to bring countries within the Asia Pacific into lasting, peaceful prosperity. The Strategic Partnership is both timely and necessary in today’s climate. Australia was once a powerful donor to Vietnam, but as Vietnam evolves, Australia must maintain its attitude of mutual respect, humility and openness to capitalise on this important relationship. However, there must be more encouragement to help the Australian private sector to take note of Vietnam.

Vietnam’s Asian neighbours are looming larger on the Vietnamese business scene, once again underlying how Australian business needs to become proactive and less risk averse when it comes to South-East Asia. Increased Government incentives and support to trade with ASEAN should be explored. Rewards from the mining boom continue to fade and the international education sector is becoming disrupted. Becoming an innovation nation means that your people are open to new ideas and perspectives.

If there is fear of doing business beyond Anglo/Eurocentric countries or that Asia simply means China, India and Indonesia, Australia’s economy will recede. As the Prime Minister, Nguyen Xuan Phuc, said during the ASEAN Summit, Vietnam offers a unique window of opportunity that won’t be around forever. A wide door is open to Vietnam. Australia needs to step robustly in.


Cat Thao Nguyen is Board Chair of the Australia Vietnam Young Leadership Dialogue.

For references Download Disruptive Asia (Volume Two) - ASEAN Special Edition

Disruptive Asia is a thought-leadership project by Asia Society Australia launched in 2017. It presents – through long-form essays – new perspectives and policy recommendations on how Asia’s rise is impacting Australia’s foreign policy, economy and society and how Australia should respond. Disruptive Asia deliberately looks at both external aspects of Australia’s relationship with Asia (foreign policy, business connectivity, international education) and their domestic implications and manifestations (community relations, leadership diversity, education settings and capabilities).

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