Vietnam is set to benefit from a flood of capital from European investors, led by companies based in the U.K. and France, as they vie for opportunities in the Southeast Asian country in the face of the COVID-19 pandemic.
Vietnam signed a total of 60 memorandums of understanding with British and French companies last week, according to Vietnamese Deputy Foreign Minister To Anh Dung. The companies committed to finance projects in a range of fields, including renewable energy, COVID-19 vaccine research and education.
According to Vietnamese media, Hanoi bagged commitments worth $30 billion during Prime Minister Pham Minh Chinh’s visit to France and the U.K. last week. “The trip provided us an opportunity to contribute to the socioeconomic recovery [from the COVID-19 pandemic] and development toward sustainability and greenery,” Dung was quoted as saying.
Standard Chartered Bank of the U.K. exchanged memorandums of understanding worth a total of $8 billion with three Vietnamese companies, led by T&T Group, a trading and manufacturing company, on project to support their sustainability goals. The bank committed to financing the country’s sustainable development and helping secure its prosperity, as Vietnam looks to become to a net-zero carbon economy by 2050.
“We remain committed to supporting Vietnam’s sustainable development, and look forward to working with the prime minister on Vietnam’s net-zero transition,” said Jose Vinals, group chairman of Standard Chartered Bank.
Total Eren, a French renewable power producer, plans to work with T&T Group on renewable energy projects worth $3 billion. Proparco, a French development finance institution, said that it is increasing its credit finance for renewable energy projects in Vietnam to $100 million via Vietnam’s HDBank.
“The U.K. and France have been two big front-runners and performers in decarbonization for a couple of decades now,” said Ha Hoang Hop, a visiting senior fellow at the ISEAS-Yusof Ishak Institute, a Singaporean think tank, adding that the two countries’ large green investments in Vietnam show their effort to reach the U.N.’s zero-carbon targets.
During Chinh’s visit to Europe, Vietnam also signed memorandums of understanding with big drug companies to enhance its defenses against COVID-19, which cast a shadow over the country’s economic growth.
AstraZeneca, a British-Swedish drugmaker said it will invest $90 million to boost production in Vietnam and support technology transfer to prevent COVID-19 and other respiratory diseases.
Bill Hayton, a British expert on Vietnam, and John Hemmings, a professor at the Daniel K. Inouye Asia-Pacific Center for Security Studies in Honolulu, wrote in an article on the U.K.-Vietnam relationship that Vietnam’s current priority is obtaining enough vaccines to slow the progress of the pandemic across its population, presenting London with an opportunity for vaccine diplomacy and medical cooperation across a range of sectors.
French drugmaker Sanofi, meanwhile, said it would invest 5 million euros ($5.7 million) to expand factories producing for export, and another 1.2 million euros for a renewable energy source to replace diesel at Sanofi Vietnam plants, through its cooperation with VinaPharm.
“This demonstrates our commitment to work with the government of Vietnam in the field of health development and green industrial ecosystem development,” said Sanofi Executive Vice President Pasteur Thomas Triomphe.
Vietnam’s vaccination rate remains low, with only about 31% of the eligible population fully vaccinated, according to Our World in Data. This has led to a large increase in COVID-19 patients in the country, with new infections running at about 7,000 a day.
As of Dec. 2020, Vietnam has had a total of 33,070 foreign direct investment projects, worth $384 billion in registered capital, since opening its market to foreign investors in 1988, according to the Ministry of Planning and Investment. The processing and manufacturing sector accounted 59% ($226.5 billion) of the total, followed by real estate 15.6% ($60.1 billion), and power generation and distribution with 7.5% ($28.9 billion). Hanoi is working to diversify away from labor-intensive industries to those with higher value-added, such as advanced manufacturing, renewable energy and biotechnology.
Additional reporting by Kim Dung Tong in Ho Chi Minh City.
This article was first published on Nikkei Asia.