Australia Upgrades Relationship with Vietnam to a Comprehensive Strategic Partnership

Australian Prime Minister Anthony Albanese announced on March 7 that the country is elevating its ties with Vietnam to the level of a comprehensive strategic partnership, which will also include an annual dialogue on minerals.

This move comes amidst efforts to diversify supply chains away from China. Australia also has a comprehensive strategic partnership with the ASEAN bloc, of which Vietnam is a part.

At a news conference in Canberra, Albanese noted that elevating their bilateral ties would place Australia and Vietnam among each other’s significant partners. It will also enhance trade and investment connections between the two countries.

In September last year, in a meeting with Vietnam’s Prime Minister Pham Minh Chính on the sidelines of the 43rd ASEAN Summit in Jakarta, Albanese had suggested making progress on this change in the bilateral relationship.

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Areas of cooperation

A joint statement by the two nations highlighted that the comprehensive strategic partnership between Vietnam and Australia will foster broader cooperation across various domains, such as the climate, environment, energy, defense and security, and education sectors, besides economic engagement.

Albanese and Prime Minister Pham Minh Chính oversaw the exchange of 12 cooperation documents encompassing areas such as energy, minerals, agriculture, banking, and finance, as reported by the Vietnamese government.

Australia stands as a significant producer of critical minerals essential for various products ranging from smartphones to automobiles. Meanwhile, Vietnam boasts some of the largest untapped deposits of these minerals globally.

Cooperation in the agriculture sector is aimed at fostering trade in additional commodities. Both leaders welcomed initiatives facilitating 1,000 Vietnamese workers to engage in the agricultural sector, addressing labor shortages in rural and regional Australia. They acknowledged a fresh agreement between agencies responsible for promoting trade and investment.

Education is another key sector and has served as a pillar of the Australia-Vietnam relationship. A renewed framework for cooperation between Australian and Vietnamese educational institutions has been reached and will bolster mutual capacity to collaborate on early childhood, primary, secondary, and tertiary education. This cooperation aims to equip the workforce in both countries with the skills necessary to capitalize on future opportunities.

The advancement in bilateral ties with Australia is the latest achievement for Vietnam’s “bamboo diplomacy,” reports Reuters. It follows Vietnam’s successful enhancement of relations with major global powers last year, as the country navigates increasing global tensions and does business with polarized markets.

Mutual political trust between the two countries [Vietnam and Australia] has been elevated, reaching the highest-ever level. – OfficialVietnam News Agency

Vietnam – Australia bilateral engagement

Last year, Australia and Vietnam celebrated 50 years of diplomatic relations.

In August 2019, the governments of Vietnam and Australia established the Enhanced Economic Engagement Strategy (EEES), spanning from 2020 to 2023. This strategy aimed to elevate Vietnam and Australia into each other’s “top ten trade partners” and to “double two-way investment”.

By 2022, Australia had become Vietnam’s seventh largest trade partner, as reported by Asialink. Bilateral trade between Australia and Vietnam reached A$25.7 billion, increasing 62 percent during the 2020 to 2021 period.

However, Australian investment in Vietnam amounted to A$1.8 billion 2022, reflecting a modest 30 percent increase from 2020, indicating significant potential for growth.

According to the Australian Department of Foreign Affairs and Trade (DFAT), Vietnam needs around US$115-140 billion in investment in energy generation and transmission to meet its electricity demand up until the year 2030.

In July 2023, DFAT unveiled specifics regarding a proposed initiative aimed at bolstering Vietnam’s economic development over an initial span of five years.

As part of the proposed Australia-Vietnam Partnership for Economic Growth, Australia plans to allocate A$75 million to Vietnam from 2024 to 2029, with the potential for an additional five-year extension.

The green economy, renewables, and the mining and processing of rare earths, which are vital components in various renewable energy technologies, are among crucial areas for Australian businesses in Vietnam.

Source:Vietnam Briefing