A customer at a transaction office of fully foreign-owned ANZ Bank Vietnam Limited in Ho Chi Minh City.

A new free trade deal between Australia, New Zealand and Southeast Asian nations will require governments to support businesses if it is to succeed in Vietnam and elsewhere, said Australian Trade Minister Simon Crean.

Discussions of the agreement signed in February included a meeting with Vietnamese Minister of Planning and Investment Vo Hong Phuc at the 8th Joint Trade and Economic Cooperation Committee (JTECC) in Hanoi, the first time a delegation of Australian business people had traveled to Vietnam to take part in a JTECC meeting.

Crean told reporters in the southern beach town of Vung Tau on Saturday the delegation had come because it was up to businesses to take advantage of AANZFTA and to advocate for what they need from governments, which would require new frameworks to respond.

It was an important relationship-building trip he said, because “it’s government to government, it’s business to business and it’s governments understanding better the needs of business.”

“The purpose of coming here is to see [businesses] first hand and to try and develop better understanding between governments so that businesses can have a greater facilitation for their plans to expand trade and investment,” Crean told reporters.

He was speaking outside an Australian company operating in Vung Tau, Strategic Marine, which exports 100 percent of its ships overseas. In the southern port town, he also visited Australian firm Blue Scope Steel, which does a majority of its business domestically in Vietnam.

Crean told reporters that future Australian investment was an important area that required some attention in Vietnam.

“…Clearly Australians would like to invest a lot more here but if there are difficulties in terms of approval process or limits on equity caps they can take, this takes the effect of deterring the maximization of that investment opportunity.”

He said he hoped the JTECC talks would “provide the basis for ongoing cooperation.”

“I think with both Minister Phuc and Minister Vu Huy Hoang, minister for both industry and trade, and Prime Minister Nguyen Tan Dung with whom we met - all three of them strongly emphasized that they would like to see stronger investment by Australia into Vietnam. Well so would we, it’s just that we have to improve the environment to encourage that.”

Crean also mentioned more free trade for Australian education institutions coming to Vietnam in a speech he made at an event organized by AusCham on Saturday night, since as education minister he had signed a Memorandum of Understanding to develop the bilateral education relationship in 1995.

He said, “Provisions of AANZFTA will open the sector further to foreign providers by making entrance requirements for Australian teachers more flexible and by expanding the fields of study that can be delivered by Australian educational suppliers.”

‘Productive and successful’

During the AusCham speech in Ho Chi Minh City, Crean said the joint committee meeting was “productive and successful” in talks about trade and investment opportunities in five key industry sectors - education and training, infrastructure and environmental management, financial services, energy and agribusiness.

The trade minister’s visit was part of a concerted push on both sides to get trade going and open the markets – particularly, and possibly worryingly, the financial services sector which last year’s sub-prime crisis had shown is dangerous to deregulate. Another focus was to stop protectionism.

Crean said at the Auscham dinner on Saturday night that PM Nguyen Tan Dung’s visit with PM Kevin Rudd in Canberra last October had set an ambitious agenda for further work to strengthen the countries’ bilateral relationship. He also said there was another official Vietnamese visit with Rudd scheduled for September in the lead up to the agreement coming into effect January 1.

Reform

While calling for better infrastructure and a better business environment in Vietnam, Crean did not neglect to make clear how far he’d seen the two countries advance together in the last 20 years.

Illustrating the rate of development during his Saturday speech in HCMC, he said Vietnam was now Australia’s fastest growing trading partner in the Association of Southeast Asian Nations (ASEAN), with 20 percent growth over the last five years and A$8 billion in two-way trade in 2008.

Crean mentioned landmarks in the two countries’ relationship including the Whitlam government’s decision to open diplomatic ties with Vietnam in 1973 and Australia’s decision in February this year to recognize Vietnam’s market economy status.

The visiting trade minister said Australia’s continuing growth of 0.4 percent in the March quarter in the face of the economic downturn was thanks “above all to the structural economic reforms we commenced in the 1980s” and he encouraged Vietnam two decades later to take the same path, which meant floating the dong, bringing down tariffs and deregulating the financial sector.

Crean also takes a strong stance against protectionism saying that it would reduce jobs in the home market rather than protect them. He argues that free trade presents better employment security for locals.

Reported by Michael S. Smith - Hoang Uy