Strategically important forum of Southeast Asia and Vietnam

Dr. Santiago Velasquez, Deputy Head of the MBA program, RMIT University Vietnam. (Source: TGCC)

As they head toward the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in San Francisco, Southeast Asian economies are grappling with the ongoing Russia-Ukraine conflict and recent tensions in the Middle East, following the outbreak of fighting between Israel and Hamas. These tensions complicate APEC’s mission of promoting cooperation on economic growth, trade, investment and climate change.

However, there are some topics that are still high on the agenda of Southeast Asian economies and they expect APEC to serve as a useful forum.

The APEC Economic Leaders’ Meeting is an important forum for Southeast Asia, especially Vietnam, in the context of geopolitical tensions and global economic changes. Its importance is further enhanced in the context of strategic considerations in pursuit of stability, growth and sustainable trade, in the context of current US-China relations and potential new alliances beyond the current APEC framework.

Organization for coordinating cross-border cooperation

APEC Economic Leaders’ Meetings continue to serve as a place where Southeast Asian economies can find common ground, form strategic alliances, advocate for sustainability, and enhance international trade. As a facilitator of cross-border cooperation, APEC serves multiple purposes for economies like Vietnam, which have weathered the turmoil of the global Covid-19 pandemic relatively unscathed.

For Vietnam, APEC facilitates the country’s integration into the global economy, contributing to a record foreign direct investment (FDI) figure of US$22.4 billion by 2022 (according to statistics from the Ministry of Finance). Importantly, APEC serves as a platform for Vietnam to continue to assert itself as one of the most attractive options in the region for the “China +1” Strategy.

Export-led economies like Vietnam are paying close attention to trade regulation negotiations and seeking to influence the global trading environment to promote fair market practices. APEC provides them with a forum to advocate for policies that provide appropriate recognition and support for the unique needs of each of the region’s small developing economies.

Vietnam and other APEC member economies can use the forum to address diplomatic difficulties arising from US-China tensions, which have been exacerbated by the Russia-Ukraine conflict and the Middle East tensions that flared up in October. In this respect, APEC economies face a choice between China and the US’s different grand plans for the region’s future.

APEC provides a strategic opportunity for the United States to address complex challenges such as fragile supply chains, climate change, and regional inequality. In the face of global economic tensions, particularly with China, APEC provides a forum for the United States to promote sustainable trade policies to accelerate economic recovery.

Joining APEC allows the United States to increase its influence in calling for support for inclusive and sustainable economic policies, and has the potential to contribute to the prosperity of the Asia-Pacific region. On the other hand, APEC is valuable to China because it provides a platform to demonstrate the world's second-largest economy's commitment to open trade.

The APEC Economic Leaders' Meetings continue to serve as a place where Southeast Asian economies can find common ground. (Source: Getty Images)

So far, Southeast Asian economies, including Vietnam, have pursued a cautiously neutral path, so APEC should play a role in finding a diplomatic balance.

Furthermore, APEC should also be used as a mechanism to build strategic alliances with non-member economies. There are many economies eagerly waiting to join APEC (such as Bangladesh, Pakistan, Colombia, Panama and Ecuador). For Vietnam, current and future partnerships with Latin American countries not only help Vietnam access those economic markets but also provide an opportunity to promote South-South dialogue and cooperation.

China is actively building relationships and inviting South American partners to boost trade. A few weeks ago, Colombian President Gustavo Francisco Petro Urrego visited Beijing in a move that could shake (to some extent) the US grip on the region – the so-called Monroe Doctrine. Strengthening these South-South ties could allow economies to share knowledge in a wide range of industries, from textiles and electronics to agriculture and forestry. All of these industries are major contributors to Vietnam’s national income.

These diplomatic and economic ties are expected to be further enhanced by the Regional Comprehensive Economic Partnership (RCEP). The expansion of RCEP (recently demonstrated by the Philippines’ accession) could resonate with APEC’s goals.

RCEP, like APEC, promises to benefit businesses, especially micro, small and medium enterprises (MSMEs), through more tolerant rules of origin and improved market access. Furthermore, RCEP can serve as a model for resilient supply chains and forward-looking trade practices, potentially strengthening Southeast Asian economies in a unified and facilitated trade area.

In short, the 2023 APEC Economic Leaders’ Meeting is an important forum for Southeast Asian economies, including Vietnam, to express their concerns and find a new path in the context of US-China competition and global conflicts. As a unified platform, APEC not only promotes economic integration and FDI in Vietnam but also creates a playground to promote fair trade activities in line with regional and global needs.

APEC’s expansion potential, including new ties with Latin American countries, opens the door to access to diverse markets and effective South-South cooperation, as well as enriching Vietnam’s economic landscape. At the same time, RCEP’s alignment with APEC’s goals can contribute to greater efficiency in business activities and strengthening supply chains.

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