Last month, President Joe Biden announced the long-awaited creation of the Indo-Pacific Economic Framework (IPEF), which aims to boost Washington’s economic engagement with its allies and partners in the Indo-Pacific region. To achieve this goal, IPEF contains “four pillars”, which aims to promote connected, sustainable, clean and fair economic interactions with regional partners.
Vietnam’s participation in the US-led economic pact came as no surprise. Guided by the principle of multilateralism, Vietnam has long sought to integrate into vital economic institutions such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). By joining these structures, Vietnam has strived for comprehensive cooperation at various levels of economic integration. Vietnam, as a member of IPEF, can play a decisive role in the political and economic agenda of the structure, given that this economic initiative will be guided by key dialogues between the partners involved.
In particular, ensuring the stability of key supply chains is a major concern for Vietnam at a time when supply chain blockages are plaguing the Southeast Asian economy. Last December, the tightening of Beijing’s land border due to outbreaks of COVID-19 caused riots among Hanoi agricultural producers, protests from Vietnamese leaders. Worse yet, Russia’s invasion of Ukraine hit Vietnam’s import and export markets, primarily its agricultural, forestry and fisheries sectors, due to Western sanctions imposed on Moscow. The two cases highlighted Vietnam’s economic vulnerability to geopolitical upheavals and trade disruptions. Therefore, supply chain diversification with IPEF partners could help Vietnam increase its economic resilience at a time when Moscow and Beijing’s actions continue to create challenges for the global supply chain.
IPEF membership can help strengthen Vietnam’s geo-economic and geopolitical interests, especially against the background of US-China economic rivalry and the countries’ desire to change the economy or the “China plus one” strategy. Vietnam hopes to receive financial and technical support from the US, especially in the areas of technology, energy and environmental protection. Vietnamese Prime Minister Pham Minh Chin recent visits tech giants Intel, Apple and Google in Silicon Valley opened up opportunities for Vietnam to participate in the U.S. tech supply chain and digital ecosystem, given the desire of these high-tech firms to diversify their own supply chains. The good news is that tech giant Apple is considering scaling up production in Vietnamwhich currently “houses 31 manufacturing and assembly plants for electronic parts and hardware for Apple products.”
Clean energy and climate change have also become a growing concern for the Vietnamese government. As one of the six countries in the world hit the hardest climate change, including threats of heat waves, floods and droughts, Vietnam brought this topic to various environmental forums. At last year’s 26th United Nations Conference of the Parties on Climate Change (COP26), Chin described climate change as one of the main impediments to Vietnam’s economic development, and highlighted the country’s commitment to achieving zero emissions by 2050. practical support from Washington to become “ASEAN’s leader in renewable energy.”
During Chin’s May 14 meeting in Boston with US Presidential Climate Envoy John Kerry underlined that the Biden administration will strengthen ties with Vietnamese ministries and departments while providing assistance to help Vietnam “develop renewable energy sources, reduce gas emissions, and consolidate its infrastructure sustainably.” In addition, as the United States maintained partnerships in the field of clean energy and sought to strengthen bilateral cooperation with New Zealand, Japan, Australia, Indiaas well as South Koreait is likely that Vietnam will continue its multilateral engagement with these countries on decarbonization and the transition to renewable energy, given the growing importance of Hanoi in the eyes of these Indo-Pacific powers.
digital transformation, decisive push Vietnam can learn from the US and other middle powers, given their practical experience in this area. Vietnam last year came out in National Digital Transformation Program by 2025 with a vision to 2030, aiming to close the digital skills gap and pave the way for a digital economy. Economic plan participants can share their experiences and sustainable solutions with Vietnam, thereby enhancing Vietnam’s capabilities and confidence in the pursuit of a sustainable digital society.
However, it remains to be seen whether Vietnam will be willing to join the IPEF’s “fair economy” pillar, which aims to compliance “effective regimes for taxation, anti-money laundering and bribery.” Secretary General of Vietnam Nguyen Phu Trong, architect “burning stove(dot lol) the anti-corruption campaign satisfied the long-standing desire of Vietnamese citizens to fight bribery and corruption. However, his campaign could become unstable amid rumors on his health and controversy over Trong’s early departure until 2026, the date for the next congress of the Communist Party of Vietnam (VKP). With Trong gone, his anti-corruption furnace could be shattered, making Vietnam’s commitment to a “just economy” less binding.
Moreover, Viet Nam may find some of the sub-themes that fall under the definition of “fair economy” too sensitive. In Hanoi, conservative leaders are skeptical of the so-calledpeaceful evolution”, a term for the quiet but gradual involvement of outside countries in the shifting of a communist nation towards a liberal democracy. Engaging in dialogues and cooperation with Washington on liberal democracy or topics related to the fight against corruption is a scenario that Vietnamese conservatives are likely to try to prevent. No less important is that anti-American sentiment still “remain ingrained in certain segments of the population”, reflecting America’s imperialist agenda and human rights violations during the Vietnam War.
Although Vietnam may not seek to participate in all components of the IPEF, it would be useful for the US to understand what Vietnam really wants and offer more tangible support for these goals, such as building closer links between Vietnam and the Quadripartite Dialogue on security, incentives US companies and investors should develop cooperation with their Vietnamese counterparts, respecting and accepting certain differences, such as ideological values and political regimes. In addition, the Biden administration should help Vietnam develop workable policies to bolster its economic resilience in the Indo-Pacific, especially amid China’s growing economic coercion and uncertainty following Russia’s invasion of Ukraine.
Given the emphasis on multilateralism and “people-centric collaboration“With like-minded countries joining the IPEF, Vietnam is likely to opt for mechanisms that work and are flexible, rather than being stuck on any fixed course of action. In order to use its status with the countries participating in the Washington implementing agreement, Hanoi must address its shortcomings, such as relatively low labor productivitymodest innovation and shadow rules in financial technologies and flaw in the export of complex goods to developed countries. In addition, it should be facilitated to reconcile the concerns and interests of Vietnam and its partners through equal dialogue and frequent consultations in order to guide IPEF to “inclusive, open and flexible process‘like Chin underlined at the virtual meeting to launch the economic pact.