Strategizing Vietnam in Taiwan’s New Southbound Policy

Strategizing Vietnam in Taiwan’s New Southbound Policy

Strategizing Vietnam in Taiwan’s New Southbound Policy

Since the 1980s, Taiwan and Vietnam have been conducting in depth non-governmental exchanges. Although neither country shared diplomatic ties, each set up representative office with semi-official status. Taiwan established Taiwan Economic and Cultural Offices (TECO) in both Hanoi and Ho Chi Minh City in 1992. In 1993, Vietnam established Vietnam Economic and Cultural Office (VECO) in Taipei. Bilateral collaboration between Taiwan and Vietnam in trade and economic affairs has also contributed to various institutional arrangements and agreements, the latest of which is the bilateral agreement on technical and scientific cooperation in soil and groundwater protection. In particular, the civilian exchanges between the two societies have continued to deepen due to the increasing numbers of transnational marriages.

Taiwan-Vietnam Relations: the 3 “M”s of Connectivity

Bilateral ties between Taiwan and Vietnam can be represented using 3 “M”s:  First, Taiwan and Vietnam have been jointly making profits for decades in trade and investment. As Vietnam passed its Foreign Investment Law in 1987, increasing numbers of Taiwanese businesspeople (Taishang) were attracted to investment opportunities in Vietnam to build up local manufacturing and industrial networks. Encouraged by the Go South Policy initiated by President Lee Teng-hui, Taiwan invested in the development of several industrial parks (such as Tan Thuan Export Processing Zone) in Vietnam, boosting local economic growth and the process of technical cooperation. Taiwan became the largest foreign investor in Vietnam before the mid 2000s.

According to the Department of Investment Services of Taiwan’s Ministry of Economic Affairs, from the 1950s to 1990s there were 383 projects funded by  Taiwanese investment in Vietnam, which amounted to USD $12.09 billion. This dollar amount is higher than in Malaysia, the most popular destination of Taiwanese investment, which had 1,786 projects during the same period. Up to the present, Taiwan has developed 2,509 projects in Vietnam with a value of  USD $31.5 billion. Vietnam has ranked highest in Taishang’s alternatives for overseas investment.

Second, there are 39 bilateral agreements between Taiwan and Vietnam, representing joint efforts to make institutional arrangements. Among them, more than 35 were signed after the 1990s in the fields of education, customs, mutual legal assistance, tourism, immigration, investment promotion, science and technology, and more. In particular, the Agreement on the Promotion and Protection of Investments in 1993 and the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income in 1998 were regarded as the key institutions to secure multifaceted interaction between the two countries. Nevertheless, the abovementioned agreements were signed in the 1990s, making the content in urgent need of update.

Third, Taiwan and Vietnam not only promote mutual interests and advance institutional partnerships, but both societies are also making families. In 2017, there are now 98,830 Vietnamese spouses in Taiwan. In addition to those being naturalized as Taiwanese, their children become one of the major driving forces of social and economic development in Taiwan. Most are still in secondary schools, while some are enrolled in universities.

The 3 “M”s phenomena demonstrate the entwined relationships and multifaceted engagement between Taiwan and Vietnam, resulting in intricate transnational social links that help shape community awareness between two countries.

Challenges Embedded

The increasing interdependence may also lead to new challenges. For example, some Taiwanese companies in Vietnam recently faced stiff fines from the Vietnamese government for violating environmental standards and regulations, resulting in protests from local environmental groups and civil society activists, such as in the case of Formosa Ha Tinh Steel Corporation. Some Vietnamese labor protests have taken place because of the neglect of labor rights by Chinese cadres appointed and hired by some Taiwanese companies. Coupled with the recent dispute over the South China Sea, China’s and Vietnam’s tension and conflict further affected Taishang. The emergence of these factors indirectly caused the international image and business reputation of Taiwan in Vietnam to deteriorate, eroding their partnership.

In addition, while cross-Strait relations are stalled, Beijing has also put more pressure on Taiwan’s regional counterparts in Southeast Asia. For example, in January and May of 2017, China signed two joint communiqués with Vietnam, in which they stated  their opposition to any official relations between Vietnam and Taiwan in a consistent tone. China hopes to weaken Taiwan’s ability to execute its New Southbound Policy. In spite of this, it is important to note that the two paragraphs of the joint communiqué actually recapitulate the contents of the 2015 communiqué, without any additional stipulations, which indirectly shows that Vietnam is still resilient in the face of China’s pressure and wants to maintain its constructive partnership with Taiwan.

Reinforcing Social Connectivity

Nevertheless, Taiwan’s New Southbound Policy highlights Vietnam as one of the six priority countries, and aims to reinforce its existing ties and explore new partnership opportunities with Vietnam based upon the shared interests, institutional arrangements, and deepened social connectivity of the past three decades. The policy can provide the impetus for shaping shared community consciousness between the two countries by strategizing social connectivity through a bottom-up approach.

Among them, maintaining and upgrading constructive dialogues with Vietnamese policy communities should be prioritized. The track II platforms and dialogues between Taiwan and Vietnam are unobstructed, which lead to unimpeded communication and collaboration on the issues of education, trade, investment, and technological cooperation. In May 2016, a new “Amity Association of Parliament Members of Taiwan and Vietnam” was set up in Taiwan’s Legislative Yuan welcomed by the Vietnamese Representative of VECO. Later in January 2017, the ”Taiwan-New Southbound Policy Countries Parliamentary Amity Association” was installed, hoping to facilitate the exchanges of parliamentarians as well as deepen the cooperation and discussion of mutually beneficial policies. New type of enhanced exchanges and further collaboration among policy communities will not only reduce the misperception and miscommunication between Taiwan and neighboring countries, but will develop reciprocal policies sustainably and pragmatically as well.

Second, it is extremely significant to strengthen the industrial network and value-added production chains among Taiwan, Vietnam and mainland Southeast Asian counterparts. Taiwan’s foreign investment approach adopted in the 1980s needs to be refined for the implementation of the New Southbound Policy. New efforts are being made with Vietnamese communities to jointly cultivate industrial talent, to upgrade the production network for a globalizing context, and to take the social and economic development of Vietnamese localities into consideration. Moreover, Taishang are encouraged to more actively assume corporate social responsibility in line with local social norms and environmental standards. New models of Taishang will highlight Taiwan’s contribution, not only to economic development, but to social and environmental responsibility, which will propel the bilateral partnership for the next three decades.

Finally, the reinforcement of the Taiwan-Vietnam partnership lies in the sincere interaction between the two societies. The idea of “caring societies” has been highly valued by ASEAN countries for more than two decades, then becoming the third pillar of ASEAN as the ASEAN Socio-Cultural Community (ASCC). Considered improvements in labor rights, nationality regulation, social welfare,and capacity building projects for Vietnamese immigrants in Taiwan are considered domestic institutional reforms, but are also an important agenda for developing common interests between Taiwan and Vietnam.

The main point: Taiwan-Vietnam relations, though unofficial, are diverse and have grown over the last thirty years. Taiwan is one the largest foreign investors in Vietnam, but in addition to commercial ties, there is also a large Vietnamese population in Taiwan through intermarriage and for labor. The New Southbound Policy seeks to enhance both the economic and the people-to-people aspects of Taiwan-Vietnam relations.