Can Collaboration With Taiwan Aid Sustainable Growth In Vietnam? | Vietcetera
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Dec 08, 2021

Can Collaboration With Taiwan Aid Sustainable Growth In Vietnam?

With Taiwan applying to join the Trans-Pacific Partnership, could Vietnam leverage already strong cross-border relations to help its own growth?

BrandedCan Collaboration With Taiwan Aid Sustainable Growth In Vietnam?

Source: Frolda/Unplash

Ever since Vietnam moved toward the development of a market economy through its Đổi Mới reforms in 1986, Taiwan and Vietnam have played notable supporting roles in the other’s economic development.

Bilateral trade between the two accounted for US$21 billion as recently as 2020, while Taiwan has been ever-present as one of the top five sources of foreign direct investment (FDI) in Vietnam since the 1990s. 

Taiwan Expo 2019 in Vietnam with a delegation of 170 Taiwanese traders | Source: Taiwan Expo Vietnam
Taiwan Expo 2019 in Vietnam with a delegation of 170 Taiwanese traders | Source: Taiwan Expo Vietnam

These cross-border bonds between two of Asia’s fastest-growing economic powers are becoming ever closer, as evidenced by Taiwan’s status as the second-largest employer of Vietnamese migrant workers, and Vietnam’s place as the number one provider of international university students to Taiwan. Furthermore, the last two years have seen a significant rise in Taiwanese companies either relocating to, or expanding existing operations in Vietnam. 

In the near future, trade relations between the two could undergo a further boost with Taiwan bidding to join The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).  Beyond the bolstering effect this could have on the overall economic growth potential of both countries, Taiwan’s performance in the key areas of green energy and sustainable technology over the last decade could also be of immense value to Vietnam. 

Vietnamese students in Taiwan | Source: Taiwan Today 
Vietnamese students in Taiwan | Source: Taiwan Today 

Strengthening Existing Bonds: Taiwan’s Bid To Join The CPTPP

Per the World Trade Organization, transactions with CPTPP member states already made up 25% of Taiwan’s total trade in 2020. By entering this free trade agreement signed in 2018 by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam, Taiwan would be able to operate even more closely with these states than it already does. 

As an export-oriented economy, the Island’s application to join the CPTPP makes sense as it looks to grow further into the global economy and diversify its external trade portfolio, as well as break more ground in the areas of green energy and sustainable tech — fields in which Taiwan is steadily transforming into something of a regional champion. 

Taiwan, Vietnam & Green Energy 

In fact, the intersection of economic growth and environmental sustainability is one area where Vietnam may reap the benefits of working more closely with Taiwan.

Vietnam Prime Minister Pham Minh Chinh (on the right) at the 2021 U.N. Climate Change Conference. | Source: Vietnam News Agency
Vietnam Prime Minister Pham Minh Chinh (on the right) at the 2021 U.N. Climate Change Conference. | Source: Vietnam News Agency

As a current member state, Vietnam is now bound to the CPTPP Environmental Chapter, which maintains that international trade and environmental agreements should be mutually supportive. Ahead of the recent United Nations Climate Change Conference (COP 26), the country also pledged to end deforestation by 2030, eliminate coal-fuelled power by 2040, and ultimately reach net-zero carbon emissions by 2050 — something that Prime Minister Pham Minh Chinh has encouraged more developed countries to offer assistance in. 

Meanwhile, in Taiwan, legislation passed in 2017 commits the government to phase out nuclear energy and generate 20% of its electricity via renewable sources by 2025. Since then, Taiwan has seen a groundswell of green initiatives put in place — with the ultimate goal of achieving net-zero emissions by 2050. 

Solar power plant in Taiwan | Source: Taipower
Solar power plant in Taiwan | Source: Taipower

Vietnam is making nascent progress on this front, with the greatest solar power capacity in Southeast Asia. But the frequently dangerous air quality in Hanoi and Ho Chi Minh City, as well as the ongoing environmental problems in the southern Vietnamese Mekong Delta region, show just how far there is to go.

Taiwan has gone quite a bit further in its bid to combat climate change by leveraging its coastlines' wind power potential. Since launching its first commercial offshore wind farm off the coast of Miaoli in 2019, a facility with the capacity to power 128,000 households, the Island has quickly become home to 105 more offshore wind farm projects in varying stages of development — paving the way for a new eco-industrial development sector with the potential to attract international partnerships, build local expertise, and become greener in the process. 

Offshore wind farm in Taiwan | Source: Green Investment Group
Offshore wind farm in Taiwan | Source: Green Investment Group

In the world of solar energy, Taiwan is also coming up strong. In March of this year 2021, Taipower launched the Island’s largest solar power plant in Tainan, a 150-megawatt plant with enough capacity to power 50,000 homes and offset over 1 billion metric tons of carbon emissions in the process. 

Although most large-scale environmental projects are government or corporate-funded, sustainability drives in Taiwan are also being crowdfunded at the grassroots level to great effect. In Sunny Founder, a community-driven solar investment platform, people can invest in green energy initiatives for as little as US$450, with the promise of dividends within two months and an average RoI of 6%. In essence, it’s the population buying a stake not just in a company, but in the culture of sustainability, to boost their own personal wealth as well as the health of their environment. 

Tech-Enabled Sustainability In Manufacturing

Though creating eco-friendly energy sources on a national scale may be the surest way of aiding the environment, it’s important to address the need for a culture of sustainability across all industry sectors and levels.  

In Vietnam and Taiwan alike, approximately 30% of each’s GDP is created by a combination of the manufacturing, agriculture, and aquaculture industries, according to figures collected by Statista. While these are helping in large part to drive economic success, the trade-off is often the deterioration of the environment. 

The signing ceremony of “Race to the Top” - a multi-stakeholder initiative between the government, civil and internal organizations, and global consumer brands. | Source: The Ministry of Industry and Trade
The signing ceremony of “Race to the Top” - a multi-stakeholder initiative between the government, civil and internal organizations, and global consumer brands. | Source: The Ministry of Industry and Trade

There are, however, shoots of hope that this could change in the future as the increasing sophistication of technology and business compliance meets eco-conscious entrepreneurialism. In Vietnam, one of the most disruptive voices on this front is Race To The Top -- a multi-stakeholder initiative among the government, civil and internal organizations, and global consumer brands including Levis, GAP and Puma. Race To The Top promotes and enables sustainable manufacturing practices in the footwear and apparel industry  — the country’s second biggest export industry and an employer of 2.5 million people.  

SINGTEX Industry meanwhile, is one of the leading providers of eco-friendly, yet high-performance functional textiles in Taiwan, with fabrics used by big-name brands such as Adidas, Nike, and Patagonia. 

SINGTEX makes its own fabrics from reused organic waste such as coffee grounds and castor beans. | Source: SINGTEX
SINGTEX makes its own fabrics from reused organic waste such as coffee grounds and castor beans. | Source: SINGTEX

Unlike Race To The Top, which is effectively trying to work from the outside-in to implement sustainable practices, SINGTEX works from the inside-out at the supply chain level, creating its own fabrics from reused organic waste such as coffee grounds and castor beans. Its fabrics are then used by brands keen to create a more circular economy. 

Though these two eco-conscious, eco-assertive organizations may seem somewhat disparate, they do in fact converge — SINGTEX is one of a significant number of Taiwanese companies that have already opened up operations within Vietnam through its subsidiary, Magictex. Other Taiwanese textile and garment manufacturers active in Vietnam, such as Far Eastern, Makalot and Eclat, all leading global suppliers, have also increased efforts to integrate sustainability into their production.

The Sustainability Stage Is Set

Drawing back to our main question of whether closer economic ties between Taiwan and Vietnam could be of benefit, it seems clear that they would be good for overall economic development, and could also lead to a greener future for both. 

While the two already collaborate to profitable effect, the overall health of the region at large would be the true long-term beneficiary here.