Mr. Winters

What are your views about Vietnam’s economy after 2 years of being affected by the pandemic?

The global economy is facing a lot of challenges but Vietnam is faring very well against that backdrop. There is an inflation challenge across the world but it’s possibly less so in Vietnam because Vietnam is more self-sufficient in some of the commodities whose prices have been driving inflation elsewhere. But inflation is a problem. There is a series of bottlenecks in global trade and the global supply chain that is affecting economic growth everywhere.

The pandemic is leaving different scars in different places. In London where I live, there’s a combination of the pandemic as well as Brexit, which significantly shifted the composition of the workforce in the UK. Many A lot of people went home during the pandemic. Around the world we have seen people move back to where they were living before the pandemic, in the case of Britain, they’re not coming back, in part because of Brexit, and in part because people have made choices during the pandemic, and at least for a while, they are not going back to the source of jobs that they were doing before. That is also driving inflation.

Vietnam doesn’t have the same problem, so I think that has allowed the inflation to be moderate here relative to other parts of the world. The fact that Vietnam is self-sufficient in food is very helpful relative to other emerging markets and developing economies, which in many cases are food dependent. With the prices of some basic foods increasing by 30 to 50, or 100 per cent, there is a real economic shock.

So, what I see in Vietnam today is good economic growth, good underlying business confidence, and that is allowing for ongoing capital investment, which I think will carry on for some time to come.

There is also a very large educated and technologically capable workforce that is available and ready to work. While there is some inflation in wages and basic goods, that inflation is manageable in the context of the overall growth in Vietnam. That is part of the reason why we are so keen to continue our investment in Vietnam.

Vietnam is considered to be a highlight in promoting FDI. What do you think of FDI attraction in recent times and what sectors will draw the most?

Mr. Winters

Vietnam is becoming a key destination for the technology sector, and there’s no reason to think that will change. The combination of logistic and technological confidence will continue at pace. Some major tech companies and manufacturers already have substantial positions in Vietnam. Many other companies are beginning to look at and consider Vietnam.

I think it is just a matter of time before Vietnam is no longer a low-cost producer but rather focuses on high-quality products, and that transition is already happening. This means higher-value goods are being manufactured and distributed out of Vietnam.

Among the interesting opportunities for Vietnam is foreign direct investment (FDI) into the services sector. There is a growing financial services sector, a growing IT sector and professional services supporting the manufacturing and agriculture sectors in Vietnam. I think these will present fantastic opportunities in the years to come.

Can you tell us more about Standard Chartered’s upcoming plans to promote sustainable development in Vietnam?

Ms. Wee

Firstly, it is about education. A big part of our strategy is to make sure that we communicate and discuss with our clients about what transition financing is. We have had a lot of discussions, and I am very happy that since November last year, conversations have really turned around. Now, instead of us speaking to our clients about sustainable financing, they now turn around and ask, “How can we do it?” and “How much of this financing can be done sustainably?”. That is very encouraging, and I think that education and continued conversations about sustainable financing are very important.

Secondly, the continual evolvement of the products and services that we can bring to the market, whether in the retail space or the corporate space, is very important. For example, in the retail space, we have introduced to Vietnam environmentally-friendly auto loans and green mortgages with better pricing, and carbon-neutral credit and debit cards. These are the things we have brought to Vietnam to encourage people to participate in the green economy.

At the local government level, it is about sharing thought leadership with the government and ministries and getting involved in the discussions, as the laws and regulations are being discussed and formulated.

At the “Mobilizing Resources for Green and Sustainable Development Goals” conference, which the State Bank of Vietnam (SBV) and the Banking Working Group (BWG) jointly held on August 16, it was made very clear to the government that if we want international financing to flow, we need a standardized, clear, and global legal and governance framework. Because when international investors look at the market, they want to know that they are investing in something they can understand. I think that is fundamental and that is where we can come in and continue to play a part. We have been doing our best in our work with the Ministry of Natural Resources and Environment to harmonize the various frameworks. Harmonizing the many moving parts to get this framework in place is super critical at the domestic level.  

Ms. Michele Wee, CEO of Standard Chartered Vietnam

Mr. Winters

This is key at the global level as well, and it is getting some elements of harmonization. So, COP26 in Glasgow was very important for getting the evolution of intergovernmental understanding in place around commitments that governments have been making. It is quite a tactical matter, Article 6 - the treatment of carbon credit across markets and the intersection between a voluntary carbon market, which Standard Chartered has had an essential role in developing in the past few years and the various government-run compliance markets and the interplay between the two.

We have made good progress, but it is not done and is not as clear as it needs to be. As we go into the next phase, COP27 in Egypt this November and COP28 in the UAE next year, the focus needs to be ongoing from high-level agreements to a very specific understanding of what a global carbon marketplace looks like, and what the agreed global standards are.

This is probably the most global of all problems - sustainability, tons of carbon - and it does not matter where it comes from. Globally, we will suffer the consequences. It is a truly global problem that requires a global response, and we are not fully there yet. Getting that coordination and harmonization is critical, and the COP process is part of that. When it comes to financing, an organization that I am one of the principals of, Glasgow Financial Alliance for Net Zero, is a collection of financial services organizations, which in total manage around US$135 trillion worth of assets. We come together and try to agree on the standards of financing, so it is the financial services’ contribution to the global fight. An important part of that will be the intersection of public policies and the private sector, with private financing and businesses coming in to solve this problem. That will then manifest itself through things like the joint economic transition plans, that are being agreed upon between the G7 countries and various developing countries around the world, to bring together public policies and public contributions, and creating a framework for private finance.

We have a lot of initiatives and are making good progress with many of them, but we really need to bring it all down to the ground level to implement and accelerate the amount of money that is going in to solve the problem.