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Viewing cable 06SINGAPORE3829, VIETNAM'S PLACE IN THE SUN: SINGAPORE'S VIEW

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Reference ID Created Released Classification Origin
06SINGAPORE3829 2006-12-21 03:34 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Singapore
VZCZCXRO0655
RR RUEHDT RUEHPB
DE RUEHGP #3829/01 3550334
ZNR UUUUU ZZH
R 210334Z DEC 06
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 2091
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
UNCLAS SECTION 01 OF 02 SINGAPORE 003829 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PREL ETRD VM SN
SUBJECT: VIETNAM'S PLACE IN THE SUN: SINGAPORE'S VIEW 
 
REF: SINGAPORE 03224 
 
1. (SBU) SUMMARY: Singapore is actively promoting closer 
economic and diplomatic ties with Vietnam as an up and coming 
regional leader worth cultivating.  Singapore is already 
Vietnam's largest source of foreign direct investment, and 
bilateral trade has grown at a 20-percent annual rate over 
the last six years.  Senior GOS officials visit Vietnam 
regularly and are hailing Vietnam as Southeast Asia's next 
big success story in private conversations and public 
speeches.  Some observers believe that Singapore sees Vietnam 
as a potential counterweight within ASEAN to neighboring 
Malaysia and Indonesia, with which Singapore's relations are 
sometimes testy.  The pace of high-profile GOS visits, the 
bullish comments of senior officials, and the tone of the 
local press coverage suggest that Vietnam figures in 
Singapore's long-term strategic plans as a future major 
regional player.  END SUMMARY. 
 
---------------------- 
Bilateral Ties Growing 
---------------------- 
 
2. (U) As one of Asia's best performing economies, Vietnam is 
increasingly visible on Singapore's economic and political 
radar, and the Government of Singapore (GOS) has stepped up 
efforts to deepen bilateral ties.  Singapore is already a 
major economic partner for Vietnam.  It is Vietnam's largest 
source of foreign direct investment and its fourth largest 
export market.  Government-Linked Corporations (GLCs) 
investing in large-scale projects led Singapore's investments 
in Vietnam.  Among them, the Vietnam-Singapore Industrial 
Park (VSIP) has attracted US$1.5 billion and currently 
provides 40,000 jobs in the Ho Chi Minh City area.  A second 
Vietnam-Singapore Industrial Park II (VSIP II) is currently 
under construction in Binh Duong Province.  Cumulative 
Singapore FDI in Vietnam stands at US$7.4 billion (according 
to GOS figures provided by Vietnam's Ministry of Planning and 
Investment), much of which is focused in the real estate, 
food and beverage, and transport sectors. 
 
3. (U)  Singapore's efforts have been paying off.  Total 
bilateral trade with Vietnam grew at rates averaging 20 
percent per year between 2000-2005, and in 2005 reached 
US$6.7 billion.  Vietnam exports primarily crude oil, 
seafood, computers and components, machinery, equipment and 
spare parts to Singapore.  Singapore's exports include 
plastic goods, computer and office equipment, fertilizers, 
machinery, equipment and spare parts.  Singapore has enjoyed 
a consistent trade surplus, which totaled US$2.6 billion in 
2005. 
 
4. (SBU) Singapore has actively cultivated closer ties with 
Vietnam.  Since 2005, numerous high-level officials have 
visited Vietnam, including Prime Minister Lee Hsien Loong in 
September (bilateral) and November (to attend APEC).  In 
December 2005, Singapore and Vietnam signed the Framework 
Agreement on Singapore-Vietnam Connectivity under which the 
two governments pledged to encourage cooperation in trade and 
services, education, finance, transport, investments and 
information technology.  MFA Deputy Director for Vietnam 
Adrian Tan told us such visits and Singapore's GLC-led 
investments reflect the deepening GOS-Vietnam bilateral 
relationship. 
 
---------------------------------- 
Building Up a New Regional Player? 
---------------------------------- 
 
5. (SBU) Recognizing the competitive challenges China poses 
for Southeast Asia, the GOS has long sought to hasten ASEAN 
regional integration.  In October, MFA Second Permanent 
Secretary Bilahari Kausikan reiterated to a visiting U.S. 
 
SIPDIS 
official that ASEAN needed to "integrate more deeply" to be 
effective as a counterweight to China (Ref A).  Some 
observers in Singapore believe that Vietnam's vibrant 
economy, stable political system, territorial size and past 
military successes make it a natural future leader within the 
region and ASEAN. 
 
6. (SBU) Singapore officials have been consistently bullish 
in their public and private comments about Vietnam in recent 
months, suggesting the GOS may be thinking of a closer 
partnership with Vietnam within ASEAN.  Minister for Trade 
and Industry Lim Hng Kiang has called Singapore-Vietnam 
relations a "winning connection."  During his visit to 
Vietnam in September, Prime Minister Lee Hsien Loong's speech 
highlighted the many shared interests and perspectives of the 
two countries, including on the need for ASEAN integration, 
and suggested that Singapore and Vietnam should "pool our 
resources and bring together the ASEAN member states as a 
 
SINGAPORE 00003829  002 OF 002 
 
 
strong and robust economic community."  Singapore's 
government-controlled media have given Vietnam extensive and 
glowing coverage of late.  The largest newspaper in 
Singapore, the Straits Times, touted Vietnam's success as the 
host of APEC in November with the headline "Vietnam the New 
ASEAN Star." 
 
7. (SBU) Vietnam experts in Singapore think-tanks offered 
different views on Singapore's objectives in developing a 
more robust relationship with Vietnam.  Ng Chia Sue from the 
Institute of Defense Securities Studies told us that 
Singapore sought closer ties with Vietnam as a way to 
counterbalance Malaysia and Indonesia, two major players in 
ASEAN with periodically testy relations with Singapore. 
Vietnam's potential as a political and soon-to-be economic 
heavyweight in the region makes it an attractive partner for 
Singapore.  Ng suggested that sustained GLC investment in 
Vietnam for a number of years would give Singapore leverage 
to build such a partnership. 
 
8. (SBU) However, Dr. David Koh, a prominent Vietnam-watcher 
at the Institute of East Asian Security Studies, argued that 
political motivations were not the primary factors in 
Singapore's investments in Vietnam.  They were based on sound 
business calculations.  The bilateral relationship between 
the two countries was rather shallow, argued Koh, lacking 
depth on the social, cultural, and non-GLC-led business 
sides.  Furthermore, Koh thought the Government of Vietnam 
(GVN) continued to harbor suspicions of Singapore because of 
its close ties to the United States. 
 
------- 
Comment 
------- 
 
9. (SBU) The attention Singapore officials and media are 
lavishing on Vietnam indicates the GOS sees it as an 
up-and-coming regional player.  Singapore undoubtedly wants 
to continue profiting from Vietnam's growth, but its heavy 
GLC-led investment and diplomatic overtures suggest it also 
wants to encourage Vietnam's emergence and perhaps cultivate 
it over the long-term as a close partner within ASEAN.  From 
Singapore's perspective, it would be a natural partnership. 
Vietnam appears to have overlapping trade and strategic 
interests -- in managing China's reemergence, for example -- 
and would not bring to the table the historical religious and 
ethnic baggage that so often vexes  Singapore's relations 
with its nearest neighbors.  End Comment. 
HERBOLD