China offered to bail out Malaysia’s controversial 1MDB fund, according to an investigation made by the Wall Street Journal.
The report has Vietnam worried, since it reveals that in 2016, China tried to pour money into Malaysia through infrastructure deals after a discussion on September 22, 2016. In return, that explains why Malaysia’s then-Prime Minister Najib Razak supported Beijing’s stance on the South China Sea during the 28th and 29th Association of Southeast Asian Nations (ASEAN) Summits in Laos the same year.
This kind of offer reflects exactly what many fears about Beijing’s ambitious Belt and Road Initiative – that China is buying the world. And Vietnam is concerned that it is surrounded by leaders willing to sell. Hanoi, the most active protester to China’s claims over the South China Sea, is facing the prospect of being isolated by Beijing’s money.
But there is good news, too. In parallel with the chance to host the second Trump-Kim Summit, Hanoi sees opportunities to widen its support on foreign affairs. Brexit could work to Vietnam’s advantage in this regard.
Mark Field, the minister of state for Asia and the Pacific at the U.K.’s Foreign & Commonwealth Office visited Vietnam earlier this month. Along with his visit, he contributed an article for Tuoi Tre News, one of the leading media outlets in the Southeast Asian country. The article, given the title “UK to strengthen relationship with Vietnam after Brexit,” was the latest positive signal for Vietnam-U.K. relations as the two celebrate the 45th anniversary of their ties.
Earlier, on October 10, Pham Binh Minh, Vietnam’s deputy prime minister and minister of foreign affairs, paid a visit to the U.K., which ended in a noteworthy joint statement with U.K. Foreign Secretary Jeremy Hunt. In the statement, both sides agreed to strengthen the strategic partnership between the two countries. The U.K. and Vietnam also noted the growing importance of collaboration in the United Nations on peacekeeping, global security, international law, and the illegal wildlife trade. Prime Minister Theresa May’s administration has asked for Vietnam’s commitment to the United Nation sanctions regime to encourage North Korea to take steps to denuclearize fully and verifiably as well as maintaining the ban on the use of chemical weapons globally. Beyond that, public opinion tends to focus on trade and security issues in the relationship.
Vietnam, as well as ASEAN in general, has been considered one of the best options for the U.K. after Brexit. Post-Brexit trade deals are important for Downing Street, especially in the worst-case scenario of a “hard Brexit” – something that became more likely this week with the empathic parliamentary rejection of the U.K. government’s proposed Brexit deal.
That is why the U.K., a strong advocate for free trade in Europe and Asia, is looking forward to ensuring “continuity for business” with Vietnam by “transitioning the prospective EU Vietnam Free Trade agreement during the Brexit transition,” as the joint statement put it. Further more, Pham and Hunt also agreed to consult on the prospects of the U.K. joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), sometimes called the TPP-11.
Free trade agreements beyond ASEAN that involve Southeast Asian states (like CPTPP), bilateral free trade deals with selected ASEAN member states (such as Vietnam) and an ASEAN-U.K. free trade agreement are three possible opportunities for a post-Brexit U.K., according to a report by the U.K.-ASEAN Business Council (UKABC) and the London School of Economics’ Saw Swee Hock Southeast Asia Center (LSE SEAC). The report, “Future Options for the UK-ASEAN Economic Relationship,” points out the U.K.’s longstanding and deep historical relations with Southeast Asia. In terms of trade, U.K. exports to ASEAN are higher than exports to Japan, India, and South Korea. In 2016, two-way trade between the U.K. and Southeast Asia amounted to 32.4 billion British pounds — a 9.1 percent increase from 2015. Vietnam is now the U.K.’s third largest trade partner in ASEAN, accounting for 14.9 percent of total trade with the bloc.
But with ASEAN divided by national interests, not least because of economic inducements from China, the ASEAN-U.K. free trade agreement seems uncertain. Bilateral free trade deals with selected ASEAN member states can be crucial in the short term, at least.
“I am confident that when the UK leave the EU that we will be ready to negotiate a bilateral trade deal with Vietnam, which will be good for both sides,” Gareth Ward, the U.K. ambassador to Vietnam, told me on the sidelines of a business reception in Ho Chi Minh City in December. He added:
Also in the future, the UK is considering whether we will make the application to join CPTPP. We know from our discussion with members of CPTPP, including Vietnam, that there is a lot of interest among the members for working with the U.K.. So the U.K. and Vietnam are both strong supporters of free trade, and that means we will find the way to make sure trade is maintained smoothly.
The U.K. is also accelerating toward the Vietnamese market in order to keep on track as “the only [EU] country to maintain market share” in the country last year, according to the UKABC/LSE SEAC report.
As part of its efforts to approach Vietnam, the U.K. is playing its role an issue of core interest: The South China Sea. The joint statement of Pham and Hunt noted included a nod to a 2016 international tribunal’s ruling, which favored the Philippines over China’s claims on the South China Sea:
They agree that adherence to international law is the foundation for peace and stability and renew their commitment to upholding existing Arbitrations and to freedom of navigation and overflight. They hold the view that countries should resolve all disputes by peaceful means, in accordance with international law and through existing legal mechanisms.
There are signals proving that the U.K. is taking the South China Sea seriously. In addition to port calls — for instance, the visit of HMS Albion to Vietnam in September — Britain is acting in line with its “Look East” strategy.
In a recent interview with the Sunday Telegraph, British Defense Secretary Gavin Williamson revealed plans to build a permanent naval base in Southeast Asia, possibly in Singapore or Brunei. This almost immediately caused protests from China.
To put it into context, there are suggestions that the U.K. is pursuing an idea similar to the previous U.S. administration’s strategy of pivoting to Asia, in which the rules-based trading order would be protected by a military presence close to China.
While flirting with Vietnam, the U.K. wants to make sure that those efforts contribute to its global strategy in general.
Du Nhat Dang is a Vietnamese reporter who works for Tuoi Tre newspaper in Vietnam. He graduated from the Faculty of Journalism and Communication, University of Social Sciences and Humanities in Ho Chi Minh City. He is a fellow at the Reporting ASEAN program, which supports articles about ASEAN.