Vietnam took market share of European Union trade away from other Southeast Asian nations last year, a trend that may continue after it concluded a free trade agreement with the regional bloc.
The country accounted for 19.1 percent of the 201.4 billion euros ($227 billion) in total trade between the EU and members of the Association of Southeast Asian Nations, or Asean, in 2015. That figure is up from 15.8 percent in 2014, according to data from the EU delegation in Singapore.
“Vietnam is one of the growing markets and we’ve seen a very positive development with our trade relationship with that country,” Michael Pulch, EU ambassador to Singapore, said in an interview on Wednesday. That growth coupled with the finalization of the free trade pact “points to a dynamic trade relationship in the future,” he said.
Signs of Vietnam’s trade prominence are growing: in 2014, the country overtook its Asean neighbors to become the biggest exporter to the U.S., powering ahead of traditional manufacturing hubs like Thailand and Malaysia. Vietnam has capitalized on shifting production patterns in Asia as labor costs in China rise, attracting investment from companies such as Samsung Electronics Co., which assembles and exports smartphones from the country.
While EU trade with Singapore, which is still the bloc’s biggest partner in Southeast Asia, increased last year, its market share of total trade fell to 24.1 percent from 25.1 percent. Malaysia, Thailand and Indonesia also lost market share to Vietnam.
Vietnam is the second country in Asean after Singapore that the EU has concluded a free trade pact with. Exports from Vietnam to the EU are dominated by phones, electronic products, footwear, clothing and coffee.
Sluggish economic prospects in advanced countries have pushed investors to search for opportunities in markets that are benefiting from faster growth and younger populations, such as the Philippines and Vietnam.
Vietnam “has higher levels of income and is generally more developed,” said Pulch. “Some of the products that we can offer now can find a broader audience.” The Southeast Asian nation has also matured into demanding more advanced technologies, which Europe is still a key provider of, he said.
Total EU trade with Asean rose 12 percent last year. China’s trade with the European regional bloc amounted to 520.8 billion euros in 2015, more than double that of Asean’s trade, according to EU data.
The EU has targeted Vietnam and Singapore in a new business initiative aimed at exposing small and medium-sized companies in Europe to opportunities in Southeast Asia. The EU will help facilitate meetings between companies in the two regions in industries ranging from water to food and beverages.