March 2, 2022 Bich T. Tran, Adjunct Fellow, CSIS
On February 11, 2022, the Biden administration released its Indo-Pacific Strategy. The document covers a vast geographic area including many nations and touches on a wide range of issues. What does the new strategy mean for U.S.-Vietnam cooperation?
The strategy names Vietnam as one of the United States’ leading regional partners. Keen observers have anticipated the U.S.-Vietnam Comprehensive Partnership signed in 2013 to be upgraded to a strategic partnership. Although some U.S. and Vietnamese officials have said that the name does not matter, formally upgrading to a strategic partnership with a written joint statement will assure both sides’ commitments.
Vietnam’s digital economy is rapidly expanding. In 2011, only 35 percent of the Vietnamese population used the internet, which doubled to 70 percent by 2020. According to the e-Conomy SEA 2021 report, 71 percent of Vietnamese internet users have made at least one purchase online. The report projected Vietnam’s gross merchandise value (GMV) to reach a total value of $21 billion in 2021, when all sectors, except online travel, experienced double-digit growth. E-commerce is leading the pack, with a 53 percent increase from $8 billion to $13 billion. Vietnam’s GMV is expected to grow from $21 billion in 2021 to $57 billion in 2025.
Meanwhile, one important element of Biden’s Indo-Pacific Economic Framework (IPEF) is the focus on digital economy. The United States can work with Vietnam to speed up the latter’s digital transformation and support its fast-growing digital economy. This involves building secure digital infrastructure to expand access to reliable internet and developing rules and regulations to govern cross-border data flows. Given Washington’s current aversion to free trade agreements, deals on digital trade are more feasible, as they do not require congressional approval because of their limited nature.
Cooperation on Traditional Security Issues
As tensions over territorial disputes in the South China Sea have escalated, the United States has helped Vietnam improve its maritime law enforcement capabilities, including the transfer of two Hamilton-class cutters to the Vietnamese Coast Guard in 2017 and 2020, as well as the delivery of 18 “Metal Shark” patrol boats in the last few years.
The FY 2016 National Defense Authorization Act, Section 1263, known as the Indo-Pacific Maritime Security Initiative, specifies Vietnam as one of seven countries to which the United States will provide assistance and training. The initiative, which remains in effect until December 2025, aims to “increase maritime security and maritime domain awareness of foreign countries along the South China Sea and into South Asia.”
Cooperation on Nontraditional Security Issues
Economic growth in Vietnam has significantly increased demand for electricity. This, in turn, has led to concerns about inadequate energy services, high prices, and environmental and health impacts.
Through the Vietnam Low Emission Energy Program, the U.S. Agency for International Development (USAID) has allocated $36.25 million between 2020 and 2025 to support Vietnam’s transition to a clean, secure, and market-based energy sector. This involves increasing the deployment of advanced energy systems, enhancing energy sector performance, promoting competition in the energy sector, and promoting innovation, incubation, and inclusion. From 2019 to 2023, the USAID Vietnam Urban Energy Security project, with $14 million in funding, is working with major Vietnamese cities to improve policies and regulations, mobilize public and private sector investment, and increase adoption of innovative solutions.
In the fight against Covid-19, the United States has donated more than 24 million vaccine doses and USAID has provided $23.06 million in assistance to Vietnam. In addition, USAID has launched several projects to strengthen Vietnam’s capacity to prevent, detect, assess, and respond to public health emergencies. Those include Risk Mitigation and Management of Human Health Threats along Animal Value Chains, One Health Workforce-Next Gen, and Infectious Diseases Detection and Surveillance. In August 2021, Vice President Kamala Harris opened the U.S. Centers for Disease Control and Prevention Southeast Asia Regional Office in Hanoi, elevating Vietnam’s role as a regional health hub.
China has conducted cyberattacks in Southeast Asian countries to deepen its regional influence. In a recent report from Insikt Group, Chinese hackers are said to be potentially state sponsored because the attacks “almost certainly support key strategic aims of the Chinese government,” such as gathering intelligence on countries engaged in South China Sea disputes or countries strategically important to the Belt and Road Initiative. According to the report, Vietnam is one of the top three targeted countries.
As Biden’s Indo-Pacific Strategy signals U.S. intention to help regional countries improve their cyber capacity, the United States can support Vietnam in protecting against, recovering from, and responding to cyberattacks.
Cooperation on Education
Through educational assistance, the United States has aimed to strengthen ties with nations in the Indo-Pacific and nurture the next generation of global leaders, while cultivating positive views of the United States. The Young Southeast Asian Leaders Initiative (YSEALI), which provides fellowships, workshops, and grant funding to young leaders, has bolstered leadership development and networking in the region.
USAID is supporting Vietnam’s efforts to modernize its higher education system by helping Vietnamese universities improve academic quality and enhance institutional governance. Launched in 2016, Fulbright University Vietnam (FUV) is the country’s first fully independent nonprofit university. From 2020 to 2024, FUV is set to receive $21.1 million from USAID to advance its goal of achieving international accreditation. In addition, Partnership for Higher Education Reform is a five-year initiative (2021–2026, $14.2 million) supporting the three largest Vietnamese universities with higher education policy advocacy and reform, technology and digitization, and gender empowerment for success and long-term sustainability.
Although Vietnam may welcome U.S. approaches to many issues, the newly issued Indo-Pacific Strategy’s emphasis on “democratic institutions” and “democratic governance” may intimidate Hanoi and hinder deeper bilateral cooperation. Going forward, the Biden administration should emphasize cooperation on the areas discussed above and tailor its message to the Vietnamese audience. For instance, the United States could emphasize the importance of anti-corruption and economic reforms in attracting foreign investment. Using similar approaches, the Biden administration can work more effectively with countries in the Indo-Pacific.
Bich T. Tran is an adjunct non-resident fellow for the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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Adjunct Fellow (Non-resident), Southeast Asia Program
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