Decoding Via Vietnam

Prime Minister Narendra Modi’s visit to Vietnam (September 2-3) needs to be viewed from an angle of India’s desire for a significant role in the South East Asian region. 

His visit to Vietnam after 15 years of an Indian PM’ visitation and incidentally after the showdown in South China Sea (SCS), snowballed by UN Convention on Law of Sea arbitration against China’s claim for sovereignty, hold paramount importance to draw a new role for India. 

Modi’s visit to Vietnam and its impact on the relations between the two countries cannot be assessed without linking the turbulence erupted by SCS dispute. In SCS water, interests of both countries are involved. They are apprehended to be overridden by Chinese assertiveness for its sovereign power in the water. 

In SCS, India’s concern relates to its trade since half of its trade passes through the SCS water and Vietnam’s agony relates to its maritime right, which was overpowered by China’s claim of sovereignty.

 

In 2014, a dispute erupted in between Vietnam and China over the maritime right when a Chinese oil rig company conducted oil drilling inside Vietnam’s Exclusive Economic Zone (EEC). Country-wide anti-China protest raged Vietnamese, resulting 21 deaths in the country. This caused a bitter relation between Hanoi and Beijing since then. 

After the UN arbitration ruling and China’s defiance to it, India was at loggerheads with its off-shore oil drilling in Vietnam territorial water. In 2006, ONGC of India was awarded two oil blocks in Vietnam territorial water. One of them was relinquished by ONGC.

The remaining Block 128 got entangled with the dispute, when Chinese company, China Off-shore National Company (CNOOC) invited global bids for the nine blocks, which are located in the Vietnam EEC. Of these, two oil blocks overlap half of ONGC’s Block 128. 

Even though China is the biggest trade partner of Vietnam, it could not make a dent in the preference list of Vietnamese. India is much above China in the Vietnamese choices, despite the economic relations between the two countries being at a low ebb and the country is ruled by communist regime (Communist Party of Vietnam). 

According to Pew Research Centre, USA of its Global Attitude survey, (covering 1000 opinions), 66 percent of Vietnamese have favourable opinion about India, against 19 percent for China. 

Further, 56 percent of Vietnamese have confidence in Modi’s leadership for driving the world affairs in right direction, compared to 20 percent in favour of Chinese President Xi Jinping. 

The survey also found that a higher proportion of Vietnamese, 60 percent, were much concerned about territorial disputes with China. 

Modi’s visit to Vietnam after the UN arbitration raised a hope for Vietnam to strengthen its arm to put pressure on China. Vietnam did not put direct pressure on Beijing, fearing China’s political and military clout. It was sending signal of its concerns through mustering the support of other powerful countries opposing the Chinese defiance. India is one of them. 

To this end, Modi’s visit to Vietnam was a shot in the arm. It beamed a ray of hope for revamping the relation between the two countries. The ten-year-old strategic partnership status between India and Vietnam was jacked up to a Comprehensive Strategic partnership, unleashing a deeper meaning of all round cooperation between the two countries. 

The Joint Statement, asserting to build the Plan of Action of Comprehensive Strategic Partnership to reality in all areas of cooperation, caught the attentions of global strategists. 

In this respect, India’s commitment for line of credit worth $500 million for procurement of defence equipment and implementation of India-Vietnam Defence Relations of May 2015, can be treated counterweight to China’s military clout. 

India is among the ten trading partners of Vietnam. Currently, the total trade between the two countries is about $8 billion. In terms of India’s global trade it is insignificant. It accounts for two percent only. Modi’s visit enhanced the target to $15 billion by 2020. 

Even though Vietnam is not a major trading partner of India (28th rank), it offers ample opportunities to the Indian investors to penetrate in the emerging global biggest free trade block. 

Currently, Indian investment in Vietnam is worth $1 Billion. Vietnam offers a gateway to TPP (Trans-Pacific Partnership). TPP is a biggest Pacific nations’ free trade block, comprising of the USA, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. 

India is not a member of TPP. Neither is it interested in becoming one. Paradoxically, the countries, who play major role in ushering Modi’s ‘Act Asia’ policy, are prominent members of TPP. 

Vietnam is one of them, besides Singapore and Malaysia. Given the opportunity of Vietnam to accelerate its trade relations with global majors utilising the TPP free trade block, Indian investment in Vietnam can reap bigger opportunities to enhance trade with these global majors.