UAE-Vietnam Cepa: Can both nations build partnerships beyond traditional alliances?

The signing of the high-profile UAE-Vietnam comprehensive economic partnership agreement on October 28, 2024, highlights both countries’ interest in deepening their bilateral relationship beyond traditional alliances.

The deal is economically significant. The UAE-Vietnam trade volume is nearly $6 billion. The Cepa programme seeks to expand the trade of Vietnamese goods into the broader GCC region and encourage the UAE’s focus on Vietnam’s burgeoning sectors.

Positioning UAE as re-export hub for Vietnamese goods

The UAE-Vietnam comprehensive economic partnership agreement is less about local consumption than about positioning the UAE as a re-export hub for Vietnamese goods across the broader Gulf Cooperation Council (GCC) region.

Major Vietnamese exports – seafood, agricultural products and consumer electronics – stand to benefit from the UAE’s strategic position as a transit point to the GCC’s combined population of 54 million.

For instance, seafood tariffs are expected to reduce substantially because of the Cepa programme, boosting opportunities for Vietnamese exporters. Enhanced access and reduced tariffs could position Vietnam as a top supplier to the UAE.

Beyond trade, the agreement is intended to facilitate UAE investment in Vietnam‘s infrastructure, technology and clean energy sectors. Vietnamese infrastructure and energy hold particular interest for Emirati businessmen seeking opportunities.

Is UAE seeking to venture into Southeast Asian market?

The recently signed UAE-Vietnam Cepa represents the UAE’s ambitious venture into the Southeast Asian market. The UAE and Indonesia signed a similar deal in 2020, subsequently attracting $10 billion in Emirati funding for logistics and energy.

The UAE and Cambodia inked another Cepa shortly after. These deals signal the deepening Association of Southeast Asian Nations (ASEAN) – Gulf Cooperation Council (GCC) relationship, encouraging better partnerships.