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UK in the Bloc: CPTPP expansion benefits all parties
With the UK’s new access to CPTPP, the available Vietnam-UK free trade agreement, and the country’s strong fundamentals, Vietnam continues to stand out in the region, offering more preferential trade opportunities for its partners across the globe, write Ian Tandy, co-head of global trade solutions, Asia Pacific at HSBC and Surajit Rakshit, head of global trade solutions at HSBC Vietnam.
Ian Tandy, co-head of global trade solutions, Asia Pacific at HSBC. Photo courtesy of HSBC.
The UK’s accession to one of the world’s biggest free trade agreements can unlock further growth along the Asia-Pacific corridor including Vietnam.
One of the world’s biggest – certainly the most modern – free trade agreements has just gained its newest member: the United Kingdom formally joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on December 15, 2024.
The accession of the UK will take CPTPP’s members to 12, with the new entrant joining Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. With the UK in the bloc, it will account for about 15% of global GDP.
Having joined trade finance activities in both the UK and in Asia-Pacific, we have seen firsthand the scale of potential for increased trade and investment between the two markets.
The UK is a highly attractive trading partner for many of the other members – Asian members in particular will welcome the improved access to the world’s sixth-largest economy and its deep financial markets. And for UK businesses there are exciting potential benefits too, not least improved access to the region’s expanding manufacturing industries and its increasingly affluent and digitally-connected consumers.
Taken as a whole, the agreement marks a critical element in the UK’s relationship with the Asia-Pacific region, where more than half of global growth already originates.
Surajit Rakshit, head of global trade solutions at HSBC Vietnam. Photo courtesy of HSBC.
A future-facing free trade pact
Older trade agreements have often had to grapple with the demands of modern economies, such as the shift in relative importance of services versus goods, and the particular dynamics of digital trade. But one big advantage of CPTPP is that it is designed precisely with these in mind.
That matters for the UK especially, given that the country is the world’s second-largest exporter of services. And digital trade – where businesses in the UK export services remotely to CPTPP countries – is also a substantial activity.
The CPTPP agreement, with its more manageable requirements in matters such as where data can reside, allows information to flow more easily between members.
It also points to significant growth potential: none of the CPTPP members currently ranks in the top 10 for UK services exports. Singapore – which acts as a gateway to ASEAN for many firms – stands out as one of the fastest-growing services markets for the UK, having grown by 147% from 2013 to 2023.
A boost from the CPTPP membership points to opportunities for a range of businesses, from financial services to logistics, as well the burgeoning ‘new economy’.
Goods still matter, of course. When CPTPP comes in force for the UK, the country’s exports of goods to member nations will be practically all tariff-free.
The UK government has assessed that the long-term boost to UK exports to CPTPP countries could total £2.6 billion. Many UK firms that lean into ‘Brand Britain’ – covering everything from cars and machinery to pottery and Scottish whisky – stand to benefit from improved access to CPTPP markets.
On the other side, the UK is also an important export market for Asian countries with a wide range of products such as fruits, seafood, rice, rubber, metals etc. In 2023, while Vietnam’s exports to other markets witnessed a drop, its exports to the UK increased by 11%. According to the data of Vietnam’s General Department of Customs, in 11 months of 2024, Vietnam’s exports to the UK continues to grow by 19,5% compared to last year.
The accession of the UK will take CPTPP’s members to 12, with the new entrant joining Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Illustration courtesy of the Vietnamese government’s news portal.
Simplifying supply chains
Entering new markets can often be challenging, and one of the most useful aspects of CPTPP is how its provisions take into consideration the concerns and challenges faced by small and medium-sized enterprises (SMEs) in its member economies.
For larger businesses, one of the biggest benefits will be in relation to international supply chains. The pandemic and geopolitical uncertainties have demonstrated the need for ever-greater resilience when it comes to such links, and CPTPP will play an important role in smoothing the way for new improvements.
A big reason for that is the modern approach taken to rules-of-origin provisions in CPTPP, which allow contributions from all members to be aggrated. In other words, if parts of a product are made in five different CPTPP countries, thoseeg parts can collectively form the mandated CPTPP proportion of the final product.
It’s been pleasing to see that international firms’ intention to make use of the CPTPP is on the rise – up over 10% year-on-year according to the HSBC Global Connections survey in 2023. While that’s encouraging, there’s more to do for banks like HSBC, in partnership with policymakers, to explain in detail how specific provisions in the agreement can support business growth, especially for SMEs.
Vietnam in particular has benefitted from the implementation of CPTPP. Vietnamese enterprises now have more opportunities to access high-quality markets such as Japan, Canada, Australia, and now the UK.
Statistics from the General Department of Customs show that the total import-export turnover to CPTPP markets in the Americas soared by 56.3%, from $8.7 billion in 2018 to $13.6 billion in 2023.
In the same period, Vietnam’s exports to these markets nearly doubled, from $6.3 billion to $11.7 billion. Vietnam’s trade surplus in these markets also nearly tripled from $3.9 billion to $11.01 billion.
Into 2025, with the UK’s new access to CPTPP, as well as the available Vietnam-UK free trade agreement, thanks to all strong fundamentals that the country owns, Vietnam continues to stand out in the region, offering more preferential trade opportunities for its partners across the globe.
Now in its sixth year, the CPTPP is expanding to include the world’s sixth-biggest economy. The benefits all round could be set to multiply.
The Ho Chi Minh City Real Estate Association (HoREA) has proposed a pilot mechanism that would allow businesses to invest in and construct worker housing within industrial parks.
In a document submitted to the Prime Minister, contributing feedback on a draft pilot policy aimed at boosting social housing development, HoREA suggested that businesses, cooperatives, and cooperative unions operating within industrial parks be permitted to build accommodation for their workers. It also called for allowing companies to rent housing outside industrial parks for the same purpose.
HoREA emphasized that all costs related to building or renting worker housing should be recognized as legitimate business expenses and be included in the enterprise’s operating costs.
The association further recommended expanding the policy framework to allow companies within industrial parks to lease social housing or worker accommodation built by third-party developers outside the park premises.
According to Mr. Lê Hoàng Châu, Chairman of HoREA, the current Housing Law (2023) only allows companies to rent worker housing inside industrial parks, without clearly defining whether they can rent social housing outside the parks or construct such housing themselves.
With worker housing demand at industrial parks far exceeding supply, HoREA pointed out that current social housing and dormitory offerings are inadequate. Meanwhile, commercial housing remains out of reach for most workers due to high prices. Therefore, the association urges the government to introduce policies enabling manufacturing businesses—despite not operating in real estate—to develop their own accommodation solutions for employees.
HoREA underscored that such policies would create a strong legal foundation, empowering enterprises and cooperatives to proactively resolve housing issues for workers. If allowed to construct their own housing, companies could ensure homes go to those in need, boosting employee retention, improving living standards, and supporting sustainable growth in industrial zones.
The association also proposed financial support mechanisms, including tax incentives, access to preferential loans, or government-matching support, to reduce the financial burden on companies participating in worker housing development.
Previously, many businesses had expressed a desire to buy land, build housing, and offer installment-based homeownership plans to workers, whereby employees would pay monthly through salary deductions. While this model helps workers secure long-term housing, legal procedures remain a major hurdle.
Providing accommodation has increasingly become part of corporate strategies to retain labor, alongside other employee welfare policies. For example, Nissei Electric Vietnam (Linh Trung 1 Export Processing Zone, Thu Duc City) has built a dormitory complex with 285 shared rooms, housing up to 2,280 workers. Eternal Prowess Vietnam (District 12) and Thien Phat Company (Linh Trung 2 EPZ) have also invested in on-site worker housing. Thien Phat’s project includes 368 units (35m² each), rented at VND 2.2 million/month, with 80% of the units for families and 20% for shared accommodations.
As of Q2 2024, Ho Chi Minh City has 18 industrial parks with around 1,700 businesses employing approximately 320,000 workers. Citywide, over 1.3 million people are employed in factories. However, there are only 16 official worker housing complexes, accommodating about 22,000 people. The majority of workers rely on rented rooms or stay with acquaintances—often sharing 12m² rooms among 2–3 people, which consumes 15–20% of their monthly income.
From 2021 to the present, Ho Chi Minh City has completed six social housing projects with 2,700 units and is building four more with 3,000 units. By April 30, the city aims to resolve legal hurdles and break ground on 5–6 additional social housing projects, totaling around 8,000 units.
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According to Statista Market Insights, the Vietnamese semiconductor market is forecast to see healthy growth with a compound annual growth rate of 9.62 per cent between 2024 and 2027, reaching a market volume of $26.20 billion.
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| Le Quan, Senior lecturer Faculty of Engineering Fulbright University Vietnam |
Vietnam also boasts over 30 foreign-led companies in integrated circuit (IC) design, including established players like Renesas, Synopsys, and Cadence alongside innovative startups like Ampere, ADTechnology, Inphi, FingerVina, Dolphin Technology. The sector also encompasses numerous smaller firms with around 100 or fewer employees.
By 2040, Vietnam is poised to become a crucial player in the global semiconductor ecosystem, encompassing all aspects of the industry, from design and manufacturing to assembly, test, and packaging (ATP) and equipment fabrication.
The strategy emphasises the importance of fostering a skilled workforce. Vietnam boasts a strong talent pool in the semiconductor industry, with 50,000 design engineers, 200,000 electronics engineers, 500,000 technical workers, and one million software engineers. To further enhance this workforce, the strategy aims to transition up to 30,000 personnel from the existing pool of 350,000 IT and telecommunications engineers.
The global semiconductor packaging landscape is undergoing a rapid transformation, driven by a surge in new facilities across Asia. The wave of semiconductor investment in Vietnam and the industry’s demand for personnel have driven educational institutions, from top universities to vocational colleges, to launch training programmes related to semiconductors.
Last year, major universities such as Hanoi University of Science and Technology, University of IT – Vietnam National University Ho Chi Minh, and the University of Engineering and Technology announced engineering programmes specialising in semiconductors. Younger universities like FPT and Phenikaa are also making significant investments in this area, not only in training initiatives but also in facilities and equipment.
However, to truly understand the current landscape of semiconductor training in Vietnam, it is essential to look at the regulations and current state of training schemes in this field from 2024 backward.
Firstly, the high costs associated with establishing chip fabrication facilities make it an impractical investment for Vietnam. The country’s resources would be better allocated towards sectors that promise more immediate returns, such as ATP and IC design. Advanced packaging technologies represent a feasible and profitable entry point in the global semiconductor value chain, aligning with Vietnam’s strengths in low-cost, adaptable labour.
Vietnam should focus on drawing overseas funding into ATP operations, leveraging its lower labour costs to attract foreign companies. The availability of a high-quality but affordable workforce makes Vietnam an attractive destination for packaging, testing, and assembly processes. Prioritising such investment with advanced packaging capabilities will allow Vietnam to build a competitive advantage in this sector.
Meanwhile, the IC design segment represents a high-value opportunity with significant global demand. To capitalise on this, Vietnam should proactively seek partnerships and outsourced projects from international IC design firms. Engaging Vietnamese firms in IC design outsourcing allows for skill transfer, builds local capacity, and positions Vietnam as a reliable partner in the global semiconductor value chain.
Collaboration between industry, educators, and government should be boosted. Building a cohesive semiconductor workforce will require closer partnerships between educational institutions, industry players, and the government.
By integrating real-world projects into academic programmes, Vietnamese graduates will better understand the industry’s practical requirements and be more prepared to transition directly into the workforce. Schemes that bring industry projects to academia will provide students with hands-on experience, making them job-ready upon graduation.
At the same time, establishing specialised training for semiconductor roles, particularly in ATP and IC design, will be essential to reduce the industry’s current reliance on costly in-house training. This should involve upskilling engineers from related fields through short, intensive courses designed to meet industry standards.
Partnerships with international organisations for curriculum development, as well as accreditation for training initiatives, will help elevate Vietnam’s semiconductor workforce to global standards.
Vietnam can also implement “train-the-trainer” programmes. Its academic institutions face a shortage of faculty members with practical experience in semiconductor technologies. By leveraging international partnerships, Vietnam can upskill its instructors, who can then transfer these skills to future generations of engineers.
Notably, several US institutions have expressed willingness to offer training to Vietnamese trainers, a vital step towards creating a sustainable, locally driven semiconductor education ecosystem.
Finally, effective workforce development in the semiconductor industry requires government involvement in fostering a supportive ecosystem. Policies that incentivise partnerships between academia and industry, such as funding for research and development and joint training programmes, are critical.
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