FILE - Passengers are seen during a flight of VietJet Air from Hanoi to Ho Chi Minh city, Vietnam, Jan. 12, 2018.
FILE - Passengers are seen during a flight of VietJet Air from Hanoi to Ho Chi Minh city, Vietnam, Jan. 12, 2018.

TAIPEI - The U.S. decision last week to permit Vietnam to fly its commercial aircraft directly to American airports is seen as a continuation of improving relations and follows other signs of international recognition for Hanoi.

Observers say the breakthrough shows that major countries including the United States take Vietnam ever more seriously after more than three decades of brisk economic development and foreign policy that includes balancing relations with its communist neighbor China without worrying the West.

“It’s been a slow and progressive bringing back [of] Vietnam into the international community,” said Adam McCarty, chief economist with Mekong Economics in Hanoi. “It’s been this continual process from the Vietnamese side of being caught, as they have been historically for hundreds of years, between larger powers.”

The Federal Aviation Administration’s award of a “category 1” rating for Vietnam means the country meets international safety standards. Vietnamese airlines can get permits now from the administration to open flights to the United States and carry the codes of U.S. carriers, the FAA said in a statement February 14.

US officials see change

Vietnamese officials knew the significance of the U.S. market in 2012, when they started working toward the FAA category 1 rating, Communist Party news website Nhan Dah reported Monday. They set out to solve 49 safety problems that the FAA found a year later, the website added.

The FAA inspected Vietnam’s civil aviation schemes again last year and gave high marks in most areas. It found just 14 “individual and not systematic problems,” the report says.

Clinching category 1 status from the world’s largest economy follows other signs of growing recognition.

Vietnamese Trade Minister Tran Tuan Anh speaks during a press conference about the Trans-Pacific Partnership (TPP) held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in Danang, Vietnam, Nov. 11, 2017.
How Vietnam Will Ship Tariff-Free This Year to Countries Covering 45% of World GDP

Vietnam’s christening this week of the 11-nation Trans Pacific Partnership trade deal, to be followed by a pact with the European Union, will give the export-reliant country tariff-free access to markets totaling 45 percent of the world GDP, its biggest economic boost since joining the World Trade Organization.

The National Assembly in Hanoi ratified the Comprehensive and Progressive Trans Pacific Partnership in November effective January 14, breaking down import tariffs to major markets such as Canada and Japan.

The U.S. ran a $29.3 billion trade deficit with Vietnam in the first nine months of last year, but Washington did not make it a big issue. China and the United States, however, have been locked in disputes for about the past year partly because of China’s trade surplus with the United States.

U.S. President Donald Trump, who praised Vietnam’s economic momentum in 2017, is scheduled to visit Hanoi next week for his second summit with North Korean leader Kim Jong-un. Both sides picked Vietnam as host because it’s seen as geopolitically neutral.

Trump and his “hawkish colleagues” will see Vietnam as distinct from China in terms of trade, McCarty said.

FILE - Workers are seen at a Foxconn factory in Longhua, Guangdong province, China, May 26, 2010. Foxconn is Apple's main supplier of iPhones.
Vietnam Given Best Odds to Gain from Sino-US Trade Dispute

The world’s largest contract assembler of consumer electronics, Foxconn Technology, as well as a prominent producer of wireless earphones may be in talks to locate production in Vietnam, instead of the once more obvious choice, China, to escape the Sino-U.S. trade dispute. And business experts in Vietnam say many more export producers are planning the same kind of move.

Vietnam is poised to receive the world’s biggest inflow over the next year of multinationals fleeing the almost year-old trade dispute.

“The degree of economic and trade closeness between Vietnam and the United States is always increasing,” said Tai Wan-ping, Vietnam-specialized international business professor at Cheng Shiu University in Taiwan. “Apart from Vietnam having trade deals, in substance the degree of progress is extremely high.”

Bigger economy, more fliers

Foreign investment in Vietnamese manufacturing is fueling economic growth of 6 to 7 percent since 2012. That trend is growing the middle class to about one-third of the 93 million population by next year, the Boston Consulting Group estimates.

Citizens are spending some of their new wealth on airfares.

Vietnam's Bamboo Airways Chairman Trinh Van Quyet is seen at his office in Hanoi, Nov. 19, 2018.
Vietnam Start-up Bamboo Airways Secures License After Delayed Launch

Vietnam's start-up Bamboo Airways has secured a license from the local authorities, the company said, opening the way for its maiden flight in January after a string of delays.

Bamboo, owned by hotel and leisure firm FLC Group will operate 37 routes connecting major cities and tourist destinations in Vietnam to "reduce pressure on aviation infrastructure," the airline said in a statement.

"In 2019, Bamboo Airways will also launch international air flights to Asian countries, starting with Japan, Korea and Singapore," it said, adding that it also intended to operate flights to Europe, without

The country saw 94 million passengers in 2017, including 13 million foreign nationals, up 16 percent over 2016. The domestic civil aviation industry has grown 17.4 percent over the past decade and the International Air Transport Association projects Vietnam will become the world’s fifth fastest growing aviation market by 2035.

Foreign investors are expected to keep flying in, too. In January Vietnam formally joined the 11-country Comprehensive and Progressive Trans Pacific Partnership, a free-trade deal encompassing about 13.5 percent of the world economy. The European Union expects to ratify its own trade pact with Vietnam.

As part of a 10-member bloc of Southeast Asian countries, Vietnam trades freely with China. But political scientists say Vietnam avoids favoritism toward China, despite its having a similar political system and its significance as a source of raw materials. Vietnam has vied with China over territory for centuries and prefers a multi-country foreign policy today.

Loads of returnees, fewer tourists

Vietnamese in the United States are likely to pack the eventual direct flights as relatively few American tourists visit Vietnam, compared to other sources, McCarty said. Some Vietnamese-Americans go back to visit; others to invest.

The Migration Policy Institute estimates there are about 1.3 million people of Vietnamese heritage live in the United States today, many relocated after the U.S.-backed former South Vietnam lost to the Communist north in the 1970s. Foreign tourism to Vietnam surged to 14.1 million in the first 11 months of last year, led by citizens from China and South Korea.
 
“There are residents in the U.S. itself, so that alone would be good enough for airline connections if they see fit to,” said Song Seng Wun, regional economist in the private banking unit of CIMB in Singapore,  “Every country on the planet has representation in the U.S. population in one way or another. Obviously therefore it makes economic sense, commercial sense to have connectivity.”

Passengers on the eventual direct flights would avoid today’s stopovers in places such as Hong Kong and Taipei, Tai said.