Commentary: Vietnam’s olive branch to Elon Musk sets a bad precedent

TOKYO: Vietnam was often viewed as a winner during the first US-China trade war. This time around, such a victory looks less certain as it faces the threat of tariffs. But the Southeast Asian nation appears to be trying to come out on top again by opening itself up to business with Elon Musk.

Last week, Vietnam approved new regulations that would allow Musk’s Starlink to provide satellite internet services in the country and maintain full ownership over any subsidiary – an abrupt reversal of the local rules that had previously barred overseas companies from fully owning satellite internet providers.

Talks between regulators and the company have been going on for years, sputtering in 2023 after lawmakers signalled they would not make an exception to the domestic partnership policies. The government said last September that SpaceX, Starlink’s parent company, had plans to invest US$1.5 billion in Vietnam, but it still didn’t give details on its potential entry into the market.

So, what’s behind the sudden reversal now? Apparently, the threat of tariffs spurred Vietnamese lawmakers to extend an “olive branch” to the business owned by Donald Trump’s close ally.

A NEW ERA OF TECHNO-IMPERIALISM

The move exposes a new reality: Musk’s proximity to the US president, known for his transactional approach to foreign policy, is impacting how countries are writing regulations – and in ways that stand to further enrich the billionaire.

Musk’s pseudo-government role is already causing consternation in Washington over a slew of potential conflicts of interest. Vietnam’s change of heart reveals how this new era of techno-imperialism is quietly reshaping policy in developing countries.

Vietnam isn’t alone in its efforts to court the world’s wealthiest man and his political clout. Bangladesh’s interim leader recently invited Musk to visit the country and launch Starlink.

It’s true that expanding access to satellite internet has upsides in both countries; the service can help boost connectivity across harder-to-reach mountainous and rural regions. And these nations have nothing to gain by trying to separate Musk’s business empire from US foreign policy.

Vietnam, meanwhile, is going through its own government overhaul. Leaders recognize that tariffs would devastate their export-driven economy. Opening its tech savvy market up to Musk’s business, even without a domestic partner, still seems like a wiser option. And it’s an attention-grabbing way to chip away at its trade surplus with the US.

But is Vietnam setting up a bad precedent? Should the personal business interests of Trump’s “first buddy” be enough to alter US trade policy? Is opening up your marketplace to Musk a sufficient reason to avoid the president’s long-promised tariffs?

CHINA WILL BE TAKING NOTES

Other jurisdictions will be watching closely how this plays out. China, the prime target of the new trade war, will especially be taking notes. Beijing has reportedly mulled using Tesla, the electric vehicle maker deeply intertwined with its domestic market, as a potential bargaining chip in negotiations.

Musk stands out among Trump allies with his softer stance toward America’s top geopolitical rival, likely because of his business interests there. Chinese policymakers recognise they can exploit their control over his company to further their own interests and catch the attention of the president.

It is said that no one is a winner from a trade war. Time will ultimately tell if that holds true in this new era of the Trump’s broligarchy, or if it will end up growing the power and influence of America’s tech elite. Vietnam may have prematurely capitulated to Musk, but leaders in other jurisdictions are responding to the threat of US tariffs by pre-emptively targeting his firms.

As Musk injects his global businesses in more countries across Asia, it could potentially give governments bargaining chips as the trade war heats up – but being a political pawn could also backfire on his companies. It’s no guarantee these unevenly gained business wins so far are sustainable.