Vietnam, with a young and hard-working population, offers great potential despite recent fiscal challenges, Second Minister for Foreign Affairs Grace Fu said on Thursday.
Urging Singapore companies to "pay attention" to the country of over 90 million, she pointed to opportunities in several growing industries like manufacturing, financial services and tourism.
"Labour cost is very low... and with their greater linkages to the world through various free trade agreements as well as the TPP (Trans-Pacific Partnership) for example, we see this as great potential for us to tap," she said.
Ms Fu, who is visiting Vietnam as part of Prime Minister Lee Hsien Loong's delegation, spoke to reporters a day after the two countries launched a strategic partnership.
She reiterated Mr Lee's point on Wednesday that Singapore banks are keen to set up subsidiaries here, and can play a greater role in financial services.
In a July report, the World Bank said Vietnam's financial sector remains "fragile", though the risk of a systemic crisis has receded.
But the country has taken steps to reform its banking system, having set up a state asset management company to buy back some of the country's bad loans, which are worth some US$5 billion (S$6.3 billion).
Singapore will "continue to watch carefully" Vietnam's fiscal policy, currency management and investment, said Ms Fu, who is also Minister in the Prime Minister's Office and Second Minister for the Environment and Water Resources.
She added that Singapore is keen to help Vietnam create a "more robust regulatory framework" and to share its experiences.
"That is a good starting point for us to help build a stronger banking system that would be important to the health of the Vietnamese economy."
PM Lee, who wraps up his visit to Vietnam today, called on National Assembly president Nguyen Sinh Hung on Thursday.
He noted at the meeting that bilateral economic cooperation has "prospered" in recent years, and with the strategic partnership in place, ties can improve at all levels - be it public, private or parliamentary.
Mr Lee later watched a combined Singapore Armed Forces and Vietnam's People's Army military band performance at the picturesque Ly Thai To Park.
Despite the rain, he stayed on to mingle with 28 Singaporeans based in Hanoi.
He was later hosted to an official dinner by Vietnamese President Truong Tan Sang at the Presidential Palace, and will travel to Quang Ngai today to officiate at the ground-breaking of the fifth Vietnam-Singapore Industrial Park.
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