Australia-Vietnam Ties Poised to Strengthen in PM Albanese’s New Term

Australia’s re-elected Labor government signals continuity in Asia-Pacific engagement, with a strategic focus on Vietnam, climate partnerships, digital transformation, and resilient regional trade. 

The re-election of Prime Minister Anthony Albanese and the Australian Labor Party in 2025 marks a significant moment of political continuity for Australia and reassurance for its regional partners. Albanese was officially sworn in for a second term on May 13, leading the largest Labor caucus since federation, after securing a landslide victory in the national election.

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In a time of escalating global trade tensions, climate pressures, and shifting geopolitical alignments, PM Albanese’s renewed mandate provides a stable foundation for Australia’s external engagement, particularly with Asia. Building on his first term’s emphasis on diplomacy and sustainable development, the Albanese government is expected to deepen strategic and economic ties across Southeast and South Asia. Among these, Vietnam stands out as a key partner for Australia, as both share the ambition to expand trade, double investment, and collaborate on regional priorities such as climate action, education, and digital transformation.

On May 6, Vietnam’s Prime Minister Pham Minh Chinh spoke with his Australian counterpart over the phone to celebrate the Labour Party’s recent electoral win. The Vietnamese PM congratulated the Australian Government on this achievement and recommended that it continue to prioritize Southeast Asia, especially Vietnam, in its regional initiatives and resource distribution. For his part, PM Albanese emphasized the importance of safeguarding a free and open multilateral trading system while improving market access for each country’s goods and services.

Key policy trends under the Albanese Labor government’s second term

Multilateralism and regional resilience

Multilateralism remains a cornerstone of Australia’s regional engagement strategy, reflecting its belief that long-term resilience depends on inclusive, rules-based cooperation. Australia plays an active role in shaping the regional trade architecture, participating in major agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the recently upgraded ASEAN-Australia-New Zealand Free Trade Area (AANZFTA). These frameworks not only open markets but also promote transparency, regulatory alignment, and sustainable economic development across Asia.

Australia is also stepping up as a climate leader through its bid to co-host COP31 with Pacific Island nations. This initiative signals a broader ambition to lead global and regional efforts on climate action, while ensuring Pacific and Southeast Asian voices are central to the conversation.

Commitment to ASEAN’s centrality

The outcome of the 2025 Australian federal election affirms a clear mandate for PM Albanese’s Labor government, reinforcing Australia’s long-standing foreign policy direction amid intensifying geopolitical competition and climate urgency. Australia’s reaffirmed commitment to ASEAN centrality and a rule-based Indo-Pacific is particularly significant as regional actors seek reliable partners to navigate shared challenges. The Labor government’s sustained regional focus reflects a long-term commitment over short-term shifts.

A key pillar of this approach is the Southeast Asia Economic Strategy to 2040, which outlines plans to deepen engagement across ten priority sectors, including green energy, infrastructure, education, healthcare, and digital transformation. With 75 concrete recommendations, the strategy reflects Australia’s intention to move beyond rhetoric and into tangible action, offering pathways for mutual economic resilience and growth. As regional economies shift toward sustainability and technological advancement, Australia’s stability and proactive agenda position it as a vital partner in shaping Asia’s future.

Other focus

The Albanese government also emphasizes digital transformation, workforce upskilling, and gender inclusion as pillars of its foreign policy. Australia supports women’s economic participation and invests in digital infrastructure and education to drive equitable, future-ready growth across the region. Together, these efforts reinforce Australia’s role as a constructive and forward-looking partner in the Indo-Pacific.

Vietnam: The flagship bilateral relationship

Vietnam stands at the center of Australia’s regional engagement strategy, representing one of the most dynamic and multifaceted bilateral relationships in the Indo-Pacific. Both countries have actively deepened cooperation since upgrading ties to a Strategic Partnership in 2018 and launching the Australia-Vietnam Enhanced Economic Engagement Strategy (EEES).

Cooperation spans a wide range of sectors, including:

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• Education: Australia remains a top destination for Vietnamese students, and a growing number of institutions now operate in-market programs;
• Energy and climate: Australia has committed A$105 million (approx. US$67 million) to help Vietnam decarbonize and diversify its energy systems;
• Agriculture and aquaculture: Joint projects such as sea cucumber farming and sustainable fisheries management not only support livelihoods but also contribute to marine conservation and regional food security; and
• Trade and investment: Most recently, Vietnam expressed interest in negotiating a bilateral trade and investment agreement, highlighting mutual confidence and a shared appetite for deeper economic integration.

Simultaneously, strong people-to-people ties form the social foundation of this relationship. With over 300,000 Australians of Vietnamese heritage, the language is now among the most widely spoken in the country. Alumni networks, educational exchanges, and long-standing migration links continue to foster mutual understanding and open doors for bilateral cooperation. As both countries navigate global uncertainty, their deepening ties offer a model of trust-based, future-oriented cooperation.

Also read: Vietnam-Australia Strengthen Development Partnership 2025-2030

Australia-Vietnam trade

Economic ties between Australia and Vietnam have expanded rapidly, with two-way trade reaching A$28.2 billion (approx. US$18.17 billion) in the 2023-2024 period, making Vietnam one of Australia’s fastest-growing trade partners. Australia exports energy, grains, meat, cotton, dairy, and education services to meet Vietnam’s growing demand, while importing electronics, textiles, and machinery from Vietnam’s export-driven manufacturing sector. Both governments have set a goal of becoming top ten trading partners and significantly boosting mutual investment, supported by the Australia–Vietnam Enhanced Economic Engagement Strategy and regular ministerial dialogues.

Deepening bilateral economic ties

In March 2024, the relationship was elevated to a Comprehensive Strategic Partnership, paving the way for deeper collaboration in areas such as climate, energy, and digital transformation. Education remains a key pillar, with over 36,800 Vietnamese students enrolled in Australian institutions and expanding university partnerships underway. Joint initiatives in aquaculture, agriculture, and clean energy—supported by the Aus4Innovation program and a new Energy and Minerals Ministerial Dialogue—underscore the long-term potential of this partnership. To facilitate investment, Australia launched a dedicated Investment Deal Team hub in Ho Chi Minh City to identify new opportunities for Australian investors in Vietnam’s rapidly modernizing economy.

Forward outlook: opportunities and risks

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Looking ahead, Australia enters its new political term with both promising opportunities and complex risks in its regional engagement. One major opportunity lies in the potential negotiation of a bilateral free trade agreement with Vietnam, which would further solidify the already strong foundation laid by the Enhanced Economic Engagement Strategy. More broadly, Australia is well-positioned to scale up its sustainable development initiatives across Asia, building on climate financing, agricultural innovation, and renewable energy partnerships. Greater collaboration in education, skills training, and the digital economy will strengthen economic resilience and help the region adapt to a technology-driven future.

At the same time, several risks must be carefully managed. As strategic rivalry between the US and China intensifies, Australia must navigate regional perceptions of alignment with great powers, ensuring its policies reflect independent, constructive engagement. Relying too heavily on one partner risks volatility and eroding trust. To sustain long-term partnerships, especially with ASEAN members, Australia must continue to practice inclusive, consultative diplomacy that respects regional priorities and fosters shared ownership of outcomes. Balancing ambition with sensitivity will be critical to securing Australia’s role as a trusted partner in Asia.

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