Thursday, September 19 2019

VietNamNews

Middle East – Africa holds great potential for VN enterprises

Update: September, 10/2019 - 08:07

 

Deputy Minister of Industry and Trade Đỗ Thắng Hải

During a conference titled ‘Meet Ambassadors from the Middle East and Africa 2019’, Deputy Minister of Industry and Trade Đỗ Thắng Hải talks to the Vietnam News Agency about economic and trade cooperation between Việt Nam and Middle East - African countries.

How has the economic relationship between Việt Nam and Middle East - African countries improved in recent years, especially in the first months of this year?

In recent years, trade relations between Việt Nam and countries in the Middle East - Africa region has seen strong development.

The bilateral trade value in 2018 reached US$20.5 billion, of which Việt Nam’s export value stood at $11.7 billion to the region, including $8.8 billion to the Middle East and $2.9 billion to Africa.

Việt Nam spent $8.8 billion importing goods from the region last year, including $5.1 billion from the Middle East and $3.7 billion from Africa.

In the first seven months of this year, Việt Nam's export turnover to some major markets in the region reached $6.4 billion and its import value from these markets stood at $4.5 billion.

In recent years, co-operation between Việt Nam and Middle East - African countries in the industry and energy sectors has also witnessed development. According to the Ministry of Planning and Investment’s Foreign Investment Agency, by 2018, 33 countries and territories in Africa and the Middle East invested a total of $2.87 billion in 447 projects in Việt Nam. In the first seven months of this year, 25 countries in this region registered to invest $206.8 million in Việt Nam.

What are the opportunities to expand Việt Nam's exports to this region?

Recently, the development of Việt Nam's export market to countries in the region has faced many challenges, including fierce competition with other countries such as Thailand, India and China.

However, there is still potential to expand Việt Nam's exports to those countries because their populations are increasing, leading to increases in demand for goods, especially food, consumer goods, equipment and machinery.

On May 30, 2019, the African Continental Free Trade Agreement (AfCFTA) with 44 member countries came into effect, making Africa the largest free trade area among the participating countries since the World Trade Organisation was established.

Therefore, Việt Nam has many chances to supply goods to this market with a population of over 1.2 billion people.

Many of Việt Nam’s goods have been exported to this area and locals appreciate the imports for their affordable prices, good design and high quality. The products include rice, coffee, pepper, coconut, seafood, mobile phones, electronics, textile and garment products and footwear.

Businesses from Việt Nam and Middle Eastern - African countries will have many opportunities to promote investment cooperation and joint ventures in sectors such as oil and gas exploration and exploitation; mineral exploitation and processing; chemical and fertiliser production; and production of textile, garments and footwear.

The Ministry of Industry and Trade, under the direction of the Government, has been and is focusing on solving problems in trade exchange between Việt Nam and some Middle East – Africa markets and supporting Vietnamese enterprises to promote production and export to the region.

Việt Nam needs imports from the region, including crude oil, diesel, liquefied gas, plastics, metals, fertiliser, animal feed, chemicals, and others.

How can Vietnamese enterprises boost exports to the region?

The biggest difficulty in exports to Africa is the payment process. Due to limited financial capacity, African importers have often offered deferred payment and CIF (cost insurance and freight) - delivery at the port of destination and not opened L/C (letter of credit) due to the high cost. Payment methods are telegraphic transfer reimbursement (TTR) with a deposit of 10 per cent and the rest is paid on receipt. This is an unsafe payment method, so most of Việt Nam’s export businesses have not accepted it.

In addition, enterprises of both sides have often lacked information about each other. Việt Nam has just eight embassies and five commercial offices in Africa, so there are many difficulties in the introduction and verification of partners, and support in visa procedures.

To avoid these risks, Vietnamese businesses have often implemented export activities via international intermediaries. This has increased the prices of Việt Nam's agricultural and fishery products, reducing their competitiveness.

To boost exports to those markets, besides support from relevant offices in Việt Nam and other countries, Vietnamese businesses need to actively update information and carefully research the markets to build suitable production and export strategies. They should increase meetings and direct contact with partners through participation in trade promotion programmes, fairs and exhibitions held in countries in the region. Especially, they need to have qualified human resources.

What should Việt Nam do to continue promoting economic and trade co-operation with regional countries in the future?

To create favourable conditions for the development of the economic, energy and trade co-operation between Việt Nam and the Middle Eastern – African region, Việt Nam and regional countries should continue to improve the legal framework, mechanisms and policies to facilitate trade exchange and investment co-operation activities of those businesses.

At the same time, the two sides should strengthen co-operation between ministries, functional branches, chambers of commerce and industry, and business associations. They should also enhance the exchange of ministerial-level delegations as well as business delegations to promote mutual understanding and co-operation.

The two sides should promote bilateral co-operation via the joint committee between Việt Nam and countries in the Middle Eastern - African region to propose specific solutions for promoting co-operation in many sectors.

Việt Nam needs to import crude oil, liquefied gas and other petrochemical products as well as raw materials from the region and is ready to supply food products, processed foods, vegetables, fruits and aquatic products.

Moreover, Việt Nam welcomes Middle East - African investors to invest in the fields of industry, energy, renewable energy, agricultural production, aquaculture and food processing.

The two sides need to increase trade promotion and support businesses attending fairs, exhibitions and market research opportunities.

The parties need to pay attention to the development of information and communication activities to provide reliable information about the market, thereby raising businesses' awareness of potentials and business opportunities in Việt Nam and the Middle East - Africa region. — VNS

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