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Trade growth target with Russia in sight

Update: June, 13/2011 - 10:28
Viet Nam News spoke with Sergey Brighinevich, trade representative of the Russian Federation in Viet Nam, on the occasion of Russia's National Day yesterday.

This year marks the 10th anniversary of Viet Nam and Russia's strategic partnership. What were the most significant economic achievements of the past decade?

Russian Trade Representative Sergey Brighinevich

Russian Trade Representative Sergey Brighinevich

There has been sustainable growth in economic and trade co-operation between Viet Nam and Russia in recent years.
Two-way trade turnover reached US$2.45 billion last year, a 2.3-fold increase compared with 2007. This growth came despite the global economic crisis and is a demonstration of the sustainability of our bilateral trade in the face of negative external forces.

During a visit to Viet Nam in November, Russian President Dmitry Medvedev and President Nguyen Minh Triet agreed to boost bilateral trade to $3 billion by 2012 and $10 billion by 2020. How feasible are these targets?

The target of $3 billion in bilateral trade by 2012 is quite feasible.

Though our bilateral trade has grown sustainably, I don't think we have fully exploited our potential. By 2010, Russia's exports to Viet Nam accounted for just 0.4 per cent of its export turnover – 40th among its trade partners.
In my opinion, there are two factors contributing to that. First, the
list of goods exchanged between the two nations is very short. And
second, the great distance between the two countries has presented a problem with transportation costs. The merchandise exchanged between us has mainly focused on raw materials and agricultural products. Their price
has increased substantially due to the high cost of transportation.

To overcome this problem, we should increase the proportion of high-tech and refined products we trade.

Because of Viet Nam's diverse range of products from consumer goods to food and food stuffs, Russia is a lucrative market.

Meanwhile Viet Nam's tropical goods, including fruit, coffee, tea, cashew nuts, aquaculture and rice are attractive to Russian people due to their affordability. This is a good opportunity for Russian entrepreneurs to do business in Viet Nam.

However, when these goods are exported to Russia, they should be processed further before retailing.
Russia is one of Viet Nam's biggest importers of frozen catfish fillets. Yet, in recent years Russia on several occasions has had to temporarily suspend imports of frozen catfish fillets from Viet Nam on safety grounds. I think if Vietnamese products meet Russia's safety requirements, there won't be a problem with Vietnamese goods. I suggest the two countries sit down and discuss the establishment of joint venture enterprises specialising in making canned food in Viet Nam. This is a good way to
increase the efficiency of Viet Nam's food export sector.
To further promote Viet Nam-Russia bilateral trade, I suggest
Viet Nam establish some regional centres in Russia for direct shipment and distribution of Vietnamese products. And the Viet Nam-Russia Bank will play a role in settling payment.

Another way to expand bilateral trade I should mention is the establishment of a free trade area between the two countries.
Positive talks on the establishment of a free trade area have been held by Russia, Belarus, Kazakhstan and Viet Nam since mid-2010. By now the basic working mechanism for a joint working group has been agreed by these countries' experts. The group's assignment is to conduct a feasibility study on the free trade area. Once the free trade agreement is established it will enable the two sides to trade. As a result, both Viet Nam and Russia would enjoy the benefits presented to them by the agreement.

Regarding investment co-operation, I can say that considerable gains have been recorded.

During the 14th Russia-Viet Nam Inter-Government meeting on trade, economics and science and technology co-operation last
October in Moscow, the two sides reached agreement on the orientation for future investment co-operation and a road map for some specific projects to be implemented.

Besides oil, gas and atomic energy joint projects, are there other areas in which Russia and Viet Nam could collaborate?

There are many areas that both Russian and Vietnamese companies are interested in. For example, the extraction of hydrocarbons in Viet Nam, Russia and even in the third countries.

The Kremlin in Moscow is the oldest part of the city and is recognised as one of the most beautiful architectural ensembles in the world. — VNS File Photo

The Kremlin in Moscow is the oldest part of the city and is recognised as one of the most beautiful architectural ensembles in the world. — VNS File Photo

Other potential projects I think that Viet Nam could join are the extraction of coal in Russia and export to Viet Nam to feed the existing coal-fired power plants and future ones. Russian companies are also interested in winning contracts in extracting mineral resources in Viet Nam, particularly aluminium, copper and titanium.

Regarding the manufacturing industry, the Russian company Kamaz has entered a joint venture with the Viet Nam Coal and Mineral Corporation (Vinacomin) to manufacture trucks in Viet Nam.

At present, Russia is
negotiating with Viet Nam to export road building machinery to Viet Nam.

In the field of telecommunications, the Viet Nam-Russia Joint Venture Group (Gtel-Mobile) was established between the Russian Joint Stock Company (Vempelkom) and the Vietnamese State enterprise Gtel. Gtel-Mobile launched a service in 2009 under the brand name Beeline in the cities of Ha Noi, HCM City, Nha Trang, Hai Phong and Vung Tau.

In addition, Russia is willing to supply Viet Nam with technical equipment used in aviation.
Another potential area for co-operation is in the field of energy. Russia has also proposed establishing a joint venture with Viet Nam in manufacturing equipment for the energy sector.

Russia at a glance

Area: 17,075,

Population: 141.8 million

Capital: Moscow

Language: Russian

Currency: Ruble

Flag description: Three equal horizontal bands of white (top), blue and red.

Russian investors have recently expanded their activities in building resorts in Viet Nam. And a five-star resort is being built near Nha Trang City, in the central province of Khanh Hoa.

A very important project which was launched last October during
an official visit to Viet Nam by Russian President Medvedev was an agreement to build a nuclear power plant in Viet Nam.

With the rapid economic growth of Brazil, Russia, India, China and South Africa (BRICS), predicted to account for 22 per cent of global GDP growth by 2015, what will the benefits for Viet Nam be?

No doubt, Viet Nam will benefit from Russia being a member of BRICS and through the establishment of a free trade area with the Customs Union.
At present Viet Nam has invested in nearly 20 projects in Russia with a totalcapital of $1.7 billion. I would like to underline the fact that the Russian foreign investment law is rather liberal and a very good opportunity for Vietnamese firms to invest in Russia.

As for the sites of new factories, I think they should be in the Special Economic Zone where the best infrastructure lies. They would also benefit from preferential tax policies and customs' tariffs.
The Viet Nam-Russia Bank is willing to help resolve problems that arise over payment of contracts. Vietnamese partners should be the bank's clients. That would enable them to settle payments directly. Furthermore, the Viet Nam-Russia bank opened a branch in Moscow in 2010.

The Trade Representative of the Russian Federation in Viet Nam is willing to provide any information required by Vietnamese businesses and help them carry out their projects. — VNS

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