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Int'l Cooperation

Last updated: Thursday, August 16, 2018

 

Joint Efforts to Boost Trade and Investment Ties

Posted: Friday, August 10, 2018

Prime Minister Nguyen Xuan Phuc (right) and his Canadian counterpart Justin Trudeau, Hanoi, November 2017
Prime Minister Nguyen Xuan Phuc (right) and his Canadian counterpart Justin Trudeau, Hanoi, November 2017

After 45 years of diplomatic relations (August 21, 1973 - 2018), Vietnam and Canada have become increasingly important partners in many fields.

In 2013, the two countries held a political policy dialogue at the departmental level and then upgraded it to the vice-ministerial level in 2017. This paved the way for the two countries to upgrade the relationship to Comprehensive Partnership in November 2017 during Canadian Prime Minister Justin Trudeau's official visit to Vietnam.

The comprehensive partnership framework has broadened bilateral cooperation ties into various fields such as trade and investment, official development assistance, science and innovation, security and defence, and people-to-people exchange. Cooperation in these areas has developed very well and become great motivations for the two countries continues to elevate their ties in the coming time.

Potential market
According to the Ministry of Industry and Trade, Vietnam is ranked fifth in Asia in export value to Canada after China, Japan, South Korea and Taiwan (China), with the two-way trade value rising 20-25 per cent a year on average.

Statistics from the General Department of Vietnam Customs show that Canada has always been among the 25 largest trading partners of Vietnam which has trade ties with more than 200 countries and territories. In 2017, Canada ranked seventh in the G7 bloc and ranked 24th among the more than 200 trading partners of Vietnam in the world, with the two-way trade value of US$6.2 billion, of which US$5 billion were exports from Vietnam to Canada.

In the first five months of 2018, the bilateral trade turnover increased 6.3 per cent year on year to US$1.45 billion.

Vietnam's main exports to Canada remained telephones, printers, electric cables, telecommunications equipment, wooden furniture, apparels, footwear, seafood, coffee, cashew nuts, vehicles and spare parts, toys, sports equipment, rubber, plastic products, vegetables and fruits. Meanwhile, Canada exported from agricultural products, softwood, pharmaceuticals and wine to marine services, high technology and clean technology to Vietnam.

Currently, Vietnam and Canada are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). When it takes effect, CPTPP will open up many opportunities for both countries.
According to Ms Ping Kitoneone, Ambassador of Canada to Vietnam, with CPTPP, Vietnam will benefit greatly from tax reduction from this agreement by boosting exports that Vietnam is strong at like electronics, apparels and footwear. For Canadian businesses, CPTPP will also bring them the opportunity to introduce many high quality products to the Vietnamese market. Canadian businesses are also very interested in investing in information technology, high technology and services in Vietnam.

In investment, Canada now has 168 investment projects in Vietnam, with a total registered capital of US$5.12 billion, ranked 13th out of 112 countries and territories investing in the Southeast Asian nation.
At the Vietnam - Canada Business Conference in Quebec on his attendance to the G7 Summit and his official visit to Canada from June 8 to 10, 2018, Prime Minister Nguyen Xuan Phuc said, in the context of the favourable business climate created by the forthcoming CPTP agreement, there will be a boom of investment of Canada and Quebec in Vietnam.

"Vietnam considers Canada an important partner in the Americas. The two countries' economies have tremendous potential and are highly complementary to each other rather than competitive. We think that the current trade value of over US$6 billion [a year] has not met expectations and Canada's investment in Vietnam is much below the capacity of Canadian investor. Hopefully Quebec, the city famous for having world-renowned investors, will have many projects in Vietnam in the future," he said.

Seeking more effective cooperation
Ms Do Thi Thu Huong, Vietnam Trade Counsellor in Canada, said, although Canada is a potential market, Vietnamese companies are still not very interested in exporting their products there.

Consumer goods in Canada are primarily imported, with 50 per cent coming from the United States and the rest from other regions such as Latin America and Asia. However, imports from Vietnam account for just over 1 per cent of Canada's total import value.

Weighing the market size, Canada is only one-tenth of the size of the US market but its per capita import value is twice that of the United States. In addition, the market is dominated by immigrants, with a large share of Asians. About 250,000 Vietnamese people are living in Canada, thus the demand for foods is very high. This is a characteristic advantage potentially tapped for agricultural products of Vietnam. In addition, the Canadian government is seeking to diversify markets to reduce dependence on imports from the United States.

Therefore, Vietnam is one of the countries that Canadian businesses want to boost trade and investment with.

Moreover, Canada has always been among the leading donors of development aid for Vietnam for the last two decades.

Particularly, Vietnam has always been a priority partner of Canada in Asia in three important policies: Global Market Action Plan, International Education Strategy and Development Aid Policy.

Both sides share many similarities in international issues, work closely together on multilateral mechanisms such as the United Nations (UN), the Asia - Pacific Economic Cooperation (APEC), and the Francophonie - the international organisation of French-speaking countries. Nevertheless, their cooperation results are not commensurate with available potentials, partly due to insufficiently mutual understanding of market and investment policies. For that reason, the two sides aim to unlock potential and expand bilateral trade and cooperation to achieve sustainable development.

To assist companies to boost exports to Canada, the Ministry of Industry and Trade of Vietnam instructed Trade Offices and relevant units to implement measures to increase key exports, expand the market and focus on exploiting Vietnam’s export advantages.

The ministry’s scheme to stimulate Vietnamese companies to take part in foreign distribution networks was approved by the Prime Minister. Nonetheless, according to the ministry, opportunities cannot turn into benefits themselves. Therefore, besides long-term strategies, enterprises should take advantage of commitments and incentives of trade agreements to boost exports to this difficult but potential market.

Quynh Chi








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