Vietnam-EU Expect Breakthrough Growth in Bilateral Trade

After leading businesses from the US, Japan and South Korea invested in Vietnam; European giants are actively seeking opportunities to expand bilateral cooperative ties on a mutually beneficial basis. The Vietnam-Spain Economic Forum on June 5, 2007 in Ho Chi Minh City further boosted the good relationship.

Since the doi moi (renovation) policy was launched in 1986 by Party Congress VI, the Vietnamese economic structure has been drastically reshuffled. Vietnam officially recognised the private economy and the Vietnamese economy began changing for the better. In 1992, Vietnam and the EU signed an agreement on textile and apparel. This was considered the first economic agreement between Vietnam and western nations. In 1995, this pact was expanded, the beginning of continuous growth in two-way trade ties.

According to the general statistics office (GSO), Vietnam-EU trade turnover was US$9.87 billion, standing third after China and Japan. In 2006, bilateral trade value was EUR8.75 billion, up 18 per cent against 2005. According to the figure from Euronext, in 2006, Vietnam spent US$2.2 billion importing EU machinery, equipment, milk and steel, accounting for 12.2 per cent of Vietnam’s import expenditure. In investment, the EU is still the most reliable investor in Vietnam, only after Japan.

A cooperation agreement in garment and textile, signed December 2004 and effective from January 2005, removed all limits in terms of export quota to the EU. This agreement opened a wide door for Vietnam to speed up WTO entry negotiations.

With a population of more than 83 million, over half being young people, and annual GDP growth of 7-8 per cent, Vietnam is developing very quickly and is an attractive place for foreign investors. Especially, the populous Ho Chi Minh City which accounts 22 per cent of Vietnam’s GDP, is the most active and fast-growing economic hub where 2,549 foreign representative offices from 56 countries and territories are operating. HCM City’s per capita GDP was US$2,000 a year, much higher than the country’s average US$725. The VN - Index exceeded the 1,000-point benchmark. The city is also home to an international airport, annually accommodating 8 million passengers.

 

Madam Soledad Fuentes, Spanish Ambassador to Vietnam, evaluated: “We find out that Vietnam, especially Ho Chi Minh City - the largest economic centre in Vietnam, has high potential for development. I think the businesses between the two nations will have numerous opportunities to exchange and promise trade development between Vietnam and Spain.”

 

Also at the forum, businesses from the two nations had an exchange meeting. The Investment and Trade Promotion Centre (ITPC) and Department of Planning and Investment introduced major projects to Spanish investors, including Northwest Urban and Industrial Zone and Binh Khanh Bridge. Notably, Ms Nguyen Thanh Xuan, Deputy Director of ITPC, provided information about retail business to Spanish companies. From January 2008, foreign companies will be allowed to set up retail companies in Vietnam.

 

Mr Antonio Berenguer, Commercial Counsellor of the European Commission (EC) Delegation to Vietnam, said “Five months after Vietnam’s accession to the WTO, we find that Vietnam is striving to complete the legal system and laws to match with international conventions, with 10 laws being amended, most importantly the effectiveness of the intellectual property law. The process of enterprise equitisation is faster and more than 10,000 tax lines have been reduced to 13.4-17.4 per cent in the next 5-7 years. And, I believe that not only Spain, but also many other countries in the European Union will invest in and cooperate with Vietnam. I believe Vietnam-EU bilateral trade will make breakthrough growth in the coming time.”