Another Channel for Vietnam-US Businesses

Since the establishment of official diplomatic relations between Vietnam and the US on July 12, 1995, the bilateral relations have been increasingly enhanced and developed. The two sides have exchanged high ranking delegations and signed several economic agreements such as copyrights relations; bilateral trade agreements; science and technology cooperation; apparel, airlines, economic and technology cooperation, as well as MOU on agricultural cooperation. Among them, the most important agreements are the conclusion of the bilateral negotiation on Vietnam’s accession to WTO, endorsement by the US Congress on Permanent Normal Trade Relations (PNTR) with Vietnam and Trade and Investment Framework Agreement (TIFA).

 

The economic-trade relations between Vietnam and the US have recorded impressive growth in recent years, especially after the enforcement of the bilateral trade agreement in late 2001. The export value of Vietnam to the US has increased from over US$1 billion to over US$12 billion in 2008.

 

Due to the world financial crisis and economic recession, Vietnam trade to the US in the first half of 2009 was only US$6.2 billion, 7 percent less than the same period last year. However, compared to other markets, the Vietnam-US trade maintained the lowest decrease. The main Vietnamese exports to the US are garment, wood-based products, electronic products and parts. According to the forecasts of the Ministry of Industry and Trade, in 2009 Vietnam’s export value to the US could be at US$13.2 billion, or 5 percent more than 2008, including garment (US$5.53 billion, up 5 percent), footwear (US$1.4 billion, up 16 percent), handicraft and other industrial products (US$2.73 billion, up 16.5 percent).

 

Currently, some 1,000 American businesses are investing and operating in Vietnam including big multi-national corporations such as Intel, Microsoft. By June 2009, American FDI in Vietnam was nearly US$5 billion. In August, the US was the biggest investor in Vietnam. In the coming years, the two countries will sign big projects worth some US$1 billion making the US among the Top Five investors in Vietnam.

 

American businesses have special interests in Vietnam and regard it as an economy of stability and high growth. VCCI has maintained close cooperation with the American business community such as the US Chamber of Commerce, US-ASEAN Business Council, AmCham in Hanoi and Ho Chi Minh City, organizations for trade investment and economic development as well as American businesses to promote trade and investments between the two countries. In recent years, VCCI together with Vietnamese and American counterparts have organized several delegations for market survey, trade promotion and investment cooperation with the US, especially accompanying Vietnamese President and Prime Minister to visit the US, as well as received American business delegations visiting Vietnam. Business forums have been organized in several States of the US and cities of Vietnam and many important agreements and projects have been signed worth billions of US dollars.

Also in recent years, VCCI has increased dialogue to remove constraints confronting foreign businesses and investors and as a result the Chamber has been highly appreciated by foreign business communities. To follow up, AmCham in Hanoi and Ho Chi Minh City are making joint efforts with VCCI to promote foreign business communities in Vietnam.

 

In September this year, VCCI together with the Ministry of Planning and Investment, Institutional Investor, US Chamber of Commerce, US-ASEAN Trade Council will organize a Vietnam Investment Forum in New York and business meetings with leading business groups of the US and other countries on the occasion of President Nguyen Minh Triet’s attendance of the 64^th UN General Assembly. It is an important event for business communities of the two countries and hopefully it will reach a successful conclusion.

 

With WTO membership, Vietnam can no longer directly support businesses in export activities. Therefore, it is most appropriate to establish forums to promote activities of business communities. The Vietnam-US business forum is a flexible and suitable mechanism to rally related businesses and organizations to implement the following tasks:

·                                 To establish a channel of effective public-private dialogue to draft policy regarding the American market, present business views on constraints and submit solutions to concerned authorities prior to the inter-governmental meetings on economy, trade and investment.

·                                 To serve as a permanent channel for the meetings of business communities of the two countries to promote economic and investment cooperation.

·                                 To increase publicity of Vietnamese economic policy and information on trade, investment and tourism.

·                                 To voice business views and advise government agencies on the improvement of business and investment environment, creating a level playing field for all economic sectors, promoting economic development and Vietnam-US relations in general.

 

Regarding forms of activities, the Forum will be based on a Plan of Action to organize periodical business meetings, studies on the business environment, recommendations on bilateral economic cooperation, advising government agencies on economic policy, mobilizing American support for Vietnam’s economic integration and difficulties, supporting Vietnamese businesses and ensuring fairness in economic disputes especially in the American market, organizing periodical business meetings and other activities to improve related policy and legal instruments.

 

To maintain dialogue relations with government agencies, an Advisory Council will be established within leading body of the forum including representatives of concerned ministries and agencies.

 

The leading body of the forum will meet twice a year to review activities and decide a course of action for the next year. Special meetings can be convened if necessary.

In the initial period of 2009-2015, the Vietnam-US Business Forum will be officially established and Vietnam-US Internet portal will be inaugurated in November this year.

 

The US is a huge market with a diverse population and wide rich-poor gap. To start a business in the US, Vietnamese companies carefully draft economic contracts as all commercial activities are guided by such contracts. Americans are always careful in drafting contracts with partners through professional legal consulting services. Any violation, though small, is subjected to legal process at a tribunal. The Americans are also firm on intellectual property and against violation of copyrights.

 

In general, American businesses prefer large scale and long-term partnerships. Therefore, Vietnamese businesses should establish long-term relationships. Presently, in absence of strong and big economic groups, Vietnam businesses should join efforts to establish distribution channels into the American supermarket network. They must also develop a business strategy in case of commercial disputes result from American protectionism.

 

Adequate attention must also be paid to trademarks, packages, labels as well as provisions on food safety, consumers’ interests, compliance to commitments quality, origins and delivery timetable.

 

In many years to come, the US will be Vietnam’s biggest export market in spite of the fact that the economic crisis has affected Vietnamese export turnover. Therefore, Vietnamese businesses must find more markets, organize business exchanges well, seek more import partners, and understand export markets and partners better. The US is preparing certain laws like the Farm Bill and Lacey Law which will affect Vietnamese exports such as aquatic products, wood-based products. Consequently, Vietnamese businesses should increase consulting services to understand the new regulations. In other words, they should combine production with access to information and trade promotion.

 

 Concerning investment, the US ranks seventh among investing countries in Vietnam. In the first 8 months of this year, the US made the biggest investment in Vietnam. Obviously, American investments in Vietnam are long term in nature. The current difficulties in Vietnam are short term and in no way preventing the increased American investments in Vietnam.

 

In the course of discussion, American businesses show great concerns on inflation control, stable macro economy, efficient legal system, transparency of policy and business environment, WTO commitments as well as bilateral commitments on intellectual property, education and human resources development.

 

For their part, Vietnamese business community must be prepared in resources and standards to cooperate most efficiently with American partners.