Following the success of the "Vietnam - India Trade Forum," the Ho Chi Minh City Branch of the Vietnam Chamber of Commerce and Industry (VCCI - HCM) joined hands with the Indian Chamber of Commerce and Industry (InCham) to organise a workshop on "Vietnam’s economic overview in 2012 and introduction to ASEAN - India Free Trade Agreement."
Addressing the workshop, Indian Consul General in Ho Chi Minh City, Abhay Thakur, said Indian companies always appreciate Vietnam’s economic development potential in the future. In the past 10 years, Vietnam has made outstanding progress with the world’s second fastest growth just behind China, he said. To achieve these, Vietnam has successfully promoted its advantages of abundant natural resources, cheap labour, social stability, high labour productivity, and economic restructuring.
However, Consul General Abhay Thakur admitted that Vietnam’s growth has slowed down since 2010 because of the decline in inherited advantages. Thus, the important driver for Vietnam’s economic development in the next 10 years will only be new growth paradigms. Especially, Vietnam needs to increase labour productivity to use capital more efficiently. Mr Abhay Thakur said: “I have a very optimistic outlook on Vietnam’s economic development and believe that the Vietnamese State and the people have the capacity to overcome difficulties and challenges to reap more success in the future. In this perspective, Indian companies always join close hands with Vietnamese partners to exploit all business opportunities.”
Ms Nguyen Hong Ha, Deputy Director of VCCI - HCM, said: At present, the biggest challenge for the Vietnamese economy is untrained labour force. Compared with other countries in the region, Vietnam's labour force has lower levels. To get rid of this weakness, the Government must boost up human resource training programmes. And, Vietnam will need the support from India for this field. Ms Ha noted: "VCCI wants to cooperate with InCham to promote trade, especially in 2012 when the two countries celebrate the 40th anniversary of Vietnam - India diplomatic relations establishment."
Remarking on trade prospects between Vietnam and India, Mr Ly Quoc Hung, Director General of the South West Asia and Africa Market Department of the Ministry of Industry and Trade, said that trade revenues between Vietnam and India have increased strongly in the past years, from US$1.018 billion in 2006 to US$3.9 billion in 2011. The two sides expects at US$7 billion of two-way trade revenues by 2015 and this goal is forecast to be reached more easily at the back of ASEAN - India FTA. Especially, Vietnam and India also signed many important agreements, such as double tax avoidance and investment protection. In 2011, Vietnam licensed 61 Indian projects with a total registered capital of US$258 million. India’s leading corporations like ONGC, Tata Steel, Assar, Reliance, Ranbaxy and Godrej are successfully doing business in Vietnam.
Mr Hung said ASEAN - India FTA was signed on August 13, 2009 in Bangkok, Thailand and took effect on January 1, 2010 (Vietnam from June 1, 2010.) The pact removes tariffs on many goods. This is an important milestone in ASEAN - India commercial and economic relations in general and Vietnam - India ties in particular. The signing of the agreement the recognition of Vietnam as a full market economy by India will broaden the legal framework for business communities to be more aggressive in penetrating into our two countries’ markets, enabling Vietnamese goods to acquire a more competitive edge in the Indian market.”
According to the agreement, tariff reductions are divided into five categories with different progress and degree of reduction. As an ASEAN member, Vietnam’s tax cut roadmap is five years longer than other ASEAN member states. India is committed to cutting duties on Vietnam’s key exports. Besides, at the request of Vietnam, India pledges to reduce taxes on Vietnam’s advantageous exports, namely pepper, tea and coffee, to 40/50 percent from 90/100 percent (the category of highly sensitive).
The FTA provides a better chance for Vietnamese goods to be exported to India, especially when tariff barriers are significantly lifted. As more than 90 percent of its spending on Indian goods is for input materials for domestic production, Vietnam will enjoy lower input costs than others, thus enhancing its competitiveness on the market. Apart from trade benefits, the ASEAN - India FTA also help attract more Indian investors to Vietnam.
To boost exports to India and utilise benefits and advantages generated by the ASEAN - India FTA, market access is an important step. Mr Ly Quoc Hung said his department is completing the export promotion project for the Indian market to submit to the Ministry of Industry and Trade for approval. The project will focus on states with high purchasing powers and interest in Vietnamese products. Besides, it will coordinate with the Vietnam Trade Promotion Agency (Vietrade) to set up the Export Promotion Centre in Mumbai - the economic, commercial and financial centre of India. This centre will give a helping hand to Vietnamese exporters to sell their products in India.
My Chau
Vietnamese
