To expand new export markets plus traditional markets for Vietnam and improve the product competitiveness, product quality and distribution services of businesses in southern provinces and cities, the Vietnam Trade Promotion Agency (Vietrade) in collaboration with the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) organised the conference entitled “Middle East and Africa Markets - Potentials and Opportunities."
With an average annual GDP growth of 5 percent, blessed with rich oil and gas resources, powered by potentials for biotechnology and petrochemical, and driven by huge demand for high technology and commodities, especially agricultural products and consumer goods, the Middle East and Africa are tempting destinations for exporters in the world, including Vietnam.
Ms Bui Thi Thanh An, Deputy Director of Vietrade, said: the Middle East and Africa are potential export markets for Vietnamese businesses because of their huge purchasing power and easy payment. And, importantly, they are major importers of Vietnam’s advantageous products.
Mr Ly Quoc Hung, Director of Africa, West Asia and South Asia Department under the Ministry of Industry and Trade, said, the Middle East has emerged as a promising export market for Vietnam in recent years. At present, many Middle East countries are promoting their trade and investment towards the east, where also includes Vietnam. This approach provides the opportunity for Vietnam to penetrate and increase market share. This is evidenced by growing two-way trade turnover between Vietnam and the Middle East. The value stood at US$3.3 billion in 2010 and reached US$5.13 billion in 2011. Vietnam earned US$2.5 billion from exports to the Middle East while it spent US$2.63 billion from imports there. In the first six months of 2012, Vietnam’s exports to this market valued at US$1.65 billion and its imports from there were worth US$1 billion.
As for Africa, Vietnam and its 55 African trade partners have witnessed stable bilateral trade performances. Vietnam exported US$1.8 billion worth of goods to this continent while importing US$677 million from it but the values soared to US$3.5 billion and US$1.2 billion, up 94 percent and 56 percent, respectively. Africa imports consumer goods, machines, equipment, production technology, foods, pharmaceuticals, engineering products, plastics, wood products, motorbikes and parts, milk and dairy products, and processed foodstuffs from Vietnam while the latter imports wood, raw cashew nuts, cotton, scrap metal and other products from Africa.
It is evident that Middle East and Africa markets are potential but it is quite hard to make a success and avoid disadvantage in doing business there. Specially, the Middle East contains payment risks because many Middle East importers are not familiar with opening letter of credit (L/C). Besides, technical barriers, protectionist policies (in Turkey, Iran and Israel), political turmoil and insufficient market information are also disadvantages.
To prevent risks arising from transactions with African and Middle East partners, according to Mr Hung, Vietnamese businesses must understand import and export regulations in destination countries, contact the Ministry of Industry and Trade, and Vietnamese chambers of commerce in destination markets to seek for information about partners in case they find signs of abnormality. They should also prefer certified irrevocable L/C payment and Documents against Payment (D/P) with a deposit of at least 20 percent. Concurring with Mr Ly Quoc Hung, Mr Pham Hoai Huan, a professor at Ho Chi Minh City Law University, recommended that payment terms must be based on international conventions, legal documents of international organisations when businesses negotiate contracts in order to mitigate risks. Each specific field has its own codes like contract conditions and payment.
Besides, Vietnamese exporters should be careful enough to thwart frauds as well as communicative culture, business practices, and consumer tastes. For example, punctuality is not respected there; thus, it usually takes time and requires patience. In Africa, infrastructure is poor and international payment is inconvenient. Financially weak African customers usually demand deferred payments.
In addition, Vietnamese enterprises should strengthen cooperation. Solidarity is the key to success in markets typical of political volatility, different religious beliefs and diverse cultures like the Middle East and Africa.
Hong Ha
Vietnamese
