"Russia became a WTO member in August 2012, and in the coming 3 to 4 years, this country will have to lower import duties on agricultural products from Vietnam to 30 to 50 percent. For some other items, import duty will be reduced to a few times on schedule. However, these tax preferences will not make demand for goods and services in Russia increase; Vietnamese enterprises must be prepared to take advantage of these preferences," said Mr Kardo Sysoev Alexander, a representative of the Russian Trade Office in Vietnam with Vietnamese enterprises at the seminar "The business potential with Russia and EU market". The seminar is part of the Vietnam – Russia and Vietnam - EU Trade Forum, jointly held in Ho Chi Minh City by the Vietnam Chamber of Commercial and Industry (VCCI)- Ho Chi Minh Branch (VCCI-HCM), the Ministry of Industry and Trade of Vietnam and the Russian Trade Office in Vietnam.
Opening the seminar, Director of VCCI-HCM, Mr Vo Tan Thanh said that the relationship between Vietnam and Russia is a very special relationship. In recent years, despite many difficulties, the two countries have made great efforts to promote bilateral relations to a new height. However, economic ties and bilateral trade have not developed to the potential between the two countries. He said, to further promote relations between Vietnam and Russia in this field, a number of problems in trade cooperation and issues of quality control of agricultural and seafood exports of Vietnam, and problems on import and export payment are gradually being addressed. In the near future, to promote further achievements, the two countries’ leaders agreed to continue to diversify the cooperation channels and enhance trade to realize the goal of bringing trade two-way turnover to US$7 billion in 2015. At the same time, Vietnam will focus on opening negotiations with the Customs Union (including Russia, Kazakhstan and Belarus) on establishing a free trade area (FTA) in the first quarter of 2013 and strive to complete negotiations within two years.
Mr Kardo Sysoev Alexander said the cooperation between Russia and Vietnam has been raised to a new level of quality. This is the period of forming a systematic premise to promote cooperation. This is related to the possibility of establishing an FTA between the Customs Union and Vietnam. According to preliminary calculations of Vietnamese experts, after Russia became a WTO member in August, 2012, in the next 3 to 4 years, this country will have to lower import duties on agricultural products from Vietnam to 30 to 50 percent. The average tax rate for these items will be reduced from 13.2 percent to 10.8 percent. For some commodities, the import duty will be reduced to a few times according to the schedule, for example, electrical appliances and equipment down seven times, clothes down two times, tea down two times, etc. Vietnamese private enterprises exporting to Russia will only have to pay 75 percent of most favoured nation tariffs for goods enjoying preferential status, because Vietnam is under the preferential tariff system that Russia offers to underdeveloped and developing countries.
Mr Kardo Sysoev Alexander assumed that in the near future, Russia will continue to be a traditional market having stable demand for goods and services from Vietnam. Tropical industrial goods and agricultural products will maintain their position on the Russian consumer market in the future. More favourable conditions will be created if Vietnam and the Customs Union sign the FTA agreement. This Agreement is expected to drive import taxes to zero. According to the calculations of Russian experts, by 2018, trade turnover between Russia and Vietnam may increase to US$12 billion. In the first stage, Vietnam will benefit from this agreement. All of these changes directly relate to the businesses of Russia and Vietnam, when participating in external economic activity. However, these changes will not make the demand for goods and services increase. Issues such as product competitiveness in terms of price and quality, supplier capacity, brand popularity and contract payment terms will still be hot issues in the future. In other words, to make the most effective use of the opportunity, businesses must be well prepared.
Deputy Director of the European Market Department (Ministry of Industry and Trade), Mr Duong Hoang Minh said that many essential commodities that Russia and the EU need to import are staples of Vietnam. Therefore, if Vietnamese businesses know how to exploit the potential of these two markets, the opportunity is huge. Russia and EU markets have high requirements on quality and strict regulations for imported goods, so Mr Minh recommended that Vietnamese enterprises focus on expanding factories, machinery and equipment, modernizing technology, and aim to improve product quality so that they can meet the most strict technical requirements. Businesses also need to be more active in the expansion of their distribution systems to deliver goods to consumers in these two huge markets.
In terms of trade, in the first nine months of 2012, trade turnover between Vietnam and Russia reached US$1.77 billion, of which exports reached US$1.13 billion and imports reached US$640 million. Vietnam’s major exports to Russia include phones, clothes, farm produce and fishery products. Vietnam imports petroleum products, iron, steel, fertilizer, machinery and equipment.
On investment, as of September 2012, the Russian Federation has 78 direct investment projects in Vietnam with total registered capital of US$919 million, ranking 23rd among countries and territories investing in Vietnam. Russia’s investment in Vietnam has increased rapidly in recent years, concentrated in the mining sector, the processing industry and manufacturing, while continuously expanding into new areas such as banking and telecommunications.
As for the EU, over the years, this area has always been one of the leading trading partners of Vietnam, with two-way trade turnover increasing by an average of 15 to 20 percent per year. In 2011, two-way trade turnover reached US$24.29 billion. The two-way trade turnover in the first eight months of 2012 was US$18 billion and expected to reach US$30.4 billion this year.
Gia Phuc
Vietnamese
