Vietnam-Africa Trade Expected at US$1Bln by 2010

Deputy Prime Minister Vu Khoan expressed his hopes to 300 enterprises and nine African Ambassadors at a seminar entitled "Vietnam-Africa trade and investment development co-operation" organised by VCCI recently in Hanoi.

After the seminar in May 2003, with the financial support of the Vietnamese government through the National Principal Trade Promotion Fund, dozens of Vietnamese businesses made market surveys in Africa. Though the result remains limited, the survey is an important breakthrough. The fund will continue in 2005, showing the will of Vietnam to increase economic co-operation with African nations and cultivate the strengths of each country in the development.

According to Deputy Prime Minister Vu Khoan, from 1991 to 2002, two-way trade between Vietnam and African countries increased 10 fold, excluding trade through third parties. Vietnam performs strongly in the export of rice, garment, footwear, electronics, rubber-based products, fruit and vegetables, plastics products, aqua-products, bicycles, motorbikes, small motors and common medicines. In return, Vietnam has a large demand in materials such as steel, cotton, timber, unprocessed cashew nuts, metals, tobacco and petroleum.

However, trade co-operation remains modest:  Africa comprises only 1 per cent of Vietnam's export value and Vietnam accounts for just 0.1 per cent of African exports. These figures result from low-based economies and a mutual shortage of capital and technology. Currently, payment is a big problem. While Vietnamese businesses due to financial restrictions cannot offer delayed payment sales, African countries for the same reason cannot afford immediate payment. Additionally, major Vietnamese exports to Africa are often conducted through third parties, causing losses to both sellers and buyers. Furthermore, mutual understanding is also limited, especially in economic systems, business practices, and demand and co-operation in specific areas.

Ms. Vu Thi Them, Head of the Department for Africa, West and South Asia, Trade Ministry disclosed that Vietnam and some African countries are exchanging drafts on trade agreements. She also hoped that agreements on trade, transport, encouragement and protection of investment, double taxation, etc., will be concluded. Commercial representative offices will be opened at Vietnamese embassies in Tanzania, Morocco and Nigeria.

Concerning investment, although both sides have favourable laws for foreign investment, they cannot currently make investment in each other. Presently, only developed countries are investing in Vietnam and Africa.

Mr. Vu Khoan pointed out that under present conditions, Vietnam and Africa should create new incentives and methods to develop multi-faceted relations, especially in economy and trade, and offer each other preferential treatment. At the same time, businesses must exchange information in order to understand each other's potential, demands and even difficulties through visits, exhibitions and fairs so that together they can seek efficient measures to expand co-operation.

For his part, VCCI Deputy Secretary-General Nguyen Van Thao proposed that Vietnam and African countries should build Internet gateways on economic and trade information to facilitate and support business activities. The information gateways will be in place by the end of 2005.

More trade agreements will be signed

Dr. Goitsimolimo Leonard Pitso, South African Ambassador to Vietnam

The seminar is a good preparation for the coming visit of Prime Minister Phan Van Khai, accompanied by a Vietnamese business delegation, to African countries in this November. I am sure that the trade cooperation between Vietnam and Africa countries, particularly South Africa, will be further strengthened and many trade agreement will be signed during the visit.

According to the Vietnam-Africa Business Gateway, there are many kinds of goods we want to import, so we have to sit down and discuss. Our imports are something that your country has, but sometimes it might be not enough from the country. South Africa's major exports include wood, diamond, coal and others.

The business community of Vietnam are called for investing in Algerian market

Mr. Naceur Boucherit, Algerian Ambassador to Vietnam

Algeria now ranks third among African countries, after South Africa and Egypt, in attracting foreign direct investment (FDI), and its total investment in 2004 is expected to stand at US$4 billion. About 170 investment projects, each of which valued in average at US$200 million, have been registered for the first half of this year.

On the occasion, I would like to avail myself to express the hope to seeing the current economic exchanges between the two countries to reach the level of excellent political relationship, and make an appeal to the whole business community of Vietnam to invest in Algerian market that is more open than ever, where there is still a place for Vietnamese enterprises.

Knowing customers tastes

Ms. Nguyen Thi Loi, General Director, Hamarma Trading Company

As the first Vietnamese business in Morocco, Hamarma had to spend a long time studying the market. It finally has a foothold in the market but is still faced with several difficulties because of the long distance and high transport fees. The absence of diplomatic relations also causes difficulty in administrative formalities. Investment in Morocco requires an understanding of the market and should focus on competitive products. Payments could be direct or through a third party (banks of France, Germany, Italy, UK, etc.). I believe investment can be made in the production of cotton yarn, processing of aquaproducts, mechanics, automobiles, ship-building, hotels, restaurants, tourism and food processing.

Big demand in rice

Mr. Nguyen Quang Thuan, Director of Foodinco

Most African people eat rice, and their rice production falls short of demand. Their rice demand is both large and long-term, especially low-grade rice (25 - 35 per cent broken and 100 per cent broken rice). High grade rice, 5 per cent broken or parboiled rice are consumed only in developed countries such as South Africa for high-income earners and tourists. However Vietnamese rice export to Africa remains limited. It has to pass through third parties, trans-national companies in Europe. These companies buy Vietnamese rice in big quantities (10,000 tonnes per shipment) to reduce transport fees and open L/C for Vietnamese companies. The rice is then sold gradually to Africa. The transaction is risky for Vietnamese companies. The government should help to increase the rice exports.

SA - A favourable market

Ms. Nguyen Kim Lan, Director of Incomex Saigon

South Africa is a potential market. With better co-operation the two sides can develop their comparative edges. Many products can be exchanged and investments can be made in many sectors. Since 1999, relations have developed favourably. Incomex Saigon has established a representative office and has continued to increase export activities. The South Africa has good infrastructure, making it in some respects favourable for trade and investment. Vietnam can invest in food processing and mechanics in South Africa. However there are certain constraints, such as unrest in some areas and high costs.

After six months of operation, the Incomex Saigon office together with partners in South Africa has organised some tours providing Vietnamese businesses opportunities to seek partnership in South Africa. The company has also signed some contracts for export of cassava powder, quick-sticks for AIDS, malaria and tuberculosis, to Mozambique and Angola. The value of the two exports in 2005 is expected to be around US$10 million. Commodities still under negotiation are dried fruit, instant noodles, and articles of fine art.  Incomex Saigon expects an export value of US$15 million in 2005.

• Quynh Chi